If you have a nice and stable business in your home country, and your growth there is limited, then it may be time to move to international markets. But how to start?
1. It all starts with preparation: are you ready for export business?
Export is selling your goods in a country that you don’t know, with a different culture and with different regulations. The market may be better there than in your home country, but you will still have to invest in building your network and promoting your product, just as you started at home. That means that your current operations should be able to run with a bit less of your attention, and that you can invest time and money in entering a new market.
There are also some more practical things: do you have your website and product documentation available in English or in other relevant languages? Is your brand name easy to pronounce in different languages and can you handle international payments?
If your product is suitable for it, try to sell online first. Although online sales heavily depends on the right local marketing, it may give you an impression where your product is easily picked up, and it helps you get get your organisation up and running for international business.
2. Which country to go to? Business trips and market research
In which country would your product or service be a success? How you would need to position it, and with whom? These insights cannot be derived from statistics or the internet. You will have to go to the country yourself or invest in practical insight-oriented market research.
There are tools available to see how much each country imports your specific kind of goods, what the price levels are and what the trend is. Once you have made a selection of two or three promising countries, it is time to have a look there yourself. Sometimes your embassy or trade commissioner there can offer first introductions, there may be local chambers of commerce, or you can hire a local consultant to fully prepare your business trip. Especially in countries like Japan, China, Thailand or in Africa this is a necessity.
Focus your market research on things that are important to you: where are the niches, what is the competition, what are price levels. Ask for interviews with potential agents or distributor, to get their view on your product.
3. Find a distributor abroad, or choose for direct sales
If you want to set up your distribution abroad, you have three main options: online, through distributors, or with direct sales.
Online often seems to be the easiest option, but having your product on Amazon.com, Tmall or Lazada doesn’t mean that it will sell. You will still have to promote it, either through paid advertising on these platforms, or by investing in a social media approach. The latter one will work better for a fashion product than for a thermo mug. However, even with little efforts there may already be some results.
Through local distributors
A distributor will buy your product in large quantities and sell it to his clients. The more unique your product is, the easier you will get it on the shelves. Proven functional effectiveness is the best. If you have a new blender that automatically separates the seeds from the rest of the fruits, then that’s a clear advantage. Design is a bit more subjective. And if you have a product that doesn’t differ so much from the competition, then it will be either service, branding or price to stand out on.
Finding a distributor requires good preparation. Purchasers of major distribution chains get numerous offers a week for new products, so they will only spend a few minutes on your ideas. They will not be interested in placing and promoting your product if there is no guarantee that it will sell. So you will either need existing sales data from other countries, or a clear idea how you are going to co-promote your product.
Direct sales to find buyers in other countries
The third way is to hire somebody locally to do your sales. This may be useful for highly customised products, like big technical systems. This doesn’t need a full-time employee, you can also hire somebody to represent you on part-time basis. If you pay your representative on basis of his sales, then we are talking about an agent.
4. Plan your market entry and close the right agreements
In all cases you will need a plan to get your sales up and running. If you have a distributor or local staff, you may have to train them in selling your product and providing service. Also take in mind that if you’re selling more complex products, you may have returns because of defects. Be sure that you also negotiated about this part, which may not be so profitable for your distributor, but which helps to you protect your brand.
The easier it is for a distributor to sell you products, the more he will do so. Having good promotion materials, displays, demo models etc. and having a hotline for all kind of product assistance pays off.
5. Establish your presence abroad
It may take a while before your investments in a new country really start to be profitable. A good business case with projections based on market research will help to determine where you have to do more.
Once you have some experience in a country you can also determine metrics: e.g. that every 100 website visitors lead to 1 sales transaction. This way you can predict the outcome of your marketing efforts and even attract financing for your growth.
In order to become successful in a new country, you may have to do as much marketing and sales effort as you did in your home country. And since you can’t do everything yourself this time, investments may vary from 20,000 to over 200,000 USD. See our article Financing your export and international growth.
Contact our specialists to learn more about this topic!
We work as consultants who help you with every step in your market entry. We are no commission based agents, nor a distributor, we charge for the activities that we do. Read more about our approach. However, we can act as your part-time export manager or country manager in a new market, and that can be very attractive to you, since we live there, know the culture and have an extensive network to get you started quickly.