Entering overseas markets
The different ways to enter overseas markets
When you decide to enter an overseas market, it's important that you identify the best approach for your business.
There are four main ways to sell to customers in overseas markets. You may find you need to use more than one entry strategy, depending on the markets you target and the products you offer.
|Selling directly from the UK|| |
This typically involves making periodic sales visits to the country, supplemented by telephone sales or accepting overseas orders on an e-commerce website. It can be a simple and cost-effective way to enter an overseas market. However, it may isolate you from your customers, and make you unable to share the exporting workload with partners or intermediaries.
Opening an overseas operation
This involves opening your own branch or subsidiary in the new market, or entering into a joint venture with a local business. Having a presence on the ground can be valuable, but setting it up and maintaining it may involve major resource commitments.
Using an overseas sales agent
A sales agent acts on your behalf in the overseas market, either by introducing you to a customer or by receiving commission on any sales to that customer. Agents are used extensively in the European Union and are protected from abusive business tactics by law. Ensure that you understand what you have agreed and seek legal advice on your agreement, as it's not advisable to operate without an agency agreement in place.
Using an overseas distributor
A distributor buys from you and then sells on at a higher price to their market and customers. They take full responsibility for the import of your goods. A distributor takes ownership of the goods and therefore can do with them as they wish, which means you must trust them with your brand.
Important considerations when entering overseas markets
There is much more to exporting than simply generating overseas sales. An intermediary can help you with issues including customs and other paperwork, shipping, warehousing and after-sales service. Selling direct means you will have to handle these issues yourself.
Find out more about how to manage the risks of exporting.
When selling overseas, you can sell your product or service directly to customers or use an intermediary. You may decide a mix of these approaches is best for your business. There is no 'one size fits all' solution.
You should consider the implications of each method in terms of:
- the direct and indirect costs, such as investment in an overseas operation, or the heavy discounts often demanded by distributors
- how much control you'll retain over how your product is sold, and how much you'll need to delegate to partners or intermediaries
- which export-related risks you'll have to bear, such as exchange-rate movements, non-payment risks, longer trading cycles and delays due to documentation problems
An intermediary may be able to handle issues such as paperwork, shipping and warehousing. However, you will have less direct control. Selling directly may give you more control, but you will have to bear higher costs.
Read a step-by-step guide to exporting.