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Market Entry: What’s Your Export Strategy?

Estimated reading time: 7 mins

Go to any store close to your home. There’s an extremely high chance that you will encounter many products that are made outside of your country. They got to where they are through the export and import market. Products that you haven’t even heard of and perhaps nobody close to you has heard of either, are all present in lots of different stores both in retail and online. There was once a time when the barriers for the export market were too high for a small business. You had to quite literally, land at the beaches and force your way into the market by actually being there physically. Setting up an offshore base from where you could command your business was the only way. This was incredibly costly and perhaps a life-threatening expansion for a small business. Hence why only large and some medium sized businesses ever took this risk. Thankfully however this has all changed and it’s largely due to two main factors. One and easily the most important, technology has pushed means for technology-based companies to reach far and wide. Secondly, the logistics that make the export market possible have greatly advanced and diversified. Both ways are now viable options for small businesses as they are now more affordable than ever before.

The premise of market entry

The sole objectives for a market entry is to gain new customers, plug a gap in the market and become a viable choice for the average consumer. This is going to be a new market as the intent is to export your goods to another country. The market in whatever country you are entering will have some key differences which you will need to adapt to. First and foremost, the simplest to understand is the language barrier. Your products will need to have their instructions and packaging translated into that new market’s native tongue. If you are also entering via your online business then your website will need to have an option that allows users to change the language to the new market. Those that are connecting from the new market will of course automatically need to land on the already the new version. The second is to price yourself competitively. You may be able to charge £30 for your product in the UK, but if you’re selling it in a poorer nation you will need to lower that. This gives rise to the third difference in that quality will need to be reassessed. Perhaps you can make a downsized version of your product for a new market.

You can make it of lower quality for a poorer nation since you wish to meet the average consumer’s price range. Consequently, you may want to increase the quality or expand the options for the product and or service for a rich nation. You will need to adapt while also staying true to your business ethos and quality.

Shipping is still a risk

Selling retail products comes with its own challenges when you are entering into a new market. You’re obviously still making the product from your current location and quite clearly means they will need to be shipped. Shipping has changed a lot and become more affordable but it still remains a risk for many small businesses. The costs are still on average, high and thus not many small business owners can see this way of transporting their goods as an option that will remain feasible. The reason for this is international cargo ship companies are forever going to be an expensive business to operate. So if you plan on shipping regularly, which could be around 10 shipping containers every month or possibly more, then you are taking up a sizable chunk of space on board.

Instead what you can do is work with a fulfillment company such as Amazon or eBay. These incredible behemoths have a lot of logistical power. They are very large multinational businesses that spread their reach far and wide, high and low. Working with such a company will allow you to not only use their warehouse storage facilities, but also sell your products online in your targeted new market. When a customer buys your product online, the fulfillment company will take care of the international shipping for you as well as delivery to the customer. This is perhaps one of the best options for any small business looking to enter into a new market via the retail product route.

Sifting into a neighbor

If you’re in a landlocked country or share a border with another nation, then you can simply sift into the neighboring market. It will be a lot easier to export your goods to this new market because you can set up a sustainable logistics plan that will only improve over time. However the first step is to set up a warehouse from which your good may be delivered to that country. Of course this means you will only be available in some regions or cities to begin with but the plan is to slowly expand into this new nation by replicating what you will do at the beginning. Once you have bought and set up the warehouse to become fully operational, which is itself a big task, you’re ready to begin transporting your products over the border.

For this you’ll need a good old trucking solution. Freight trucks are a very good choice for a small business as you have full control over the transportation of your goods. It also means that because you have more control you have the ability to time manage much more effectively. First you need to amass a fleet of trucks. Transport trucks are not cheap and buying your own small fleet will cost you hundreds of thousands. You can use financing to swerve around this hurdle and utilize something like a Truck Finance Calculator. You will need around 20% of the overall loan for a deposit. However you should also explore the ‘no deposit truck finance’ options that you may be eligible to. No proof of income is required for a loan that amounts up to $500,000 which is capable of buying at least two or three of the most modern haulage trucks. Once you have this fleet assembled, you can constantly have them going back to and fro from your manufacturing facility or warehouse, to the neighboring country. From then on you may wish to have the trucks make their deliveries to a new warehouse that you have set up, or if you have struck a deal with a distributor straight to their own storage facilities.

Branching off and teaming up

Joint ventures are a great way for two companies that have a shared goal to achieve it by means of cooperation. This is the fantastic world of business and trade, where anything is possible as long as you have the will to make it so. Finding a company that would make a great partner to your business and also wants to enter into a new market could you be your ticket to making it a reality. This is why you should go to industry events, exhibitions and conferences that will allow you to make such contacts. You just never know who you’re going to run into at one of these gatherings. You could find a partner that wants the same thing you want and if the foundations are right, both of you can balance each other out. A couple of good examples of a joint venture is Sony Ericsson and MillerCoors. Sony being the company that creates the product and Ericsson that focuses on it’s communications. Millers being the large distributor of beers and Coors being the product creator. However what you can see, is that they both form a new separate company together to achieve this.

You will need to create and agree upon a joint venture agreement. This is a very complex and important piece of legal framework. However it’s to hold the two parties to account and responsible for their end of the partnership. If you are a clothing line and want your products to be sold in another country, you may want to partner with an international clothing distributor. Merging your two names together, would let your consumers know that you are part of this new company. This may not be what you want, but if you don’t have the funds and need a partnership to land more well adjusted into the market, this is a brilliant way to make it happen. Sharing the profits is standard practice but this can and should be negotiated in the contract creation and signing.

Market entry is a very exciting route for any business. You’re going to be introducing yourself to new customers and spreading your name around. It’s now easier than ever for a small business to develop a grounded export strategy. You can use the traditional method of shipping but this remains an expensive option. You can however use a fulfillment company such as a massive multinational exporter of goods such as Amazon or eBay. If you would like a helping hand and would like the strength that a partnership brings, then a joint venture is the route you should explore.

 

About the author /


Simon is a creative and passionate business leader dedicated to having fun in the pursuit of high performance and personal development. He is co-founder of Applied Change, a Business Change consultancy based in the UK. Simon is also an Ambassador for Gloucestershire business. Simon is an Associate Member of the Chartered Institute of Professional Development.

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