Route to your export market

Reaching your customers

Whether you are selling a product or a service into an international market you will need to think about how to actually deliver in that market. Choosing your ‘route to market’ is an important decision as it will determine the resources that you will need both in Jersey and in the market and it will have an impact on the margins and profitability of your off-island sales.

It is important to consider who your customers will be in your chosen market so you can think about the type of relationship that you need with them and the best way to reach them. For example, if you have a consumer product you might need to get it into as many outlets as possible so you’ll have a ‘hands-off’ relationship with your end consumer, whereas, if you are providing a bespoke consultancy service you will probably want a face-to-face relationship which requires you to be on the ground.

The type of relationship you need will lead you towards a particular route to market and there are a number of options which are typical for working internationally. Remember, you may have different routes to market in different countries depending on the characteristics and culture of your client base in those markets.

Whatever route to market you decide on, ensure you carry out due diligence on potential business partners. Speak to their clients wherever possible and do as much research on the company as possible before committing to them.

Some of most common routes to market are:

Working directly with clients from a Jersey base

Advantages

You own the client relationship.
You identify, sell to, supply to and service customers from your Jersey base.
You may use multiple channels such as website, catalogue and/or telesales to talk to customers.
You can set your own prices without losing margin to 3rd parties.

Disadvantages

You’re responsible for the entire process of delivering your product or service.
But you’ll need to consider where and how your will warehouse and fulfil orders.
You will need to work flexibly to accommodate different time zones.

Setting up an overseas office

Advantages

Often having local staff increases market presence and cultural understanding.
You are presented as a local company.
Can make it easier to provide strong customer service.
Legal and tax requirements might be beneficial.

Disadvantages

It is the costliest, resource intensive and high risk option until the market is established.
Helpful if someone from your own business will set it up to provide a link between the market and home organisations.
Takes a significant amount of management time.
Legal and tax requirements might be onerous.

Setting up a joint venture

Advantages

Joint ventures can take many forms, from a formally constituted JV company to an informal strategic alliance.
You get a share of the management control and the profit of the JV.
It gives you a presence in the market without having to set up from scratch.

Disadvantages

It can be a complicated and expensive option.
It requires ongoing management involvement.
You are not completely in control.

Working with a business or associates based in overseas markets

Advantages

You get access to local expertise.
There will be financial savings in not having to operate the business yourself.
Local knowledge and involvement in your target market.
Partners will have strong working relationships with clients.

Disadvantages

You rely on your associates brand and reputation in the market.
You may not be their primary focus.
The arrangement can be as loose or complicated as you make it.
You are not in control of the sales pitch so managing client expectations might be difficult.
The work or sales may be sporadic or difficult to predict.

Setting up a franchise or licensing agreement

Advantages

Typically, you need a strong, trusted brand that customers identify with.
You specify what products or services can be sold where.
You are in control of how your products or services are sold and how they are delivered.
You can have different licensees or franchisees in different locations.
You don’t have the expense of operating your business abroad.

Disadvantages

You supply guidelines and training for the operations, marketing and branding of the business so your licensee or franchisee will deliver to your standards.
Your franchisee runs a separate business from yours and are responsible for the customer relationship.
Success is based on good relationships and the support you provide so you need to spend time with your partners.
Your returns will be based on the success of the franchisee or licensee’s operation.

Appointing an agent

Advantages

An agent negotiates sales on your behalf and earns a commission.
Your product or service is delivered directly to the customer.
They should have extensive knowledge and contacts in the market.
They should be able to identify and take advantage of opportunities.
You retain more control over the price, product and brand image that compare with a distributor.
Some agents will hold stock on your behalf.

Disadvantages

The agent owns the client relationship not you.
You must understand what an agent’s legal rights are in the market, which might be more extensive than you realise.
Agree at the outset who is responsible for the after-sales service.
The agent is your face on the ground so make sure they will represent your business appropriately.
Agents often represent more than one product so make sure you get the attention from them that you expect.
You might have to contribute to in country marketing spend.

Working with a distributor

Advantages

A distributor buys products from you and in turn sells them to their customers.
Distributors may be sole, exclusive or non-exclusive.
Most of the sales risk is absorbed by the distributor.
You won’t need to set up in country.

Disadvantages

Your distributor owns the client relationship and the logistics in country not you.
As with agents, your distributor will represent more than one product so make sure you get the attention from them that you expect.
Distributors will expect a discount when buying your product.
You lose control over marketing and pricing in the market and rely on them for after-sales service
You might have to contribute to in country marketing spend

Selling online

Advantages

Relatively low risk and low cost.
You have control over your online presence.
You can manage all your sites from one central point
You can get instant analytics on how your site(s) is performing.
Improvements you make to your website can have instant results.
You can identify ‘hot’ markets much quicker than through traditional routes
An online presence gives you worldwide exposure 24/7.

Disadvantages

You need to be able to manage customer orders and enquiries coming from different time zones.
You might need to invest in country specific sites so the content, language and payment methods are localised.
You will need to invest in marketing your website – don’t think that because it is there people will see it!
You still need a robust logistics operation to make sure your products reach your customers.
You still need to understand the local culture and how people use online platforms to get the best response.

Relevant Links

British Franchise Association

Develop your export plan

Logistics of exporting

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"Conquering new markets not only flexes your business muscle but also gives your products or services an extended shelf life where untapped opportunities await."