How to compete with your product in the global economy? How can you manage product distribution from a few thousand miles away? How does one keep up with the competition?
International distribution strategy
There are three ways to set-up global distribution of your products:
- International departments. Setting up international departments means that your brand will directly enter another country’s market. This gives you complete control on distribution, but elements like personnel, training, compensation and cultural background should be considered.
- Online. Export has entered the internet and is now utilising online tools to send out products into the world. This has threatened certain foreign distributors, in fear of their services becoming obsolete within the global market. Although internet may take over the sales function, promotion and shipping continue to stay offline to a large extent. Local distribution partners may play a role in this.
- Working with distributors. Export management companies and export consultants can arrange your product distribution in foreign areas. Distributors with experience in shipping and importing have the fastest and easiest procedures when it comes to selling in the foreign markets. These companies help in establishing your company overseas by exclusively handling the distribution of your products.
International distribution channels: how to find and manage them?
Finding a good foreign distributor takes time and funds, but an efficient foreign distributor could bring in revenue in a fast and steady manner.
To get your desired distributor or retail distribution chain, you will need a clear product offering and convincing arguments why a distributor would benefit from promoting it. How will your product range bring him more profit than what he already has on the shelves? On the other hand, you will have to check whether the distributor has enough reach and a good reputation.
Distribution in a foreign market requires hard work from both you and your foreign distributors. It’s not just the relationship that you aim to maintain, but the brand that you wish the world to acknowledge that’s at stake. This requires constant checking, especially in the first period. Visit your distributor, provide product trainings where necessary and consult about marketing promotion.
Checklist to evaluate your export distribution channels
Here are some more items for your evaluation checklist to identify the right distributor:
- You must first look into the company’s reputation - both its recent and long-running issues must be carefully scrutinised.
- The company’s competitive profiles would come next. How they stand against other foreign competitors and local favorites will provide you with an insight to their performance.
- You must weigh the expectations of the company on your distribution support. Avoid picking foreign distributors whose demands outweighs their services.
- Discussion of requirements for minimum inventory is also considered as an evaluator. Foreign distributors will display their best performance, and it’s up to you to make them prove their capacity. Choose a distributor that could work around the limitations of your inventory.
When evaluating the candidates for your distribution, keep in mind how well they realise your goals for sales revenue for their country. Perhaps you should not promise exclusivity and work with multiple distributors.
How to identify the wrong international distributors?
Avoid dealing with wrong distributors. Some distributors don’t act according to the rules and regulations of the manufacturer even in a good marketing environment, which eventually ruins the good reputation amassed by the supplier if left unattended. Examples may be:
- Distributors who have inadequate stock of your items could be damaging towards your company’s image
- Some distributors hire inefficient counter staff who lack selling experience
- Several distributors don’t give their manufacturers the chance to personally train the staff, for fear of losing their staff’s time.
If you’re a supplier who heavily relies on your distributors, learn how to pick the distributors who can retain your brand image amidst the various other brands that they’re selling.
Export distribution strategy
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. Some international distributors focus more on the business with regard to sales rather than technical service.
Difficult technical problems are usually handled by suppliers while trivial technical issues and support are covered by the distributor. Ideally, there should be a good rapport between the distributor and the supplier to optimize distributor performance.
An important factor in the relationship is the distributor margin. You will have to see what a reasonable retail price is, and which part of the margin between the retail price and your cost price you should give away to the distributor (and possibly retailer). Balancing these margins will also help balancing the relationship.
Always be aware on which way the dependency works: is the distributor dependent on you or are you dependent on the distributor. Especially where it comes to large scale retail chains and supermarkets you may have to pay first to get your product on the shelves: listing fees or slotting fees.
Enhancing the supplier-distributor relationship
Promoting good camaraderie between you and your distributors is the key to achieving ultimate success in your business endeavors. As an empathetic distributor, you should know that your distributors are your employees and your customers.
Here are a few steps in ensuring a smooth supplier and distributor bond:
- By sharing your vision, practices, and resources with your distributors, you can create a link of trust that could harmonize mutual benefits. This could also keep your distributors interested in the kinds of service you will offer to them.
- You should be willing to help your distributor’s business succeed in their endeavors. To achieve this, you should know your distributor’s company like the back of your hand to create an impact on your trade relationship. In this way, you’ve also garnered their respect for your company and their sincere assistance to help you reach your ultimate goals.
- Feedback from end customers is essential in creating a harmonious relationship between you and your distributors. Feedback can call out service or item incidence regarding your items. As a supplier, this feedback could improve your service and items, which in turn, increase the sales and positive image of your distributors.
- For your international distributors, it is necessary to learn about the culture and traditions of your distributor to avoid being intrusive or seem dictatorial to them.
Distributors are partners. As a manufacturer, you should learn to treat them with respect the way you would treat your own employees. Distribution, especially international, is a specialized function that requires great expertise.
Suggestions for further reading
- Difference between an agent, distributor and a franchise
- Typical costs for international transport and global distribution
- What is a reasonable margin for your distributor?
- Your international sales agent: what margin or percentage to pay as fee?
- Selling in China: how to do international business with the Chinese?
- How to find your agent or distributor for export to Japan?
- Best tips on export to Germany