In a world where geographic boundaries are blurring, conquering overseas markets doesn’t have to be such a tough proposition. It does raise some new operational issues for your business though, including whether this is something you should tackle yourself or engage the services of a local agent or distributor, which is why we’ve broken down some of the big issues to make international distribution sound less overwhelming, and more achievable. There are multiple distribution channel options available to you.
International distribution is the processes, relationships and fulfilment that you set in place to get your products into overseas markets. Not to be confused with international ecommerce. That’s just international shipping. International distribution is about wholesaling into new countries. If you choose to control distribution in each country you operate in you will need to research and understand your legal requirements regarding distribution agreements, customs & duty taxes, terms & conditions in each and every country.
The process at which you handle orders, fulfilments and customer data is crucial to successful international distribution and is the most underestimated.
Being in a different country makes it hard for you to manage and grow relationships, with issues such as debt collection you’ll find that your international customers, no matter how established, will take advantage of the physical and legal distance between you to drag out payments, if pay you at all. So having the correct terms for these customers is important.
So how do you overcome the issues of distance? You need to have good systems in place that create transparency and trust between you and your retailers. Having the correct distribution agreements, general terms of business and a general grasp of your legal requirements is important. With tools like TradeGecko's customer activity tab give you a complete and comprehensive breakdown of all the events that have happened with that customer i.e. customer opened invoice email at 10.34am on 03/02/2013.
Having the right relationships in any market is key. You need the right people talking about your product. We have seen a number of TradeGecko customers relocate staff members into their target markets to establish relationships with key accounts, opinion leaders, agents and media. This can be quite an investment but there's nothing quite like face to face meetings to establish a personal connection with who you’re dealing with.
It’s your obligation to fulfil your orders and retailers hate it when they don’t get what they ordered. In fact it can destroy your reputation and hinder your ability to every branch into that market again.
It’s a common theme among growing brands who enter into bigger markets, that they are completely overwhelmed with orders, can’t meet the demand, under deliver and are never ordered from again.
Start small in a big market. Like anything in growing a business, starting with small tests is the best way to find the right formula. Utilising international distributors and agents will give you quick access to a large number of retailers, but of course you will end up paying for this with margins. You need good systems (like TradeGecko) in place to manage the orders as well as confidence that your suppliers and manufacturers can keep up with the new demand.
You’ll also need to factor in shipping costs, taxes and other logistic fees which can be a nightmare if you are new to international distribution. Search for options and talk to others who are already shipping internationally.
International distribution is not an art, it’s a science. Make sure you have the fundamentals in place to minimise your risk. Start with your back office administration. Then evaluate whether you wish to explore distribution partnerships or go it alone, from all the discussions we've had with customers about growing international distribution we've learnt that it is a large investment that takes time to get it right.
This is the first article in our new international distribution series we will be releasing over the coming months.
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