13 Old School and 21st Century Routes to Export Markets

13 Possible Routes to Exporting for SMEs | the Advantages and Disadvantages

When developing your export marketing strategy, the route or routes into global markets are multiple and the route you choose will ultimately determine your success when trading overseas. With that in mind, it's worth understanding the 13 common routes to exporting available to SMEs, plus the advantages and disadvantages of each channel…

First off, it is useful to note that having English as your first language is both a blessing and a curse because a German and an Italian are happy to communicate in English as they are both making the effort to learn the international language of trade, English.

The down side of having English as your first language is there is no other language that we can learn that is as widely used in international trade, so we have to make the effort to communicate in multiple languages. However, the up side is that everybody who wants to trade internationally will speak English, to a greater or lesser extent, so after the initial communication, English will be the language of trade.

In this article I will discuss 13 routes to market that I have split into 'Old School' and more current 21st Century routes to export markets that weren't open to SMEs prior to the digital age. This is not to say that new is better than old school because all routes to an export market are valid, provided you make a profit utilising which ever routes to market you choose. The routes we will discuss are illustrated in the graphic below.

The comments in this article are based on our own experiences of growing our own export sales from 6 per cent of sales to 67 per cent of sales, which led to one of our companies being named as National Exporter of the Year. It's this success that inspired us to develop Export Worldwide. So, there are comments from the trenches, from people who have actually created and grown B2B export sales.

The 13 potential routes to market are…

Old School

• 1. Setup an office in the overseas territory.
• 2. Work with an agent or Independent Reps.
• 3. Resellers, Dealers, VARs, Retailers and Stockists.
• 4. Find a Distributor.
• 5. Go direct to clients or customers.
• 6. Attend internal tradeshows and exhibitions.
• 7. Trade missions.

The 21st Century, Digital Age

• 8. Own international website in English.
• 9. Own dedicated website in local language and localised for territory (i.e. Germany).
• 10. Mini site of your English .com
• 11. International B2B marketplace in multiple languages.
• 12. E-market place.
• 13. M-commerce (mobile) and S-commerce (social - big in Asia).

Let's look at the advantages and disadvantages of Old School methods…

1. Setting up an office in the overseas territory

This is a high-cost, high-risk venture as you will be trying to manage a remote office, possibly several thousand miles away, and also in a different time zone. The best way of implementing this route is to find somebody within your current organisation's home market. They will know your products and methods of selling, however, this person then needs to learn the different cultural nuances of the target market.

There are generally two problems in sending somebody to head up the overseas office:

1. It is not always possible to pull a trusted member of staff out of a role in a SME.
2. Lots of people don't want to relocate to a new country.

However, the benefits of having localised staff is that you have an excellent presence and appear as a committed local company. This is how we have approached exporting to North America, but one particular problem we have found is that culturally, American sales staff are very different to European sales staff, with a much higher turnover of personnel.

Establishing a base in an international territory tends to be a long-term goal for SMEs. Once you have built up your experience of exporting indirectly, setting up a permanent presence could become a viable option for you.

Advantages:

• Customers feel you're committed to their market for the long-term
• Easier to provide after-sales support
• Greater autonomy for doing business and recruiting staff
• You present as a local committed company

Disadvantages:

• Cultural clash between home market and export office ways of doing business
• Huge costs involved
• Increased overheads and tax requirements
• Substantial man hours to plan the logistics and manage remotely

2. Work with an Agent or Independent Reps (Popular in North America)

An overseas sales agent would be 'the face' of your SME in international markets. They introduce you and your products to customers and then invoice directly. Agents and independent reps are usually paid on a commission-only basis for introducing you to potential customers. Commission fees tend to range between 2.5 per cent and 20 per cent depending on your industry sector.

