July 02, 2024 Industry news
Export can be a powerful growth engine for any business, offering a multitude of benefits that extend beyond simply increasing sales.
Exporting allows you to significantly expand your market reach, makes you less dependent on the economic fluctuations of your home market, can boost your brand image and encourage innovation by exposing you to new ideas and competition.
That is why we recently hosted a webinar with independent retail consultants Curatyx, to explore the requirements and common pitfalls challenger brands encounter when setting their sights overseas.
Read on for some of the key insights that were shared.
Mike Luck, founder and director of Curatyx
We are a sourcing solutions business that was set up by three former Sainsbury’s colleagues to solve problems for international retailers.
We now have business live in Asia, the Middle East, across the Mediterranean and Caribbean. We will soon be launching in North America and have plans to expand into Africa, Australia and New Zealand too.
We combine efficient logistics with strong retailer relationships to develop global retailing solutions and help out clients solve particular category problems, whether that be identifying and leveraging gaps in the market or differentiating their products.
Mike Luck
We also help with private label sourcing as we have a number of retailers that ask us to support their own private label proposition. Across all of our models, we focus on developing simple solutions for the retailer and supplier across ambient products, chilled and frozen.
We work with our retail partners to grow category sales, so we very much focus on growing categories rather than switching volume around. We do that by bringing more customers in through differentiated propositions such as exclusive products, ranges, or brands that we can support our customers with.
We also aim to create more opportunities to sell, looking at usage occasions, different product ranges, and creating more reasons to buy into the ranges we already have.
This might involve getting customers to buy more through a variety of tactics such as introducing certain chilled ranges that create a greater frequency of purchase or trading up. So again, it could be around exclusivity. It could be through different areas of differentiated propositions like organic or free from - all those areas that really help you trade up. The key point here is that we focus on growing categories using our experience, supplier contacts and strong understanding of the retailers we work with.
Gareth Roots, head of buying at Curatyx
Despite the impacts of Brexit, exporting food and drink still represents a massive opportunity for UK businesses.
The UK is a highly evolved retail environment so brands that do well over here tend to well overseas as well. Foreign retailers recognise this so there is a real and growing demand for UK products.
If you want to export, one of your first – and most complex – tasks will be developing a firm understanding your options.
This typically includes three primary routes to achieving an international listing:
- Direct to retailer
- Local distributors
- Sourcing partners
There's pros and cons to each and it’s down to you as a brand owner to work out which one is best for you.
Direct to retailer
When it comes to option one, dealing directly with retailers, the biggest challenges is often finding the right person to speak to. This can be tricky in the UK, let alone overseas.
If you have anyone in your network that can help with an introduction, do take advantage of that. Some buyers have a habit of putting messages from sellers they don’t already know in the “too difficult” pile so that is a hurdle you may need to overcome.
Another point to consider is that when dealing directly with the retailer, you could end up being responsible for the whole process as its likely you'll be on the hook for landing in their country and getting your products to into their depot.
On top of that, you’ve also got to do all the standard things you would be required to do in the UK, such as getting set up as a supplier and agreeing payments terms etc. Retailers will also want to buy in their local currency so you will have to factor that in as well.
Local distributors
Local distributors typically operate in a specific territory in which they will have coverage of most of the retailers in that market. While they can offer great coverage across their specific territory, it is worth bearing in mind that your transaction is with them rather than retailers so, once you have sold to them, you will have little control over what they decide to do with your brands and products.
Again, you'll be responsible for getting the product to the distributor. One of the key challenges in this area is logistics, especially if you're selling small quantities and are just beginning to build up your business. Logistics could actually end up being possibly the biggest cost line you have, especially with some of the requisite labelling.
In some instances, distributors will almost buy on consignment. You'll send them the stock, place it in their warehouse and have conversations with their partners but you won't get paid until it has been sold into the retailer. This could obviously impact your cash flow depending on the rate of sale.
The good news is that some distributors will assist you with importing, the associated documentation and product registrations etc. This can be a huge bonus but will vary, case by case.
Sourcing partners
The main difference between local distributors and sourcing partners is that a partner will focus heavily on specific retailers in their territory.
While they may not work with every retailer in the territory, they will have deep links with the ones they do work with and are almost appointed on their behalf to source brands from different markets.
A sourcing partner will handle all the product registrations and, to save you having to find a sourcing partner that's based in the UK, the transaction between yourselves and the sorting partner will take place in the UK, removing any foreign exchange complications.
The stock is paid for once delivered to the sourcing partner who will then take charge of the process and manage all logistics.
The key benefit of a sourcing partner is that they work with you to understand where your brands are appearing. This means there should be no surprises in terms of where your brand turns up.
Both sourcing partners and distributors ship large volumes frequently which can really help you lower the cost of logistics.
Getting prepared
Regardless of the route to market you choose, there will be some key information you will need to prepare in advance.
Retailers will want to know how your brand is performing in the UK. What makes your product stand out? Where is it selling best and to who? As mentioned earlier, with the UK being such an evolved market, there is a real and growing demand for products that do well here so it is very likely you will be expected to explain your growth story.
If you sell more than one product, ensure you have all your range information in order. This will include price positioning, variances, pack sizes and shelf life for your entire range.
This information is crucial for working out your commercials. It is very important you get this right as simply looking at similar products in your chosen market can be misleading.
You may notice that similar products within your category can sell for triple the UK retail price. While this may look like a great margin opportunity on paper, there are a lot of different aspects and requirements such as labelling and logistics that you will need to factor in. Distributors and sourcing partners can also help with this as they are very experienced when it comes to dealing with different categories in those markets.
It's really important to get your head round how you can streamline production and get your products out the door as soon as possible. You will always want them land in your chosen territory with as much shelf life as possible.
For product lead times, that factors into your minimum order quantities and how often you are producing. So, if you're producing every six weeks, you need to work with a route to market that will best suit the order frequency.
What you can't do is produce every eight weeks and then ship it to the retailer or sourcing partner seven weeks after it's made, as that eats into a significant portion of its life. All these aspects need working through when you’re building your proposition.
Exclusivity is also important as retailers thrive on it. They want to show their customers that they are procuring the best ranges from around the world so any potential exclusivity should be carefully considered, especially when if it’s your first foray into to their territory. No one would expect exclusivity in perpetuity, but six to twelve months is not uncommon.
Getting listed
Once you have completed all of the steps listed above, it will be time to get listed.
There is a litany of things that need to be prepared before export and the more that you can do before beginning your conversations with retailers, the better. Momentum is key so you don’t want to delay the whole process by having to go back and source information that the buyer will expect.
It is often harder to restart these conversations than it is to begin them, so we strongly advise getting all your ducks in a row and ensuring all the necessary paperwork in place before you start the journey. You're going have to do it anyway so why not get a head start?
Some territories will require your manufacturing sites to be approved. Whether you are producing your own products or are working with partners, it's important to begin those conversations early so you know where you stand in terms of any registration requirements or paperwork.
This is incredibly important because if your product lands at port without the required accreditations or paperwork, it may get held until it expires, leaving you liable for the loss.
The more that you have in place prior to any discussions, the smoother the process will be. There are always surprises in export, but the more you can do ahead of time, the better position you'll be in.
It's all about maintaining the momentum of your conversation with the retailers. Don't give them any reasons to halt the process.
