What Do Importers Want?
This is an important question for your search of the right import partner. Your importer or distributor in North America expects to make a profit and get your support to build and grow your business.
Here are the 10 most common demands and worries of your trade partners:
- A Right to Make a Reasonable Profit
- How much profit and profit opportunity does a supplier provide, how much work is associated with building a suppliers business, how much value do you expect an importer to provide in relation to the contribution margin?
- Investment to build the business and brand
- Necessary investments below the line: Slotting, Free Fill, Market Research, Brand USP,
- Necessary investments above the line: advertising and communication in TV, print, radio, social media, sampling (demos)
- More marketing dollars are proportional to importer profits
- In the early stage, suppliers cannot expect importers to foot the marketing bill
- Accept and appreciate ideas to build the business locally (city by city, retailer by retailer) and don’t delay the request for funds or support.
- Invitation to visit headquarters, joint store checks, quota incentives for sales staff, lunch for support staff, letter of thanks or awards (distributor of the year)
- Unrealistic Expectations
- Category growth is 1-2%, how can you expect to grow 10% year on year, unless you spend an extraordinary amount of money, which is risky. Normal business growth reflects market conditions
- Direct Sales and Contact with Retailers
- The biggest asset of Distributors, Brokers and Importers is their contact and relationship to retail buyers and they guard these assets well. It is a natural inclination and too often standard practice among suppliers and retailers to “cut out the middle man” when sales and profits don’t meet their expectations. Retailers often try to persuade suppliers to provide more marketing dollars or buy directly from suppliers. Suppliers need to politely refer inquiries to the import partner or schedule a joint meeting.
- Last minute changes or last minute requests
- Package or graphic redesigns, price increases marketing budgets, trade spend, or sales incentives are often changed at the last minute, without prior notice or in violation of the carefully crafted joint business plan.
- The effect on importers, they have to cut their margins until price increases are accepted at their retail customers. Price increases have to be communicated at least a year in advance and very carefully so not to loose distribution.
- Frequent last minute reports, frequent or unannounced last minute market visits,
- Short Shipments
- Importers can be assessed penalties, store level space may be lost or need to be recaptures. Keep pipeline filled and treat foreign markets like your best customers t home
- Faulty Shipments and Border Detentions
- Increasingly, containers are being detained because the FDA or Customs inspectors find a faulting in labeling or in the documentation. The detention can last weeks or even months, because the FDA or CBP don’t have enough staff to resolve shipment disputes quickly. The re-inspection is expensive and at worst, the container content has to be destroyed. Reliability of labeling food correctly is the exporters first duty.
- Margin reduction
- Importers take a gross margin of about 30%, but they have to pay for warehouseing, shipments to retailers or wholesalers, payments for brokers (5-10%), payments for office space and support staff, marketing, trade fair booth and travel costs. The net profit margin is in the less than 3%.
- In order to stay in business and make a decent living, importers either need a lot of suppliers and thus have little time for each suppler, or have only a few suppliers, with more time dedicated to each supplier.
- Customer and Consumer Service
Adapted in part from Greg Seminara, Export Solutions