Advantages:

• You get an agent's extensive knowledge of your target market
• They manage and control all local payments and documentation
• You circumvent the recruitment, training and salary costs of using your own personnel to enter export markets
• Good agents will be 'in position' to identify and take advantage of opportunities
• Agents will likely have established relationships with potential buyers
• Having an agent on board means that you retain more control over final price and brand image, when compared with using a distributor

Disadvantages:

• The agent owns the customers and route to market
• If you fall out with the agent it can be expensive to terminate an agent's contract as they have a legal right to be compensated. This doesn't hold with independent reps unless written into the contract
• Selling through an agent means that after-sales service can be complex
• Equally, keeping a record of stock inventories can be costly
• You will potentially lose some control over marketing and brand image when compared with entering markets yourself
• Managing an agent can be challenging

3. Resellers, Dealers, VARs, Retailers and Stockists

Stockists will sell your products across their stores – both bricks and mortar and online.

Advantages:

• Will buy, stock, market, sell and support your product in their country/territory
• You can choose between large multinational or specialist independent companies
• Products will be sold across all stores whether bricks and mortar or online
• Likely to have multiple stores in multiple countries.
• Often have complementary products particularly true for VARs and Dealers

Disadvantages:

• Likely to demand a discount
• Marketing and pricing of your products is out of your control
• As a small to medium-sized business, you're likely to be further down the queue in terms of priority and focus, so may not get the marketing effort or sales training that your product needs or deserves
• Volume of annual orders might not meet expectations

4. Find a Distributor

A distributor will buy your products from you and then sell them to customers via multiple third-parties. Distributors make money by purchasing your product and selling it on at a higher price.

Advantages:

• Access to all the Distributors dealers and resellers
• Much of the risk is absorbed by the distributor
• No need for SME to setup offices in overseas territories, saving you money
• You only need to track the accounts of one distributor rather than several different customers

Disadvantages:

• As an SME, you are unlikely to get the marketing and sales effort your products and brand deserve because the distributor will concentrate on the top 5 to 10 selling lines that generate the majority of their income. You're likely to be further down the queue in terms of priority and focus
• The activities of your distributor are out of your control, i.e. marketing and pricing
• Distributors will expect substantial discounts when buying your products
• Distributors will often require an extensive period of exclusivity
• Often you will be asked to contribute financially to any marketing of your products in addition to the larger distribution discount

5. Go direct to clients or customers

You can go direct to businesses or the consumer by getting on a plane and visiting potential customers face-to-face.

Advantages:

• Keeps you close to your customers
• Multiple channels to reach customers directly
• You can set your own prices to maximize profits because there's no third-party involvement

Disadvantages:

• Responsibility for the entire export process rests with you, i.e. marketing, selling, stock levels and shipping
• Extensive amounts of paperwork and a requirement to support a sale through to completion, while providing after-sales support and managing returns
• Difficulty of working across time zones with no local presence

6. Attend internal tradeshows and exhibitions

Visiting overseas exhibitions is potentially one of the quickest and relatively cost-effective ways to research new markets, local competitors, customers and test the waters for demand. They're particularly useful for products that 'need to be seen to be sold' or for services that need face-to-face explanations.

However, on a per lead basis, exhibiting overseas is generally expensive (based on our own experiences, exhibition leads can be 8 times the cost of a lead generated through digital marketing) and they generally only happen once a year so it's a feast or famine of new prospects for your sales team and products.

Advantages:

• An opportunity to market products and services to a 'motivated' audience who are interested in exhibits
• Puts a 'face' to your brand
• An opportunity to network and establish key connections
• An opportunity for market research and to check out the competition
• Government support in the form of grants or supported exhibition space is sometimes available

Disadvantages:

• Your success at exhibitions depends on the success of the exhibition itself
• Lots of logistical preparation
• Depending on the length of the exhibition, extensive man hours are required
• Relatively expensive
• Generally trade shows are an annual event, making marketing and lead generation disjointed

7. Trade missions

Trade missions, often supported by funding from the government, are overseas programs for companies looking to explore and pursue export opportunities by meeting with potential clients in their industry sector.

They generally involve meetings with foreign industry executives, networking events and site visits to facilities that may require your products and services. These can be cost effective ways to research a potential export market, provided the trade mission is for an industry and territory that you plan to sell to.

