Where in the World Are Your Cross-Border Customers?
Content provided by the Women Presidents' Organization
By Laurel Delaney
Finding cross-border customers for your export products can be accomplished by means of a range of programs, largely government-sponsored, including trade shows, trade missions, and related trade networking services. This article introduces a number of these services and how you can take advantage of them.
A thoughtful, focused and long-term approach to making cross-border contacts is the best. Your objective is to start, cultivate and maintain productive customer relationships and, ultimately, to build an enduring global empire.
Defining Your Cross-Border Customers
One of the goals of your research is to assemble information about your first tier of customers -- in other words, the intermediaries who will actually purchase your product from you. Regardless of whether you are selling direct or indirect, your customers will tend to fall into five categories: overseas agent or representative (importer), distributor or importing wholesaler, overseas retailer, overseas end-user, and trading company. However you move your product, it's important to be aware of how many intermediaries will be involved in getting it to your consumers. Each one must add their markup to the price of your product in order to earn their due profit. Take this into consideration when you price your product, so that it won't end up being excessively expensive by the time it actually hits store shelves. The most attractive import won't be able to compete with local products if it costs more than a consumer is willing to pay!
Overseas Agent or Representative (Importer)
An overseas agent works on a commission basis to locate buyers for your product. Once a buyer is found, however, customer service and all transaction logistics, including setting up payment and arranging transportation, become your responsibility. The agent oversees your work, stays in close contact with the customer, and will step in to assist on behalf of either party, if needed.
Distributor or Importing Wholesaler
A distributor buys products from you, then warehouses, distributes and resells them to his customers. He also takes care of after-sales service. In some countries, for example, in Japan, distributors are referred to as wholesalers. The distributor is the most common first-tier buyer you will find, and can offer the most efficient and profitable way to get your product to the consumer.
You can also sell your products direct to overseas retailers, such as department stores, supermarkets or mail-order houses, on either an exclusive or non-exclusive basis. However, retailers are generally small in size, service only a regional location and have limited warehouse space. This means that their purchases are usually small, and they can give your product limited geographic distribution.
You can sell your products direct to certain types of end-users, such as hospitals, universities or original equipment manufacturers. They, in turn, may resell your products to their customers or else incorporate them into their own manufacturing processes.
You can sell your products directly through a trading company, who resells them to their customers in turn. Trading companies, better known in Japan as sogo shosha companies, are useful for establishing contacts or making introductions for you, but they are rarely qualified to do extensive marketing of your product. This is because they tend to be huge, loosely structured organizations that lack both the appropriate investment funds and the focused commitment to bring a product to market. Their efforts show very little continuity, which means poor repeat business. If you use a trading company and they do develop some business for you, consider meeting in person with the customers they find and taking responsibility for its sales, marketing and distribution yourself. It could be a great way to lay the groundwork for future direct sales.
Now that you know who your customers are, let's talk about how you're going to meet them!
Making Customer Contacts
Whether a customer contacts you or you contact them, your goals here are very basic: identify yourself, reference their inquiry, provide the information they wanted, establish yourself as a solid, reputable institution, and respectfully express your interest in entering into a relationship with them.
Here are some high-powered services and activities that can put you directly in touch with people who are actively seeking products like yours.
Department of Commerce: Special Services
Your local Department of Commerce (DOC), which houses the U.S. Export Assistance Center, the International Trade Administration (ITA), and the US&FCS Overseas Posts, runs a number of programs to put exporters and their customers in touch:
1. CIMS (Commercial Information Management System). The ITA runs a computer "reading room" with an extensive diskette library, where you can look over a wealth of vital market and potential customer information. Although it may not be able to give you specific customer contacts, it does provide you with ways in which to get in touch with specific markets.
2. Matchmakers Service. Offered through either the DOC or the ITA, the Matchmakers Service introduces beginner export companies to agents, distributors or large retailers with specific interest in the exporters' products.
