Taking the first steps toward exporting can be daunting. Does your product fit your target market? If it’s specialized, will it attract serious distributors or just be ignored? Will duties and additional shipping costs make it hard to get the price right?
For 22 years, we have worked with U.S. companies, large and small, that became successful exporters. The first step is understanding how the marine business works across the 50 sovereign states that comprise Europe; not all are members of the European Union, so the situation is complex. Exporters must be ready to work with them all.
Many American export initiatives fail because even if there is initial interest, the European distributor eventually realizes that the line may have too few SKUs, or might be too U.S.-specific, designed for segments like pontoon or sportfishing that are almost nonexistent in Europe.
For that reason, it’s important for manufacturers to have a clear understanding of their products to gauge how attractive they might be to any export market. A large range of well-packaged products that includes lower-cost consumable items and higher-end SKUs is always going to score high points with potential European distributors.
A reliable, well-established distributor may invest at least $35,000 in a product line, and the size of the initial investment is an indicator of how seriously they take new product lines. A product range with a limited number of specialized SKUs will create a bigger challenge. After all, selling just one product can take as much time as selling a broader and more profitable line. Focusing potential partners on your whole line, rather than allowing them to cherry-pick, is important.
Selling a specialized product is not impossible. If there is a market for the product, it can be done. We represented a narrow line that was attractive mainly to the OEM sector, with limited aftermarket appeal. That company did $3 million in international sales within six years; exports now account for about for 25 percent of total sales.
By contrast, another U.S. client had a much broader product line with appeal across different market segments. After a nine-year campaign, the company is doing sales of $3 million per year, with exports comprising 17 percent of total sales (with significant room to grow).
Interestingly, neither of those companies had a policy of corporate marketing or advertising. They just developed a very clear view of the best way to market.
U.S.-manufactured products are generally well regarded in Europe, so there’s an inherent advantage for an exporter. But the most successful lines also pay close attention to packaging and marketing. One of our clients created holes in packaging for the hook systems that European retailers use in displays. The same client included packaging and marketing with images of the types of boats you’d see in Europe, rather than an American sportfishing yacht.
Little things can go a long way. Because English is a second language to most Europeans, wording on a package must be simple and clear. And even though the U.S. system for rating water or dust ingress is better than Europe’s, successful exporters use Europe’s IP rating because the dealers and distributors are accustomed to seeing it.
Probably the greatest misunderstanding we’ve found among U.S. manufacturers is that the European Union creates a level playing field among countries. That is a myth. Any number of countries may have local regulations, particularly for items such as safety equipment. Due diligence is critical to avoid potentially costly mistakes.
It’s also important to understand the distribution system in Europe. Distributors can cross borders into different countries. U.S. manufacturers need to set parameters before signing contracts, so they don’t limit their territories.
After you’ve done your research and understand that exporting won’t be a slam-dunk solution, it’s time to test the waters. The most cost-effective way to do that is by exhibiting at Metstrade, the annual marine equipment show in Amsterdam. Filling many exhibit halls, Mets is the best barometer to gauge interest in your product. Distributors and boatbuilders from around the world are all looking for fresh ideas they can bring home.
Metstrade will provide instant feedback about whether your product has international appeal. It will also give you a sense of the European distribution system. Picking up one or two distributors in the first year is encouraging because it shows they believe your products have export potential. But, again, exercising due diligence will ensure you don’t limit yourself in the future. Offering trade prices and territorial exclusivity too quickly could seriously limit your export efforts down the line.
It’s important to take the long view when it comes to developing an export plan. We advise having a three- to four-year plan, with specific details for each European territory. Have one person inside your organization manage the export business so there’s a clear strategy, and have that person visit key customers to develop relationships.
Exporting to Europe is going to be more complicated than you imagine, with challenges that are different than you face at home. If you execute it well, exporting could become an important part of your business.
Tony Robertshaw is the founder of International Manufacturers Direct Sales, a European-based group headquartered in the United Kingdom, with an office in the Netherlands. Its clients include Blue Sea Systems, Sea-Fire, Ritchie Navigation and SureShade.
This article originally appeared in the February 2019 issue.