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global trade

Three Critical Areas to Consider When Looking for a Distribution Partner

Leveraging distribution partners to accelerate your international expansion can be both an efficient and explosive way to accomplish growth goals. But it’s important to consider all aspects of distributor relationships and how they will impact not only your growth, but also your brand.

Consider these three critical areas when vetting current or potential distribution partners and you will likely save time and money.

capabilities

Are they capable?

This seems like an obvious question to ask when considering a distribution partnership. But too often brands are chasing a purchase order, or the opportunity to enter a new market, and they forget to consider the fundamentals. Can the distribution partner buy, warehouse, distribute, promote, and service your products?

This question should be approached from two angles. Financially speaking, it is important to confirm that any potential partner can fund not only an initial order, but follow-up orders as well. The last thing you want is to have a successful product in market, without the ability to capitalize on demand.

Separate from the financial aspect of a partnership is whether a partner has the physical means to support your business. Do they have enough warehouse space? Can they store products in a safe and clean environment? Do they have delivery AND reverse logistics procedures for your products?

Again, these questions seem obvious, but I have seen many partnerships initiated without site visits, which means you should be very deliberate with your questions regarding the physical logistics of a potential relationship. 

connections

Do they have the proper connections?

One of the main values of partnering with a distributor is their ability to enter a market quickly and professionally. There can sometimes be a miss-conception that distribution partners are nothing more than sales reps with a warehouse. In fact, nothing could be further from the truth. Many distributors may employ sales reps, but they themselves are not the sales reps. Rather, an effective distribution partner will have strong relations with key channels throughout their market – at the corporate level. 

There is still a critical need for an effective sales team to sell your brand, but having established relationships at a higher level, means your distribution partner will likely be able to speed the sales process for their team and build support for your products throughout (retail) organizations in the form of favorable terms and / or funding. A well-rounded, and effective, distribution partner will not only have resources in key businesses areas, they will know how to leverage them for your mutual success.

Do they have a unique skill set?

By definition, all distributors are businesses. And generally speaking, they follow a similar construct of buying, selling, and promoting products in their local markets. But not all distributors approach business the same way. Some potential partners are focused on high-velocity, quick turns, and big numbers in order to make their business work. Other distributors may work with a limited number of brands, but invest more time and energy in the “brand building” aspect of their products. Neither strategy wrong, but each offer different approaches to how you will structure your partnership, and ultimately your growth in new markets.

unique skill set

One of my personal experiences was with a distributor that did not operate in the same product category as my company's brand. But the distributor was masterful at handling innovative technology and building foreign brands in their home market. We chose to work with this partner instead of others who were in the same product category and we were thrilled with the results. Our partner was not the obvious choice, but because of a unique skill set, they were the perfect choice for us.

Ultimately, the saying “nothing replaces hard work” holds true when considering a distribution partner. If you are diligent with your process, deliberate with your questioning, and you exercise good judgement while considering the questions above - you will be on the path to finding the right partner for your brand.

For more advice on how to maximize your distribution selection process or build an effective International Business Development strategy, contact Castus via email (hello@castusglobal.com). For ongoing tips, trends, and news - visit our website: http://www.castusglobal.com.


Emerging Markets Have A Strong Outlook For The First Time In A Long Time

For many, the expression "Emerging Markets" is nothing more than a buzz word. A snazzy term used by people to sound informed. The reality is that for many years (while emerging markets have struggled) people have tried to find a more descriptive label, but few alternatives have gained popularity.

The good news is that “Emerging Markets” are actually emerging for the first time in a long time. They are emerging from a period of stagnant growth. They are emerging as real expansion and strategic growth opportunities.

Define and Align

Before we can expand on why these markets have a stronger outlook for global companies, we need to define and align. We must define what an emerging market is, and align on which ones are most important.

Define: For the most part, emerging markets are defined as markets that have established business sectors, like those of developed regions, but lack the robust supporting infrastructure that exists in highly developed countries. Think about China’s retail sector for a moment – incredibly busy, and flush with new brands, products, and services – but the supporting infrastructure of brick and mortar stores (and their complex logistics network) rarely exists outside tier two cities.

Align: Analyst opinions differ when asked to identify all of the world’s emerging markets, but the following markets are widely regarded by all top analysts to be the Big Emerging Markets (BEM’s): China, Brazil, India, Mexico, Philippines, Russia, South Africa, and Turkey.

If we look at these countries as a group, there are three consistent trends that clearly highlight the fact that emerging markets are on an upward trajectory.

Year Over Year Growth

In 2017, the economies of Brazil, Russia, Turkey, and South Africa have all showed annual GDP growth rates above the previous year. In fact, during the middle of 2017 the Wall Street Journal projected that some Emerging Markets could grow by as much as 4.7% in 2017.

Global Trade

Exports represent a larger share of emerging market output when compared to developed economies, making them more reliant on trade. And total world trade in goods accelerated to an average of 4.4%, in volume terms during 2017, an increase from 1.3% in 2016.

Weakening USD

The USD slid as much as 12% against major currencies like the Euro in 2017.  And while a weakening USD may hurt the purchasing power of US-based companies, it means companies outside the US will have increased buying power. For example, the Russian Ruble ended 2016 at an exchange rate of 61 / 1 against the USD. The Ruble did not see a rate this high during all of 2017 and it sits at 57 / 1 against USD as of Jan. 3rd.  

Of course, not all of the future for emerging markets is bright. There is still significant geopolitical uncertainty and instability that could wreak havoc on these growing, and subsequently fragile, markets. Russia’s continued military assertions in Eastern Europe, Korea’s saber-rattling throughout Asia, and the US administration’s protectionism theme could all manifest in economic earthquakes.

Whatever the beginning of 2018 brings, we’re hopeful that after these insights “Emerging Markets” are less confusing and more enticing to those in the business of global trade. It’s a big world out there and the opportunities are endless.


Castus Makes Headlines

Castus Consulting Featured in Global Trade Magazine

Click the image to read the full article.

Click the image to read the full article.

We spent time talking with Global Trade about how Castus was formed, what type of partnerships we seek, and how our process works. It's been a humbling and exciting ride so far, and we are thrilled to share some of our experiences. Thanks to the Global Trade team for the incredibly well written story! Click the image to read the full article.

Pittsburgh Business Times Highlights Our Work With Petco

The Pittsburgh Business Times recently highlighted Castus' partnership with Petco. Castus has been leading International Business Development efforts for the Pet Care retail giant since last year and it's been a truly rewarding experience. We're excited to continue this partnership and look forward to more successes!

Click the image to read the full article.

Click the image to read the full article.


Opportunity Among Unrest

In an age where the next terrorist attack could come at any moment, or civil unrest might disrupt major markets there is still a trend of optimism among many executives.

In a recent study by McKinsey, respondents reported that they are as bullish on the global economy as they were three months ago. Nearly half said global economic conditions have improved in the past six months.


This 4th of July, Be Patriotic, But Look Abroad Too

Patriotism is especially pertinent this holiday week, but for business owners large and small, there is more opportunity abroad than ever. A weakening US dollar means oversees customers can afford to purchase more and invest in your brand.

The Wall Street Journal reports that emerging markets are projected to grow by 4.7% this year, which is more than double the U.S. and Europe.

Photo by Bill Oxford/iStock / Getty Images

Photo by Bill Oxford/iStock / Getty Images


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