We have identified promising business expansion opportunities in Latin America (“LatAm”) and according to our business strategy this region is to be targeted by appointing distributors. Great!
Now… How do we find the (right) distributors? How do we approach them? How do we perform a due diligence of a potential distributor? …?
Identifying a distributor who fulfills our requirements presupposes a considerable amount of research, investigation and communication. Once identified the distributor, the negotiation part begins. If everything goes according to the plan, an agreement is reached with the distributor. Contrary to the belief of many, the work does not end here. Our next step is to stay in constant touch with our distributor and work on maintaining a positive relationship. Business in LatAm is relationship based, remember?
The purpose of the present article is to highlight some aspects to be aware of when deciding to enter the LatAm market through distributors.
– Limited online presence of LatAm distributors
Patience, perseverance and a great deal of research as well as extensive networking are needed when searching for our optimal distributor in a new LatAm market. As for LatAm distributors, online research rarely bears fruit. As a rule, LatAm distributors have limited online presence and very little information is available online. Because of the latter, the common practice is to look for distributors at trade fairs, through recommendations, through personal meetings with their representatives, etc. As a result, it is generally a relatively long process, but indispensable if we decide to enter the LatAm market in the respective manner.
– 1 distributor for the entire LatAm?
Unfortunately, no! LatAm is a huge region. There are very few distributors covering multiple markets properly. As a rule, the company will have to search for a different distributor in each LatAm country or even several distributors within the same country in order to obtain a complete coverage of the region.
– Detailed due diligence
Lack of research is by far the most frequent mistake when searching for a distribution partner. As a rule, it turns out to be a big mistake to decide to cooperate with the first distributor that crosses our path. Companies should take sufficient time to make extensive inquiries about potential suitable distributors and then rank and compare them so that they can choose the most suitable one. Taking into account the fact that the online presence of distributors is generally limited, speaking with end clients, other companies the respective distributor represents, speaking with former employees, etc. turns out to be a good tactic for getting to know a potential distributor. Performing the due diligence of distributors is indeed a rather time-consuming process, however it is decisive for the success of any future cooperation.
– Larger or smaller distributors?
Companies searching for its distributor should not blindly opt for the larger distributor. Occasionally, larger distributors do not prioritize the company’s product, and the company doesn’t get the treatment it might get from a smaller distributor with good relationships at a site level and which is more ambitious in terms of selling the company’s product and growing its business.
– What should we look for in distributors?
The appointed distributor should possess extensive experience, skills and understanding about the importation of similar products into the respective country, established and verified sales channels, deep understanding and know-how of the product, a sales force large enough to meet the company’s needs and expectations, strong belief in the product and eagerness to bring the product into circulation, just to name a few requirements.
– Communication language
Companies must be aware that most people in LatAm do not speak English. The same applies to distributors. Some of them might speak (some) English, yet many of them might have absolutely no knowledge of the language. This being said and considering the importance of maintaining a good relationship with the appointed distributors, a bilingual consultant or an interpreter is much needed and highly recommended when it comes to the ongoing communication between the company and its distributor.
– As always: invest in good relationships!
As previously pointed out, LatAm is extremely relationship based. This being said, signing on a distributor and visiting once every now and then, will definitely not bring good results. In order for the sales to flow in line with the expectations, it is crucial to maintain good relationship with our distributor by visiting him regularly, accompanying him to visit clients, providing continuous training, etc.
What would you point out as an additional aspect that needs to be kept in mind when looking for a distributor in LatAm?