Advantages:

• Access to high level business executives
• Opportunity to network and connect with likeminded companies
• The potential for media coverage
• Opportunities for one-on-one appointments

Disadvantages

• Trade missions tend to be overshadowed by political issues
• Very niche. The scope for doing business is limited

The 21st Century, Digital Age

Digital Marketing Overview

The options that open up for SMEs to export with digital marketing are growing every month, with new platforms and ways to build links with prospects and customers.

Increasingly, SMEs are recognising the value of digital marketing and the opportunity it represents to reach customers directly in international markets. Arguably, generating leads has been the single biggest export challenge for small to medium-sized firms in years gone by.

There are over 3 billion people already online and with digital marketing you can have a direct conversation with all of them. There has never been a better time for SMEs to reach out and develop new markets.

Online channels offer a route into exporting that's not only cost-effective, but minimises the risks associated with so-called old school methods, enabling SMEs to 'test the water'.

For instance, more and more SMEs are leveraging the power of their website as a lead generation tool. With 90 per cent of Europeans performing internet searches in their native language, the importance of having a version of your website in the mother tongue of a target territory is crucial.

Once potential customers have found your website, many are more than happy to communicate and trade in English as it is the international language of trade and has become key to reaching international customers online.

With English being the 'Global Language of Business', classified as the official language in an estimated 75 territories worldwide, it has become common practice for SMEs to perfect their online export marketing strategy for English speaking nations and then replicate the model for other international languages.

Why? Most export 'buying' is done in English, but 'selling' in international markets is done by localising content. This gives your company more credibility, establishes trust and increases the likelihood of a sale.

This is best summarised by German Chancellor, Willy Brandt…

…"If I am selling to you, I speak your language. If I am buying, dann müssen sie Deutsch sprechen." (Translation = then they need to speak German – or – sell to me in mine).

It is this desire to be approached in your own language, and the fact that 90 per cent of all searches start in the person's mother tongue, that having a web presence in the local language is essential if you truly want to make progress in export markets.

To enhance their visibility in local search engines, as well as localised websites, SMEs have established a localised social media presence or had themselves listed on a local stockist's or distributor's website.

Meanwhile, partnering with online international lead generation companies and selling on high profile sites such as…

• ExportWorldwide.com – 20 languages
• Direct Industry – 9 languages
• Amazon –14 language sites
• Alibaba – 15 languages
• eBay – 27 language sites

…Have proven to be popular routes to exporting for SMEs.

Advantages of digital marketing as a route to exporting:

• Low-risk, low-cost entry into export markets
• Full autonomy over your route to market
• Your export marketing strategy is manageable from one central point
• Almost instant search engine visibility
• Identify 'hot' markets much quicker
• The internet is 24/7
• All geographic limitations are removed

Disadvantages of digital marketing as a route to exporting:

• Despite being 24/7, worldwide time zones could be problematic, i.e. establishing immediate contact with leads
• Competitors could potentially replicate your international digital marketing strategy, but this is true of all marketing channels. The challenge is to always be two steps ahead of your competition, so start today while your competitors are still thinking what 'should I do?'

While not discounting so-called old school routes to exporting, digital marketing is arguably at the forefront of breaking into overseas markets, especially for SMEs. The appeal of online is that it's cost-effective, low-risk and is an arena in which small to medium-sized firms can win new business, rather than vying for a share of the market dominated by multinational corporations.

However, digital marketing can complement other routes to exporting.

8. Own international website in English

Your own international website in English can target prime English speaking territories such as Australia, Canada and North America, to name a few. It's an opportunity to present your products and services that are successful in your domestic market in new, English speaking markets to test the waters at low-cost and low-risk to you.

Localising or 'localizing' the content increases your credibility with 'local' customers. Developing a 'replica' of your website means you will increase the chances of being found via online search engines. Equally, it's an opportunity to develop fresh content and keywords as part of a search engine marketing strategy that will boost your search engine rankings.

Advantages:

• Easy to replicate a .co.uk or .com site for other English speaking nations
• Cost and time effective to setup
• No overseas office setup required
• Present old products in new markets
• Boosts your search engine rankings

Disadvantages:

• English speaking territories are extremely competitive markets
• Management and maintenance of multiple sites can be time-consuming

9. Own dedicated website in local language and localised for territory

70 per cent of the world doesn't speak English [Source: Tech.co], while 57 per cent of websites contain only English. Therefore, one of the key advantages of developing and optimising a website for local languages is that you can reach a segment of the international market that others aren't.