3. Gold Key Program. For a small company with a bigger budget, the Gold Key Program is one of the most efficient ways for a small business operator to meet with pre-screened potential cross-border business associates, whether you are seeking an agent, a distributor or a joint-venture partner. Individual meetings are arranged in advance, most taking place at the U.S. Embassy in the host country. Many companies testify that this method is a wise investment (variable upon scope of work) because you pay only for your usual airfare, lodging and entertainment and have a series of productive meetings already arranged. The Gold Key Program will also help you to participate in trade shows sponsored by state and federal agencies.
4. Trade Missions. These are designed to assist beginner exporters to establish sales and set up representation abroad at a low cost. The organizer of the mission typically sets up the agenda (itinerary), which covers travel arrangements, accommodations, appointments with prospective customers, and opportunities to sound out the market to learn about other appropriate trade intermediaries for your products.
5. Catalog, Video and Video Gold Key Matching Service Exhibitions. U.S. companies can have their sales literature or videos displayed at U.S. Embassies throughout the world, as well as at appropriate trade shows, where they will be seen by prospective distributors, agents and other interested buyers. The Video Gold Key Matching Service is implemented exactly like a regular Gold Key, with the exception that the in-country portion is conducted as a videoconference.
6. The Agent Distributor Service (ADS). This service finds qualified distribution firms that are currently handling products similar to yours. An ADS search will generate up to six names of distributors who have an interest in specific U.S. products.
7. Export Contact List Service. This service will generate a mailing list of potential importers for your product from the DOC's automated global network of overseas firms. It lists company names, addresses, fax numbers, key contacts and specific product or service interests. You can inquire and order via email and the cost is based on the scope of work.
Inquire at your local DOC office to find out about other programs and services that are available for locating buyers of specific product types, such as textile, agricultural or commodity-related products. They have a wide range of resources to offer beginner exporters.
World Trade Center (WTC)
Some cities have world trade centers that house all the services associated with promoting and facilitating international trade under one roof. These services include trade information and communication services, trade education programs, and exhibition, conference and office facilities. This agency will permit you to advertise your product or service on an electronic bulletin board transmitted worldwide. Each local World Trade Center is affiliated with more than 300 counterparts in more than 80 countries, so contacting any one of them provides a valuable link to global opportunities.
PIERS: A High-Tech Short Cut!
One of the best ways to minimize your expenditure of time, money and energy and help focus your overseas sales and marketing efforts is to use The Journal of Commerce Port Import/Export Reporting Service (PIERS). PIERS is the only information service that provides names of U.S. consignees or shippers as well as overseas suppliers, along with detailed descriptions of import or export shipments for the commodity of your choice. This information is taken from ship's manifests by a nationwide corps of reporters and is loaded weekly into a computer database. PIERS can plot increases or decreases in market shares, rank exporters, importers, commodities or shipping lines, and otherwise make it easy to detect and track important trends in the worldwide movement of commodities.
Exhibiting at Trade Shows: A Powerful, Hands-On Approach
Exhibiting at or attending a trade show in your industry is a uniquely effective way to contact cross-border customers, especially if you have a difficult product to sell, of a type which a customer needs to actually see! The DOC's Foreign Buyer Program certifies a specific number of U.S. trade shows each year.
Exhibiting is especially powerful because it allows you to get your company name out there and have potential buyers come to you.
Even though you will no doubt begin by diffusing your exporting efforts among a variety of customer contacts, you will still need to concentrate on them individually, so that each and every one of them thinks you are the only one who can fulfill their needs. Focus on what each contact wants, and don't stop until you fulfill it. Approach your contact as you would want to be approached -- with attentiveness, courtesy, professionalism and consistency -- and you will have a customer for life.
Copyright ©2006 Laurel J. Delaney. All rights reserved.
About the Author:
Laurel Delaney runs GlobeTrade.com and LaurelDelaney.com, both Chicago-based firms that specialize in international entrepreneurship. She is also the creator of "Borderbuster," an e-newsletter and The Global Small Business Blog , which are both highly regarded for coverage on global small business. Laurel can be reached at firstname.lastname@example.org.
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