If you're looking for ways to grow your company's sales and expand into new markets, using a European distributor is a great route.
International distributors can offer a range of advantages, from accelerated sales to specialized knowledge of the market.
This blog post will explore various advantages of using distributors in export markets to grow your sales.
What is a distributor?
A distributor acts as a middleman between the producer and the end customer.
They purchase the products from the exporter and gain ownership, meaning they can set the price and terms of sale within their defined territory.
The distributor then sells the products to the final customers, adding their profit to the price. Essentially, distributors take on the responsibility of getting a product out to the market and into the hands of consumers.
Without them, the supply chain would be tough to manage, and we may not have access to many of the products we enjoy today.
The advantages of having a distributor
A European distributor can benefit companies looking to expand their reach in various ways:
1. Knowledge of the Market
Having a European distributor can help you penetrate competitive markets by utilizing the trust their customers have in them to promote your products/services.
2. Native Language Negotiation Skills
They can provide valuable insight into the culture and help navigate any cultural differences or negotiation skills needed, making it easier to maintain customer satisfaction.
3. Accelerated Sales Process
Working with a European distributor can open doors and give you a ready list of prospects that would make sales easier, eliminating the time-consuming task of promotion and prospect building.
4. Import, Logistics & Local Marketing
A distributor can simplify paperwork, product registration, and import processes.
5. Alleviate the Burden of Day-To-Day Sales
An externalized sales team can help alleviate the burden of the day-to-day sales process, allowing you to focus on other areas of your business.
6. Currency Risk Support
A distributor can manage currency and other in-market risks, such as regulatory affairs or compliance.
7. No Need to Hire Local Staff
You're provided with local staff and services that take care of complex tasks like taxes and rent so you can focus on your sales.
8. Local Stock & Delivery Times
A European distributor can provide local products and services quickly and efficiently, offering an advantage over sales agents.
How quickly can you expect results by using a distributor to grow your export sales?
Patience is vital when using an international distributor to grow your export sales. It takes three to four months to establish a relationship and get the distributor up to speed with selling your products or service.
You'll need to give it about a year to get your brand known in the market. This involves visiting clients, sending out email campaigns, and attending trade shows. It can take up to three years to reach a decent speed of sales, so it's essential to keep an eye on your growth and set achievable yearly goals.
If your distributor isn't generating good sales within three to four years, it could be due to external market conditions or simply that they're not the right fit for your brand.
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Disadvantages of using a distributor to grow your export sales
While there are many advantages of using distributors, there are some disadvantages to consider.
You may not know who your end customers are, leaving you detached from important feedback and insights. Additionally, you'll have less control over local pricing and marketing activities, making it challenging to maintain your brand identity.
You'll also need to trust that your distributor can provide adequate after-sales services, which may not always meet your standards. Ultimately, working with a distributor means trusting someone whose interests may not always align with yours.
Finally, there's the issue of negotiating margins, which can ultimately lead to less revenue for you.
Advantages of Using Distributors: In Closing
Ultimately, working with European distributors can benefit your business, since it helps you access overseas markets and establish a global presence.
The advantages of using distributors far outweigh the costs and can have long-term implications, making it an attractive option for businesses seeking success beyond their current local markets.
By weighing the pros and cons of working with a distributor and taking into consideration the competition in each European country you're targeting, you can ensure that you make an informed decision regarding the best way to grow sales in Europe.
Wherever you decide to turn next, our team at Masson International is always here to help: our experts are experienced in developing and growing businesses in Europe.
Click here to learn more about how we can support your European venture today!