Especially if you are based in a small or very competitive market, exporting makes sense. But are you getting the most out of your international activities? Five questions that can help you optimise your exports.
1. Are you in the right countries?
Countries differ in their stages of development. And depending on the spending power, people start buying certain goods and services. Up to a GPD per capita of 5,000 dollars most of the wallet is spent on food. From 6,000 dollars there is a market for for example refrigerators, from 20,000 dollars people start spending on recreation and culture. And at a certain moment functionality is not enough, and design and branding starts playing a role.
Country selection starts with knowing the drivers for your sales. Spending power can be one, ageing, internet penetration or urbanisation can be other factors. Presenting country data in a different way can show you which countries are the hidden gems, or which should be disregarded.
2. Do you know the market potential?
For each of the markets where you are active, do you know the market potential? Of course, you can buy reports for certain product categories, but what does that say about your specific segment? Do you know how your competitors are doing?
Researching the market potential and its growth is a necessity to decide whether you want to invest further in this market, or to enter another one. The market share per country should be mandatory in your sales manager’s quarterly reports. The process of estimating the market size in itself already gives valuable insights.
3. Are your distributors or agents active enough?
Of course you are happy with all turnover that your agents or distributors generate, but can it be more? Some markets may be tougher than others, but eventually the sales results depend on the activity of your local partners. How much time and money do they spend on promoting your goods or services? Are they eager to do business development and increase their market share?
You’ll only get a clear answer on these questions if there is an open discussion with somebody they trust. If that is not you or your export manager, then is makes sense to hire a local distribution specialist. He or she can also distinguish the real problems from the fake stories, and together with your business partner define and monitor a path for growth.
4. Can other distribution channels offer better margins?
You may be thinking: our contracts with our agents or distributors don’t allow that. This may be the case, but still it is useful to explore new sales channels. In the long run you may be able to shift to other channels or find a way together with your current distributors to use them.
E-commerce can especially be useful for specialty products, the ‘long tail’. When products are ordered at the source, your factory, you can customise the product itself or the packaging, thus adding value to the product. Your distributor’s outlets can become pickup points.
5. Are your export managers still traveling around the world?
If you export to many countries, your export managers will be traveling a lot. Dividing their time over multiple countries is a necessity, as often it is not economical to hire a dedicated liaison for every country. However, this has two major disadvantages:
- Export managers may spend up to 30% of their time on travel, and travel costs make them expensive employees
- An export manager can never master the culture of each of the countries he is active in, and his limited presence makes doing business effectively difficult.
The alternative is to work with local, part-time country managers. With flexible forms of work, this option becomes available more and more. A part-time local country manager can be right on the business when necessary, and can travel once or twice per year to headquarters, in order to align with your other employees.
Do you want to optimize your export further?
Alliance experts helps companies enter new markets, profitably. We deliberately placed this word in our motto, since for us it is an important focus. If there is no business case for your exports, you should not go ahead. And we like to help you looking at your exports from a financial perspective.