As 96 percent of the world’s consumers live outside the U.S., American companies that export their products tend to have higher margins, higher sales, and higher exposure than others, said Peter Guyer, founder and CEO of Athena Marketing International, during an SFA sponsored webinar, Thursday. In addition, adding an international market for a product reduces dependence on U.S. markets and helps to stabilize a business through economic downturns.
Guyer and Bob Jones, vice president of international sales at Athena, gave advice to brands that are looking to export their products and how to build an export plan.
Becoming Export Ready
“One of the most critical aspects of going international is that you need full support from the whole company. You need to get your resources aligned, do your homework upfront, and make sure you aren’t short on inventory,” said Guyer.
To determine whether or not your brand is export ready, Guyer suggested considering the following aspects:
• Product knowledge. Do you have top management’s commitment to provide direction, financial support, and critical resources to enter foreign markets?
• Market opportunity. Has your company received purchase inquires from foreign buyers or identified foreign market demand for its products and/or services?
• Operations commitment. Are your ingredients and packaging compliant with your target export markets? If not, what steps are required to ensure compliance?
• Finance capability. Does your company have a business plan with secured financial resources that will fund its market entry and export activities?
Once you determine you are ready, you can begin to build an export plan. According to Guyer, a robust export plan:
• Matches the amount of resources with achievable goals
• Identifies the cost and actions to become an exporter
• Prioritizes market entry strategies and target markets
• Ultimately becomes part of the overall business plan
Choosing and Working with Distribution Partners
Many companies choose to enter the market indirectly, through a third party that purchases the product in the U.S. and sells it overseas, because it is a low-cost, low-commitment option.
However, Guyer said he’s seen more success when companies work directly with local importer partners. “They are the experts; they know the language, the culture, and they have current relationships with the market,” he noted.
When evaluating a distribution partner, Jones recommended considering whether a company is financially sound (can they pay bills now and weather storms down the road?), if they are already established in the market, and if they are ready for growth. He also recommended checking references, both financial and for other companies the partner may work with.
To establish a strong relationship with a distributor partner, communication is key. Both the brand and the distributor need to have regular communication check points (Jones suggests annual and quarterly reviews) and to be proactive as problems arise.
It’s also important to note that many partners will expect that the brand owner will support them in marketing, social media, and e-commerce efforts. Guyer suggests keeping your online presence updated, making sure digital assets are available to foreign partners, and keeping in mind any type of packaging compliance that may be different between the U.S. and other countries.
Related: Co-Packing Agreements: What You Should Know; Selling to Supermarket Chains: What You Should Know.