If you’re new to ‘going global’, working with a local distributor can be a good way to enter an international market.
Teaming up with a business that already has feet on the ground can bring huge gains. Whereas your business probably has specialist expertise in a particular field or technology, your partner will have deep local knowledge and a nuanced understanding of ‘how things work around here’.
If you can find a reliable distributor, this approach can supercharge your reach in a new market. Whereas you, as a business owner or single salesperson, can probably do an absolute maximum of one or two hundred meetings a year to promote your product in an overseas market, a distributor with dozens of representatives can do thousands or tens of thousands. Working with a distributor means that the potential for sales overseas is exponentially greater than working alone.
So how do you go about finding a distributor who you can trust?
Select distributors, don’t let them select you.
The task of finding a distributor in a new country can seem extremely daunting, especially when you don’t have many connections there. And it’s no secret that sourcing partners from trade directories or striking up alliances with distributors who ‘discover’ your company at trade fairs can have very mixed results.
It’s often tempting to work with people who approach you and want to work with you, especially if you don’t have a lot of alternatives. But here’s the truth: the most eager potential partners may be precisely the wrong people to work with, because it’s often the case that the arrangement serves their interests better than it serves yours.
So when an agent or distributor you meet at a trade show tells you how much they love your product and how keen they are to take it on, stand back and do your analysis. Make sure that the partnership is one that will really serve your interests before you sign up. The take-home message here? ‘Select partners. Don’t let them select you.
Do your research
Before choosing an overseas partner you should do rigorous research and speak with a range of potential distributors – perhaps four or five – before narrowing the list. Before making a final decision ask your potential partner for trade references, and also consider using a professional credit checking agency to confirm their financial stability.
Meet in person
Wherever possible, you should meet distributors in their own market rather than in your home country. They should show you the market firsthand, which will give you a feel for how well they know the market and give you a chance to get to know them better as a person.
Exporters who rely only on email communication with overseas distributors often have misunderstandings leading to problematic relationships. While email is ideal for confirming discussions, meeting in person or via video in the early stages can go a long way towards reducing misunderstandings.
Communicate first, contract second.
The most important factor in choosing an agent or distributor is that you can establish a close working relationship. Business is much easier to transact if you enjoy working with each other and so you have. So look for a distributor that you feel comfortable with – one that has the right skills and values that align with yours.
Remember that you are relying on your representative’s local knowledge and contacts to win business in the market, so make sure that the relationship is real. You may need to meet several times to build a relationship and work through the fundamentals of how you will work together and what should be included in an agreement.