International distributors serve as our best customers. They purchase from us and provide a tremendous service by building our brand with all customers in a country. Some , large, short sighted , retailers attempt to bypass the system though direct purchases. This strategy is bad for the brand and not a good decision for the retailer either. Listed below are ten tips on what to tell a retailer to convince him to purchase from his local, authorized ,distributor versus direct from the overseas manufacturer.
1. Twenty Four hour delivery vs. Six week lead time
Most distributors guarantee delivery in 24- 48 hours .
This compares favorably to direct imports which typically require 6-8 weeks lead time.
2. Order by the Case versus by the Container
Distributors demonstrate tremendous flexibility and will handle orders of any size. Direct imports require minimum orders of full containers or at least multiple pallets to create cost savings for the retailer.
3. Promotional Funds
Local distributors offer periodic promotions to create excitement and drive consumer sales. Direct imports are usually based upon a “dead net” price with no access to trade promotion spending.
4. Category Advice
Professional distributors serve as in country experts on your brand and the category. They can recommend most popular flavors and sizes and what is selling well at other retailers in the market. Direct imports can represent “blind orders” with little insight into what is the best sku mix for the country.
5. Marketing Builds Brands
Direct purchase involves a low price and no investment in marketing activity.
The result is a foreign brand on the shelf , probably appealing only to the “homesick shopper”. Many of my readers have learned my story of Clorox’s Hidden Valley Ranch salad dressing showing up on the shelf of my Walmart in Argentina. Good news for me, but really a wasted effort , as no one in Argentina had every heard of Hidden Valley Ranch. Without marketing (or a local distributor), the product gathered dust and was soon discontinued.
6. Product Registration and Stickering
Retailers buying direct must handle all registration,compliance, translation,and product stickering. In this scenario, Retailers become the contact of record in case of consumer complaint or product recall. Lots of work, better handled by a distributor that is scaled to handle this paperwork.
7. In Store Merchandising Required !
Merchandisers ( shelf stockers) represent a fundamental part of the supply chain in emerging markets of Latin America (especially Mexico),Middle East, and Asia. Direct import brands without merchandisers frequently find their product stored in the backroom or buried on the bottom shelf with limited visibility. Any exporter who believes that the retailer will adequately handle the merchandising probably bets that the Chicago Cubs will win the World Series and that Buffalo Bills will win the Super Bowl and that Poland and Paraguay will play in the World Cup final.
8. Fixing Out of Stocks
Out of Stocks are a part of the business. Brands represented by a distributor face periodic out of stocks due to high sales turnover. However, these out of stocks can be fixed quickly through access to local inventory. Brands obtained by direct import can not fix out of stock conditions overnight. They must await the arrival of the next container. Frequently, I have watched out of stocks linger for a month or more, as a direct import retailer waits for inventory on all brand skus to run down before placing a new order.
9. Payment Terms & Currency Fluctuation
Distributors offer payment terms,usually 45-60 days and assume all currency risk. Direct import purchases may require advance payment or terms starting from date of overseas shipment. We have all witnessed dramatic currency swings in the last year and the retailer could end up on the wrong side of the equation.
10. Customer Service-Who to Call ?
A local distributor is ready and waiting to solve any of the routine problems that occur in our industry. This cycle of resolving issues becomes time consuming and complex when the retailer and manufacturer are separated by thousands of miles and time zones away.
The system of leveraging international distributors as local experts exists for a reason. Distributors provide a service and are dedicated to building your brand at all customers in his country. Retailers who try to circumvent the system through direct imports don’t care about your brand! All they want is a better price. Distributors provide a tremendous service to brands and retailers , as evidenced by our Ten Tips above. One final tip….If a retailer calls to Direct import, give him the phone number of your local distributor.
Greg Seminara, Export Solutions
