As a company, you are probably wondering if finding a European distributor is the right way to sell to European customers.
Usually, there are only a few ways that you can penetrate a new foreign market. You either decide to do it yourself by creating a subsidiary or with direct sales. Or you can do it through a partner, such as a co-manufacturer, a distributor, or a sales agent.
Finding a European distributor is a good way to quickly penetrate a European market and start selling to customers. The risks for you are lower than a direct investment, and they can quickly drive new sales for you. The main benefits of this approach are shown below.
1. Competitiveness of the European market
The first advantage we see in going through a European distributor to sell your products or services locally is that European markets are very competitive. There are many products and services available in the markets. Thus, it is hard to take a spot within some of the markets. Having a European distributor with regular customers gives you an advantage in penetrating the country you target. The trust their customers have in them will open the door for the first presentation of your products/services.
Your distributor can quickly send you market feedback, run trials or demos of your products/services. Before selling in any new market, you always have to promote your company and make a name for yourself. It usually takes time. Why don’t you take advantage of your European distributor’s name and use the trust their customer base has put in them to promote your products/services ?
2. A European distributor accelerates your early sales
In general, when you first do your promotion, it takes time. Then, you start building a base of prospects. Finally, you start selling the first products or services. As mentioned above, just the first step of promoting your name and starting to open a few doors is time consuming. Your European distributor can provide open doors AND an up-to-date and curated list of prospects. Potentially, it could take just one call from the distributor’s sales representative to make a sale.
3. Deals with import, customs clearance, and administrative documents
Having a European distributor also means less paperwork. The distributor usually deals with the official registration of the products, import and customs clearance, and administrative documents. If you decide to open your own subsidiary, you will have to handle all these tasks yourself and recruit staff to do so. A great number of importers have import assistants in the company and contacts at the product registration office. While your job is to prepare the export documents, their job is to make your life easier for everything else.
4. A European distributor means a local stock and installation service
Nowadays, delivery time is an important sales advantage. A European distributor can provide a local stock for your product. This is one of the few important things that separate distributors from sales agents (to learn more about the differences between a sales agent and a distributor, download our white paper, The ultimate guide to finding a distributor in Europe).
The mission of a European distributor is to make sure there are enough products in the warehouse and that the delivery to customers is smooth and quick. If you are a service provider, do not underestimate the benefits of having somebody on the ground to re-sell your services in the local language, with a local phone number, and in the same time zone. The same goes for software companies that require installation or local support.
5. Easy business model to set up
Finding the right European distributor is not always easy. Nevertheless, establishing a contractual relationship with one is not that difficult. It is a quick and easy to set up solution. That being said, be careful because some local regulations are tough with principals and defend the distributors. We always recommend that our clients draft the distribution contract with a local business lawyer.
6. No need to hire local staff
A European distributor provides you – indirectly – with local staff. Within the distributor’s company, you will find an import manager, after sales technicians, installers, sales representatives, warehouse managers, regulatory affairs managers, accountants, etc. There is no need for you to open a subsidiary, hire staff, pay all the taxes, pay rent, etc. You are free from all those complex tasks while somebody smoothly runs your sales.
7. Local after sales and installation support for your customers
These advantages are relevant whether you are selling products, software, or services. When clients know there is somebody in their country who speaks the same language and can visit them to fix any problems, it usually drives sales. A European distributor can provide you with this kind of support.
8. Business culture
Often underestimated, cultural differences can curb your sales. You may have a method of selling that does not fit the market. Even worse, you could have a product that does not fit the local needs. A European distributor is here to guide you. It will help you adapt your products or services. It will also make the bridge between you and your local customers.
To summarize, working in Europe through a distributor can be highly effective, although it can be hard to identify the right European partner in the first place. However, it is quick and easy to set up a solution after that. A European distributor can help you overcome many obstacles on the way to getting your new customers. However, it is not always that easy to find one, this is why we have prepared for you a dedicated blog post on How to find a distributor in Europe.
If you would like to compare the five different solutions to entering a European country that is new to you, feel free to download our free whitepaper: The ultimate guide to finding a distributor in Europe.