Many people who have small businesses and have grown enough to position themselves well in their local markets ask me if there is any difference between selling in your country and international markets. In my opinion, there are quite a few differences in many aspects. I will try to expand this idea based on my commercial experience.
Culture
In the same way that a buyer’s DISC style influences their decision-making process, a country’s culture can affect the sales process itself. Let’s look at some cultural differences. In America and Europe, priority is given to effectiveness; people want to know if the meeting they attend will be fruitful or waste their time. Customers are straightforward, and they will tell you quickly if they are not interested in your product.
On the contrary, in most Latin American countries, you need to have a good network of contacts that will allow you to reach the right person. However, even if you meet with the decision maker, most likely, even if he is not interested in buying, he will not tell you. The response you will get will be something like, “Let me think about it,” the truth is that as soon as you leave the meeting, he will forget about you.
In the Middle East, people won’t necessarily do business with you unless they know and trust you. They want to have a coffee, talk about your family, look you in the eyes and then discuss business (with its respective penny-by-penny negotiation).
These are just a few examples demonstrating how different our approach must be depending on the client’s culture. A European company once hired me to manage the Latin market. When I asked them why they didn’t manage it directly, the answer was that the culture drove them crazy. They couldn’t stand that buyers didn’t want to say “No” to their proposal and instead kept them waiting forever for an answer. They needed someone who understood that dynamic.
Obviously, negotiation strategies will differ according to the culture, but I have already written other articles on negotiations that you can also review on this Web.
Regulatory aspect
Depending on your product, you must adapt some specifications to the market you want to explore. In the case of food, it is clear that the European Community (EFSA) standards are not the same as those of the USA (FDA). Before starting to offer products, you must be sure they comply with the country’s regulations. Otherwise, the exporter may find himself in a series of legal problems. On the contrary, when selling in the local market, the rules are clear, and the products you handle are usually ready to market. It’s more straightforward.
Taxes and rates
Importing a product involves paying taxes. Each product will arrive in the destination country under a tariff heading. There will often be local market protection, so you must verify how much your product should paid. In addition, there may be other taxes to consider; this varies from country to country. Unless you have lower costs than local markets, your final price may exceed the local average. This is where the quality of the product must justify its price.
Politics and Country Risk
Many countries have internal policies that can make it difficult for foreign products to enter, or perhaps they are countries with credit problems that will imply a higher risk. Each company must carefully evaluate whether it wants to sell in this market. They may even pay more per product unit, but collecting can become impossible. Of course, there are protection mechanisms, such as international insurance or letters of credit, but that does not imply that sudden changes in government and opportunistic policies truncate payments abroad due to a lack of foreign currency, for example. There are many cases like this in African countries. I once suffered payment delays when selling to Egypt due to government policies regarding the outflow of dollars.
Time
International sales involve moving merchandise from one country to another. To do this, you have to consider freight and, therefore, transit time, which is usually longer than estimated. Logistics operators can give you an approximate transit time from the port of origin to the destination, but that is not guaranteed. Many things tend to happen, just to name a few: vessels tend to be delayed, or your merchandise can be “rolled”, that is, it is passed to the next vessel, it can arrive late and miss the connection in a port, or it can be inspected in port and therefore taking longer than expected. You also have to be careful with freight prices; shipping companies usually control the price, and you can hardly influence or negotiate unless you are a significant client.
Commercial aspects
All this leads us to think about the sale price. There is a saying in sales, “Every customer pays the price they deserve.” And it is very accurate. Some markets simply pay more than others. Either because they have greater purchasing power and are willing to pay more for quality (the case of the United States) or because there is less foreign competition.
On the contrary, there are also huge markets that will prioritize price. It will depend greatly on your company’s strategy to decide at what price to offer your product. It will require a market study or a good incursion by the seller to find out the average market price. There is no need to break the market by going below the average (unless that is your strategy). This is all about information.
Many companies diversify their sales, looking for different types of markets (and here is the beauty of selling in international markets that are very different from each other). Some will be small in volume but pay more per unit; others will be large in volume but demand a lower price. You must put your eggs in various baskets to protect against market problems.
Also, consider that the seller must have the capacity and means to penetrate a new market. He or she must be resourceful and look for ways to reach customers, especially starting from scratch. There are databases available, web pages, social media, etc., with much information. Certainly, as everything is more connected today, it is easier than years ago, but that does not mean it is fast. In any case, it will involve more effort than in a local market.
Conclusion
As we see, selling in an international market is more convenient than staying in a local market; you can get better prices, diversify your client portfolio and risks, increase your demand and production capacity, etc. But it would be best to consider the specificities of each country you want to sell and what you need as sellers to be up to the challenge.
If you like the topic, you can use some of the other sales articles I wrote on the blog. If, in addition to this, you feel that you need help to improve your sales techniques, you could try coaching. You can contact me via the website to schedule a meeting.
Alexander Martinez