Plus, having international sites in different languages increases your credibility with customers in your target market and boosts your online presence, while helping you to develop new content and use new keywords to boost your search engine rankings.

Advantages:

• A low-risk entry point into export markets
• Entering into multiple markets reduces dependence on your domestic market
• 90 per cent of internet users in the European Union search in their native language (Source: EuroBarometer)

Disadvantages:

• Long-term costs for translators and hiring mother tongue speakers
• Managing and maintenance of multiple sites can be time-consuming

10. Mini site of your English .com

Having a mini version of your English .com or .co.uk site gives you most of the advantages of a full site in English speaking territories, but is easier, quicker and cheaper to build initially and can be expanded on an ad hoc basis. A mini site usually consists of a 'subset of the products and pages of the main international site,' and are often easier to navigate.

A mini site could also be used as a subdomain [an Internet domain which is part of a primary domain] as opposed to a national, top level domain (TLD).

Advantages:

• Easier, cheaper and quicker to build than 'complete' websites for entry into overseas markets
• Easy to manage and maintain
• Easier to navigate and user-friendly for international visitors
• A lower cost, low-risk entry point into English speaking export markets
• Can be expanded as and when needed

Disadvantages:

• Doesn't fully represent your products and services to international customers

11. International B2B marketplace in multiple languages

International B2B marketplaces such as Export Worldwide and Direct Industry are online virtual exhibiting sites that serve to complement any existing domestic and international websites. They're an opportunity to showcase your business to new markets. With features such a multilingual content, and unlimited uploads, such channels help to boost your online presence and generate more leads.

Comparatively, Export Worldwide and Direct Industry are very different. Direct Industry is very much a product-based channel, and multilingual content has to be provided manually by service-users and the languages available are limited to European nations. Additionally, it requires a lot of input from the user to maintain product pages and the press release functionality.

Meanwhile, Export Worldwide accommodates product and service-based SMEs. It's specifically geared to focus on helping small to medium-sized businesses penetrate export markets at low-cost and minimal-risk. With an AI/machine, human, or hybrid translation feature, which can translate content in up to 20 languages representing 84 per cent of world trade, companies can get to more markets quicker.

Advantages:

• Works alongside existing websites to generate international leads creating additional marketing channels
• For companies without an international site, they're a ready-made platform to reach new markets 24/7, 365 days a year
• Easy to get started. Either upload content in English or get the platform to do this, instantly translate in up to 20 languages representing 84 per cent of world trade (Export Worldwide only)
• Quickly identify market demand and interest for your products and services in worldwide markets
• Tried and tested export model

Disadvantages:

• Some platforms are limited to product-based businesses
• Some aren't export specific
• Some require heavy service user input

12. E-market place

Tying in with the digital marketing strand, there has been a boom in the use of e-commerce as a route to exporting. E-commerce refers to transactions made online. A recent study found that 40 per cent of respondents buy goods from another country based on factors such as price, availability and selection.

As a result, there's been a surge in companies offering you the 'best e-commerce platform money can buy,' as more SMEs recognise the value of cross-border selling through commerce.

E-commerce routes into exporting require you to think about several key criteria including the platform you will choose, whether it will take a portion of profits and whether it can manage the size and quantity of transactions you want to make. There's also the localisation of your content and payment methods to think about.

Most well know e-commerce platforms are:

• Amazon
• eBay
• Alibaba

But, the UK government has identified over 400 worldwide.

Advantages:

• Faster buying and selling process
• 24/7 buying and selling
• No geographical limitations
• Low operational costs
• No need for international office setup

Disadvantages:

• Lack of personal interaction
• Requires internet access
• Potential delays on the delivery of goods
• Privacy and security issues

13. Finally, the new kids on the block, M-commerce (mobile) and S-commerce (social - big in Asia)

More recently, the emergence of S-commerce (social) and M-commerce (mobile) have provided additional commerce routes into export markets, particularly in Asian and far-eastern nations such as China that have smartphones as their main internet access. Although these routes may appear similar to other web-based routes, they require a completely different platform, optimisation and approach.

