International distribution strategy is the process of selecting the right export countries, finding the right distribution channels and positioning your product or service in such a way that your sales starts to grow. This requires local knowledge of the market and a well-structured plan.
Do you want to use the experience of others in your decision making? With local specialists in over 30 countries, Alliance experts helps you define your optimal roadmap for market entry and execute it. In each of the ten steps below, we will be at your side.
Initial country selection
If you want to export, then you need to know what drives the sales of your products or services. For trainings on cybersecurity, you may have to look at the countries with the biggest IT industry. For hearing aids, the countries with the most ageing population are relevant.
Typically you should look for the markets where your product category or the demand for your services is growing. This provides the best chances for newcomers. Or you should have an ‘unfair competitive advantage’, that others can’t copy easily.
With general country data, which is for example available in the World Bank database or websites like Trademap, you can find information to make a first selection of a few countries that may look promising.
Market verification check
With global trade data and some desk research you may already make a first country selection. But also check what competition you can expect. It may be easier to compete in a market with many smaller players than with one big incumbent. Unless you have very clear competitive advantage or there is a niche that only you can serve.
In the market verification check that we do for our customers our local partners in the country always look at the following:
- The suitability of your product or service in their markets. Is your offering useful and does it fit the local culture, habits or trends?
- Publicly available data on market size, to get a first impression.
- Possible distribution channels.
- Potential competition and their price range.
With the information that we gathered we can have a discussion with you on the best market entry strategy for your company, also given your experiences in other countries.
Regulations and localization
You don’t need to dive yourself in the legal bureaucratic procedures in the local language of the target country. Instead, our local partners in as many countries as you like will scan the applicable regulations and report on the following:
- Are relevant licenses, permits, certifications and tests from your own country accepted in the target country?
- Are there any import duties or levies that may impact your margin structure?
- Should the involved documents be translated into the local language(s)?
- For innovative products: what is the right product category to position it in?
- What are general regulations, laws and restrictions on labelling and user instructions?
- Do you need a law firm, customs broker, local distributor or to start your own legal entity?
Apart from this, it is up to you in how far you want to adapt your product, service delivery, sales materials and payment methods to the local market. Alliance experts can help you make the right choices with our local knowledge.
Choosing the right distribution channels
If you want to enter a new market, in general you have three options how to set up your local sales:
- Local departments. This means hiring staff and facilities and initiating all marketing yourself. It is often the most expensive way of entry, but gives you complete control on distribution. It may work best for bigger markets, where the cultural differences with your home country are limited.
- Working with channel partners. Distributors with experience in shipping and importing have the fastest and easiest procedures when it comes to selling products in the foreign markets. For selling services or customised products agents or resellers can perform a similar role. This way you can expand to more markets with less costs.
- Online. If your product is standardised and can be easily shipped, then online sales is certainly an option. Platforms like Amazon, Alibaba or eWorldTrade facilitate marketing, deal-making and payment, but you can also invest in your own website. Local distribution partners may play a role in the import process and shipping your goods to the buyer. Online sales may seem easy to set up, but often the investment needed in advertising and promotion is substantial.
We see that working with a channel partner like an agent or distributor is often the preferred way of exploring a new market.
If your product would be the ultimate solution to a pressing need in a market, then any distributor or agent would have found and approached you through the internet already. This means that you have to convince your potential channel partners why investing their time and shelf space for your product is a good idea. In order to have a compelling story, you need knowledge of their current portfolio and answers to the following questions:
- Where would your product be positioned in their portfolio? What new customers would it attract?
- What pricing do you suggest? And how much margin can they get?
- What current part of their offering competes most with your product? Should they abandon this? Make an estimate of how much margin that product brings them now.
- What is your estimate of the market potential? How quickly will this be realized and what investment are necessary?
- What comparable data do you have from other markets?
- How are you going to support them in introducing your products? Have you already marketing materials or channels (like social media) lined up for this?
Alliance experts knows the market and can help you formulate or check your answers. For example we look at your brand value with the Brand Asset Valuator Model of Young & Rubicam, that takes differentiation and knowledge as important aspects. Especially if you only have a few potential channels, then your pitch should be spot-on, and you should have the right cultural awareness in your approach.
Channel partner search
Typically there should be a fit with your channels partners on three levels:
- Technical: they should be in the right segment of the market, have the right knowledge, network and capacity to handle your products or sell your services.
- Strategic: it should also be important to them to work with you as a partner. It should fit in their strategy and add value to them.
- Cultural: preferably the companies should have a similar background, way of doing business and view on how to deliver value.
Of course, you can start to work with channel partners who do not tick on all aspects. But eventually, if you want to grow together, all three points are equally important.
Alliance experts has a decade of experience in finding the right channel partners for you, and can do this in over 30 countries.
Negotiations & contracting
Although the first conversations with potential channel partners are mostly pleasant, the true test is entering into negotiations. Here it helps if you know what to expect in the market: research in competition, alternative channels, pricing etc. will pay off. In addition, some cultural knowledge is supportive. Everybody knows that negotiating in Germany is different than in Japan. But what exactly are these differences and what are the tricks?
Alliance experts know how to distinguish a polite yes from a real yes. This way you can move faster towards closing a deal. For this you may need a local lawyer, because even if your strategy is to impose the law of your country on a distribution or agency agreement, local law may make this impossible. Therefore please check the legal requirements for your contract, and especially in the case of agents, the way they are protected.
Distributor management and benchmarking
Distributors are like employees and customers in one. They represent your company and sell your items like an employee while having extremely demanding requirements of a customer.
Many companies seem to be happy enough that they have a distributor in a specific country and do not push too hard for more sales. But especially if you have distributors in various countries, it can be good to benchmark them against each other, taking into account market size and the period that they are active for you. Setting out these aspects in a graph will quickly show which distributors are outperforming and which are staying behind. But this is only the beginning of the optimization process. The next step is to sit with the distributor to find out where the problem is.
Alliance experts has the knowledge of the local circumstances and can create a better rapport with your distributors or agents. We can have a more relaxed discussion and get to the real problem why sales is lagging behind. This can also be the market fit of your product or delivery problems. Our local experts can check whether this is just an excuse or that you really need to take action yourself.
Online marketing, advertising and PR
Even if you have found an active and capable distributor or agent, you still have to push your product and create traction in the market. After all, it is your brand, and you want to decide what gets on your social media, ends up in advertisements or even better: in newspaper articles.
Alliance experts can help you localise your brand message beyond the level of just translating your materials. Because we know that ‘Buy now!’ can be experienced as too direct in Japan and that French people may not like your food product at breakfast, but at lunch. We can suggest great mid-sized marketing agencies and manage them on your behalf, and support your PR, thus optimising the value that you can create with your budget.
Direct sales support
In case the market only has a few big prospects that you are interested in, or there are important clients that your distributor can’t handle, then every step to them should be the right one. Our export developers can prepare these steps with you, map the decision makers, reach out to them and introduce you. We use our personal networks, very focused local advertising, or may even visit events where they speak.
You can see us as the temporary and part-time extension of your team. Hiring us gives the following benefits:
- We are short-term available and productive from day 1.
- No need to set up an office abroad and hire somebody full time.
- No search agency fees and training costs.
We mostly work on a fixed price basis, with a clear scope and deliverables, or with a monthly retainer if the activities are more diverse. We would be happy to have an extensive call with you, see where we could help and provide you with a detailed proposal. Just contact one of our team members, or use the button below and let us contact you!