If the market segment that you’re in is saturated and overflooded with competitors, or if the buying power in your country is limited, it may be wise to look abroad. Other countries may have higher living standards, and more money to spend, or they are just developing and there are still market opportunities for your products.
Questions to ask for starting an import-export business
If your company is just starting with exports, then you should ask yourself the following questions first.
1. Is your product unique enough?
If you are selling commodities like unprocessed food products, plates, plain cloth, tyres or bolts, there is hardly any use to enter foreign markets on your own. You will face there the same price competition as in your home market, and you will make extra costs. If you think that you can stand out due to your lower production costs compared to e.g. Germany, please note that the companies further on in the value chain will absorb that advantage.
However, if your product stands out by its design, functionality or its sustainability, and you know that this can not easily be copied, then you can think of exporting it.
2. Do you have a clear website and product documentation?
International business is based on trust, because it is always difficult to enforce a contract in a foreign country. Therefore your potential clients should trust you. The best way to achieve this trust is to share information about your company, your manufacturing process, your products, your customer service. Make presentations with real pictures, include certificates and references as credentials and also make sure that your website has a modern format and is updated.
Please note that every culture has its own preferred way of communicating. Getting straight to the point with your sales pitch is not always seen as the way to start a conversation. Have a local person advise you.
3. Do you have enough time and money to invest?
If you expect that you can find an agent abroad who will sell you product purely on a commission basis, without any further support, then forget it. Just as the airline will charge you in advance, and not on basis of the success of your business trip, also other service providers will charge you for their advice, for setting up a company, for arranging meetings. If you want to have your products in an established retail chain, it may even be that you will have to pay for the space you occupy on their shelves. So they shift their risks to you!
Every product needs marketing. For business-to-business, you may have to translate your product documentation in the local language and your agent or distributor needs printed copies or product samples. You may have to come over to train them and to invite them to see your facilities. Retailers will expect you to help with their marketing and financially contribute to advertisements in which they feature your product.
There are many ways to finance your exports, but one thing is for sure: you are the one that will have to invest and to take the risk!
Ways to enter the market
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.
With distributors or agents
A distributor will buy your product in large quantities and sell it to his clients. An agent sells on behalf of you and doesn’t take ownership. The more unique your product is, the easier you will get it on the shelves or that somebody will really put an effort for selling your service.
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. Finding an agent is often a bit more specialised work, since they don’t advertise themselves.
With direct sales
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.
Help with the first steps in a new market
Alliance experts is a global network of business development professionals. We help companies to enter new markets profitably. We are active in all main economic hubs and regions across the world, including the USA, Germany, France, India, Singapore and China.
We work on a consulting basis, so we will charge you even in case your ventures abroad are not successful. But we deliver what we promise, and this way you won’t loose margin in the long run. Working with us will result in a faster market entry and less failure. Just reach out to us for more information.