International business in 2020: consequences of Covid-19 and alternative sales approaches

International trade aspects
Most international sales managers and export managers will experience a lot of quality time with their partner and children at home at the moment, since practically all of their travel has been cancelled. But will it also be quality time for the business? Some may argue that with a lot of borders closed, international business is even impacted harder than local business. Let’s have a look at the various possible consequences.

How is my agent or distributor doing?

Many of your agents or distributors may face problems. This can be on various levels:

  • In their own operations, having to organise work from home or safety measures at their factories and warehouses. Most companies seem to have overcome this hurdle now.
  • Through severe lock-downs, preventing their people to go on the street, or when being classified as non-essential business.
  • Through their customers, whose retail outlets may be closed or whose operations have been shut down.

It is essential to stay in close contact with them to wind down existing operations and also limit your exposure for non-payment. This is the time you absolutely need to stay on top of the situation to understand and manage your risks.  Depending on the industry sector there may be bankruptcies, and then you’re rather not be one of the creditors.

It is also the time to look at online sales, if your product is fit for it. Preferably with your local distributors, since they can act much faster in the market. Either they can actively refer their customers to your (of course localised) website, or you can support them promoting their web shop or placing your goods on general marketplaces like Amazon. If they can’t or won’t do it, use a local agency to support you. Your distributors can continue doing the local fulfilment and service activities.

The IMF is warning for a severe recession . Especially seasonally driven businesses, like hospitality, fashion, tourism or events and all related suppliers will miss out a complete spring and summer season and many will go bankrupt. The uncertainty in the market is already impacting the construction sector, car sales, start-up funding and IPO’s, to name a few.

This means that a distributor that you have now, may not be there any more in a few months’ time. Agents are typically more asset-light, so there is less risk there. But for distributors in a danger zone you may want to increase your support, do constant monitoring and eventually set up stricter debtor management.

Closing deals in 2020

As of April 2020, in most countries the ‘curve’ for new Corona cases is flattening, but only due to strict quarantine or social distancing measures. Eradication of the virus is not possible anymore, now all focus is on limiting the number of active cases that require hospitalisation. Even after this summer some form of social distancing, perhaps a bit less than now, will need to remain in place. And also rolling out a vaccine, if effective and developed quickly, will only reach a majority of the world population in 2021, if not 2022.

This means at least for the next few months we can safely expect that air travel will remain restricted and for the rest of 2020 (at least) all kind of big events like conferences, trade shows or business missions will be cancelled. So for 2020, visiting potential clients overseas most likely won’t be an easy option. Eating with them, drinking, doing karaoke or other ‘bonding’ activities will be out of the question.

So if you have agents or other type of partners abroad, the more reason to nurture them. Otherwise you should be looking how to extend your team with local representatives, who may not do the full sales process, but at least can serve as an effective interface. Everybody can arrange a nice background for their video meeting, but only if somebody visits your potential clients and reports back to you, you will get a better picture of how much you can ask and what the informal decision making structure is.

Finding new sales channels

Many companies use trade shows to present themselves to new clients, or to find the right agent or distributor in a new country. But bringing 1,000 or more people together in a big hall and have them shake hands already seems to be something of the past. With also the Dubai Expo that was planned only for October 2020 postponed for one year, the likelihood of going to trade shows in 2020 is almost zero.

Depending of the size of your booth, most companies spend from 20,000 to 200,000 USD on their presence on big shows, especially if you take into account costs for travel and stay of you team. Your financial director may book this in as one of the first savings in these uncertain times, but you should make a plan on how to spend this on alternatives.

  1. A trade show with its catalogue is a sort of offline search engine, where you try to stand out with your booth. In the online version (called Google or Baidu) you stand out with the content that you provide. So use your lock-down time for creating new, high quality content on your product, whether it’s bricks, a yoghurt drink or mathematical software. Also have your website brought to this new decennium, optimised for mobile search and fast conversion. This way you can still generate leads.
  2. Another way to generate leads is with local agencies. Cold calling may look outdated, but with proper targeting it may be effective. If your target group in a country is somewhere between 500 and 50.000 companies, with easy to identify decision makers, then using a call centre is an option. If it’s less than a 100 targets, with difficult to assess decision makers, then use a specialised business development agency. Of course there will always be start-up costs, you can’t do this fully on a commission basis. But what’s the guarantee that you get if you spend your money on a booth?
  3. If you use trade shows to orient on new markets and to find local distributors or agents, then a direct search approach by a local export development agency may even be refreshingly effective. On a trade show you always have to wait who approaches you, and chances are rare that this is the most successful retail chain in the market. With a direct approach the agency that you hire will list them, find the decision maker, approach him, create interest for your offering and then bring you into contact.

Conclusion

The current crisis will certainly have impact on international business. A recession is coming up, travel will be limited and trade shows will be suspended at least during 2020. Depending on the industry that you are in, your business will be hit less or more.

What will be the same for every company, is that we will have to adapt our way of working. This is will not always be bad. With video conferencing introduced, a face-to-face meeting with all its travel time will not be the standard any more, but a choice. And for those who adapt quickly, disruption may be an opportunity for growth.

Alliance experts is there to help you, with insights and alternatives like these, but also with practical help. We have experienced export developers on the ground in over 30 countries, who can check your goods, monitor your distributors, interface in deal closing and find you new clients or distributors. See us as a temporary extension of your team, as your eyes and ears on the ground. Look here for more information and give us a call, we always have somebody in your time zone.
 

This entry in exports, featured was updated on April 25, 2020 by specialist.