Overseas Expansion Talk: What are the challenges with exporting goods abroad?

What are the common pitfalls when it comes to choosing an export partner?

Overseas Expansion Talk: What are the challenges with exporting goods abroad?

Jacob Thundil MBE, founder and Managing Director of Cocofina took to the stage on the second day of Elite Business on 12 March in the Overseas Expansion talk, sharing his top tips on how to pick the right export partner for your company – and the common mistakes to avoid.

Investing in new markets can be expensive. Therefore, it’s essential to carefully choose the distributor you want to work with. Distributors purchase your product to resell to customers. They then the selling price and generally ensure the management of stocks, delivery and after-sales service in the target market. Businesses should make sure their distributor lines with their business. It’s important to consider factors such as the size of the distributor as well as what other products they distribute – as you don’t want there to be a clash of interests. For example, distributing your health food products to a sweet shop chain may not be a viable option for your business because of the types of customers that chain would attract. Jacob explained: “We choose to work with a local partner exclusively, we help them to understand our products, we support them with the marketing, but they give us local cultural know-how and they also open doors for us in the local market. So, it’s very important who you choose, and we’ve chosen the wrong type of partners before. We look at sector experience. Has the partner ever sold food before? What is the size of his business? 

“Because you can interface with the wrong sized company. When we were in Japan, we were approached by Mitsubishi. It’s one of the largest companies in Japan, they produce everything from pencils to rockets. But their catalogue was so big. They suggested putting us in their catalogue. So, it might not be the right one for us. You need to be wary of the size of the company you’re working with. Also, look at the existing portfolio your distributors have. For example, if your distributors are selling candy and you’re trying to sell healthy food. Often, the buyers that come to buy candy won’t be drawn to healthy foods. It’s important to know their existing portfolio and what existing channels they distribute to.”

It’s also important to meet the people behind the business and know who you’re working with. If you’re building a long-standing relationship with a distributor, you should understand how they work and whether they are a right fit for your business. Jacob added: “Do they line with you in terms of ethics or ethos? Who are the people behind the business? Sometimes you meet a mid-sized company and you don’t get to meet the people and later on down the line when the product starts to sell, you end up meeting the people behind the brand and think you wouldn’t have worked with these people, or should have met them before. It’s very important to meet them upfront.”

Businesses should avoid selling their products to a distributor if there is too much competition with other brands. If the distributor already sells several products that are similar to yours, it might be worth looking for another export partner. You want your brand to stand out among customers. Jacob continued: “Is there any conflict of interest with your export partner? When we work exclusively with a distributor abroad, we look at the conflict of interest. Because if two products are exactly the same, which one is he going to present to the market? Which one is he going to say is better? So, there is an issue there.”

When it comes to exporting abroad, it’s important to visit your distributor across the border. One trip can save you from months of hardship down the line. Even with advancements in technology, such as Zoom and video chats, nothing beats observing the day-to-day running of your distributor in real-time. Jacob explained: “With Covid, make sure you visit your distributor. Sometimes a glossy website and corporate brochures are very nice to see, and Zoom has backgrounds these days. You might see the seaside but you don’t know what’s behind it. It would be useful to go visit them.”

Don’t necessarily choose the first distributor you meet. It’s important to pick carefully as you will be contractually bound to them. Business owners should filter out distributors that are suitable for their company, and which ones you need to pass up to ensure longevity and sustainability in the long run. Jacob said: “As entrepreneurs, we’re always eager to make a deal work. Every lead is not an opportunity to sell. Some of them you need to walk away from. We had an enquiry last week and it was from an American company that was looking to invite us to tender for £35 million worth of condiments. The new business is two months and ten days old. At that point, we told them we were not ready yet. Every lead is not an opportunity. You have to filter them.”

Latifa Yedroudj
Latifa Yedroudj

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