Social commerce is the marriage between social media and e-commerce, the next evolution of online shopping, where consumers fuel the purchasing funnel of your brand, buying and selling of products and services online.

In our experience, social is very difficult to get to work for B2B products. It is important as a 'signal' to Google and BING for their ranking algorithm, but as an actual generator of sales, social is not very effective. The one social exception is LinkedIn and the access that can be leveraged by using LinkedIn.

If you want to reach your prospects, it's critical to be where they are! Smartphones in hand, customers aren't waiting for your company to decide to build a mobile website or app, so planning for mobile search and M-commerce is going to become more important.

Advantages:

• Strong engagement with prospects and customers on an individual basis
• Rapid and personal feedback
• Faster buying and selling process
• 24/7 buying and selling
• No geographical limitations

Disadvantages:

• For S-commerce, significant effort for currently poor returns
• Requires internet access
• Privacy and security issues

Overarching all this digital marketing is the opportunity for paid advertising to drive traffic to your website, mini-site, lead gen platform or e-market platform. This comes in many forms - PPC (pay per click), display ads, re-marketing, video ads etc. All these ads can be placed on Google, BING, Yandex, Baidu, Facebook, eBay, YouTube and many more. Paid advertising is too large a subject to cover here and requires an article dedicated to it because it can be both an excellent lead gen tool, but it can also eat mountains of cash with very little return.

Summary: Why 21st century digital marketing is such a good option for SMEs

Online channels have certainly made routes to exporting far more accessible to SMEs. Old school methods tend to carry a higher cost-burden and risk for smaller enterprises. In many cases, SMEs don't necessarily have the resources to launch a full assault on international markets using traditional methods.

That said, old school methods can't be written off completely and it is likely that what will work best for you will be a combination of a number of routes to market and the buying practices of your target markets will effect this.

For our own companies, selling B2B internationally, we have used 10 of the routes to market and the 7 routes to export that we currently use that grew our export sales from 6 per cent to 67 per cent include:

• (Route 1) Locally manned sales office in the export market after establishing, via digital marketing, that a need desire and authority exists in the export market for our products. Currently we have offices in North America, France, Poland and in 2017 Spain.
• (Route 5) Direct visits to key or significant prospects.
• (Route 6) International exhibitions, for brand awareness and to show commitment to an international market.
• (Route 9) Dedicated websites in the local language of the target market on the TLD of the local territory and often hosted locally.
• (Route 10) International mini websites as sub-domains.
• (Route 11) Multilingual virtual exhibitions that run all year such as www.exportworldwide.com and www.directindustry.com
• (Route 12) Ecommerce platforms such as www.alibaba.com.

And the ones we have tried and rejected because, for us, they did not work as well as other channels:

• (Route 3) Resellers. We tried these for several years but never got traction.
• (Route 4) Distributors. For us, it was difficult to get sufficient commitment and sales to justify continuing to work with this channel.
• (Route 2) Agents and independent reps.

While digital marketing gives you a solid strategy for entering export markets as your business evolves and continues to expand, it's likely that you will have a blend of lead generation channels in place to suit your business and to maximize your worldwide export opportunities.

Good luck and please tell us your export stories, send them to myexportstories@exportworldwide.com

We are always learning new routes to export markets by sharing the knowledge we have in the UK.

If you're not currently exporting, start today because the sooner you start, the nearer you are to doubling the profitability of your organisation.

For more information on the internet and software tools we use as routes into exporting, provide your email address to receive this new eGuide for Internet & Software Tools that work for Export Marketing, coming soon.

About the Authors

Written by Mark Neal and Daniel Waldron for Export Worldwide.

Edited by Daniel Waldron.

Mark Neal is the Managing Director of Armagard, winner of the Queen's Award for International Trade and the British Chambers of Commerce 'National Exporter of the Year Award.'

Daniel Waldron is Export Worldwide's Head of Content and a Huffington Post contributor for ExportWorldwide.com