Looking for a new market for your products? Do you want to go direct into this market, or select a partner to sell your products? Whether your product is a complex software solution or a plush toy, you want the right partners to be selling on your behalf, don't you? A partner you can trust, who understands and embraces your vision, who pays you what he owes when it's due.
Whether you are going direct, or are hoping to appoint a reseller who provides the sales and marketing expertise in your chosen market, there are fundamentals that apply universally, and I outline the 7 critical steps to success below.
Step 1 - Identify your preferred channel to market:
Selling from your home base via the Internet. This works with relatively low price items where a local presence isn't required
Using a Sales Partner. These are individuals or companies that have a local presence in your potential market and will sell on commission. Benefits are a local knowledge and a low cost of entry. Downsides include lack of knowledge of your product and vision, how much of your profit margin you have to give away, and the possibility that your great product ideas may be "borrowed".
Set up an international subsidiary of your own company. Whilst this gives you greater control over the sales function, the potential for higher profit, and direct contact with the end customer, the costs of entry are far higher.
Choosing a company that sells under their own branding. Gives you quick access to the market and potential customers, and is a lower cost approach to that of establishing your own presence. However, this does mean giving up your own brand name, risks the loss of your intellectual property, and can make you too reliant on the one partner.
Step 2 Decide whether to go Direct or Indirect. To summarize:
Direct: high investment costs, long time to market, requires high levels of management, and the cost of failure is high.
Indirect: low investment costs, quicker access to the market and its customers, lower level of management required, and lower costs of failure.
Step 3 Review your chosen markets Ease of Entry
You need to consider the following barriers to entry:
Language: if you are English speaking, consider which countries have English as first or second languages. If you wish to break into the European market, for example, then the UK presents a low barrier to entry, in the Nordic countries they are used to conducting business in English, so it is a medium barrier. In places like Germany, Spain and Eastern Europe this presents a high barrier to entry.
Competition: you need to carry out market research for the penetration of similar products into your new market.
Market size: you should consider your product affordability, and how big the potential customer base is.
Adoption cycle: consider how long it typically takes your new market to adopt similar products, and adjust your budgets and revenue expectations accordingly.
Step 4 Decide if you just want to market test a single new marketplace, or several at once.
The implications of this choice are fairly obvious if you choose a single market, then your exposure and costs are lower and your management focus can be given to a single area. If you go for multiple markets at the same time, then your investment in all these areas is higher, but the potential advantage you have a fast track to success, with bigger returns in a shorter time-frame.
Step 5 Choosing a Partner
If you decide to go the Partner route, then how do you select the best partner for your business? Firstly, make up a long-list of potential partners. This can be done by yourself, but I recommend you hire a salesperson who has experience of products similar to yours. This research can be kicked off by trawling the internet vendor websites are a good starting place.
Look at the partners of your competitors, as they could be a potential source of reseller, particularly if your competitor is struggling or if the reseller is looking to move away from being reliant on a single source of supply.
Step 6 Convincing a partner that you are the right choice for them
How do you make yourself an attractive prospect for your potential partner? Initially they will see you as a risk, not an opportunity. The key thing to bear in mind is that the partner will love you for the money you can make them, not for how great/wonderful/cute/cutting edge your product is.
When approaching your potential reseller, be clear on what your proposition is. Tell them how much they could sell your products for, what margin they could expect and be clear on what your product does.
Prepare a one-page overview of your proposition. This should include all of the above items, plus a profile of yourself and reasons why you would be good to do business with.
Step 7 Weed out the Timewasters
Some potential partners will express an interest in you to gain market intelligence about your business. To weed these out, prepare a Partner Application Form for them to complete. This will help to get rid of the timewasters and those with a casual interest. Include questions on sales for the past few years, trade and client references, a profile of the company, and ask them why they should be chosen. Be careful not to make the form too onerous or you may scare off genuine interest.
In conclusion, if you are intent on taking your products to foreign markets, then decide if you wish to take on one or several new markets, select these markets very carefully, know why you want to go for them, be prepared to spend money, localize your products and your marketing, and think long term!
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Jan Norman has lived and worked on three continents (USA, Europe and Africa) and run two businesses. He currently runs the on-line toy retailer Fat Banana Feet, based in the UK. Feel free to visit http://www.fatbananafeet.com
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