Volume 35, Number 3, March 2000

GoingGlobal

To Partner or Not to Partner ...

That is the Question

exploring the export partner relationship

by Rene Bergero

Have you ever thought about how your company can develop an export partner relationship? Although this article is by no means an exhaustive analysis on the subject, it will help you as you consider this option. (Although direct selling plays a large role, I will discuss this topic in another column). First, let’s review some basic types of export partnerships and their potential suitability for your type of
business.

1. Export Management Firms

Export management firms typically are U.S. based companies who will buy your products and resell them to their customers. Export management firms usually carry many different product lines, although they do tend to be industry specific. These companies offer a “set and forget” approach to exporting. You don’t have to do anything except ship the goods where they tell you to (usually a freight forwarder provided by the management firm takes care of this), and invoice the management firm. In terms of ease of use, export management firms can’t be beat. However, there are some key factors that will determine the suitability of this kind of partnership for your export objectives. First and foremost, ask yourself if you are willing to put all your eggs in one basket. Most management firms require that you work exclusively through them. Also keep in mind that these firms typically require its customers to buy large quantities of product, which could limit the number of potential customers. Export management firms are good choices for companies that sell high usage products, like adhesives, sealants, paints and similar materials.

 2. Sales Representatives

Sales representatives are your commissioned sales agents. Management time is required to properly administer a sales agent network. Keep in mind that agents live and die by what commissions they earn and so your products must have the potential to generate a superior return on their investment in time for them to push your line. A significant advantage that sales agents bring is their ability to provide detailed market information, including credit risk assessment. Many a sale was closed by an agent who persuaded a principal to extend credit to the customer. Remember, unless you’re paid, neither is the agent. Sales agents typically do a good job with big-ticket items like machinery and high turnover items such as aluminum air spacers and desiccants. Float glass manufacturers also use sales agents extensively.

 3. Distributors

Distributors come in many sizes and shapes and finding the right one can be quite a challenge. An ideal distributor for your products would be a company that is already actively selling complementary products and does not carry any of your competition’s products. There are also two key attributes that all good distributors will possess. First, they should have adequate resources to inventory your product and service its customers. Second, they need to be solvent enough for you to sell them on credit, as this is how they make money. These may seem like obvious points, but they cannot be stressed enough, as this will determine to a large extent your success. A good distributor will also look out for your best interests and may even suggest new products. Distributors are good options for companies that sell “stand-alone” products, like power tools.

 How to Choose

Deciding which option is best really depends on your particular situation. The more control you have over the relationship, the greater the potential rewards—but you must be willing and able to allocate the necessary resources. Let the nature of your product determine the best marketing channel and don’t exclude the simultaneous use of more than one kind of relationship.

wpe3.jpg (2131 bytes)Rene Bergero serves as export sales manager for Sommer & Maca Industries in Cicero, IL. His column appears bimonthly.


USG

Copyright 2000 Key Communications, Inc. All rights reserved. No reproduction of any type without expressed written permission.