Typical Major Obstacles
Being a product startup already has some major challenges. Being a “foreign” startup or product brand has some unique hurdles:
- Consumers typically don’t know who you are, and your typical marketing tactics might not translate well (perhaps literally).
- Managing additional day-to-day retail operations, support, sales force, communications, logistics, channel marketing, and all the other tasks is already daunting… let alone in a timezone 6 to 13 hours away.
- The US market is different. Retail terms are different. Distributors are different. The whole ecosystem is both abundant with opportunity and tough to break into successfully. Don’t assume your local market experience will apply directly.
Typical Mistakes Foreign Product Brands Make
Whether you’re a startup or an established manufacturer doing business throughout Europe and Asia, finding the most cost-effective path towards growth is always at the top of the to-do list. But the most cost-effective path to accelerate retail revenue is sometimes counter-intuitive.
1) It’s not about finding the best commission-only partner with the “best” connections.
The appeal of finding a paid-on-success, commission-based partner is that there’s no way you can possibly lose, right? If the partner does not perform then you lose nothing. Does this sound too good to be true? It most often is.
While sales reps and distributors have a lot of usefulness, they don’t put you above the noise and competition or handle back-end activities well – which is what drives long-term, consistent growth. What you save in money, you add into risk.
Retailers, distributors, and other resellers don’t care how much product you can sell them. They care about how much money they can make from you and whether or not you’ll be an easy vendor to work with.
One of the most common reasons for a consumer product brand to fail is by failing to not generate consumer demand. And getting an actual meeting in front of retailers or distributors is really not that difficult relatively speaking (see podcast at 26:25).
2) Hiring full-time employees can be expensive and risky
Many foreign product companies decide to hire US employees who can manage, support, and grow their retail distribution presence. While this may sound like a fix-all solution, there are particular drawbacks that make this option too risky for many up-and-coming product companies.
- Salary, benefits, and office material costs can add up fast. Really fast. An entry-level Marketing Manager typically ranges from $45,000 to $75,000. What if you need someone with sales, logistics, or other expertise?
- However, the biggest cost is often employee turnover especially because pioneering something new into the market involves a lot of resources, effort, stress, and specific knowledge or track record.
Better Model for Foreign Product Brands
A lot of consumer product brands do not think about other models of accelerating their US retail presence besides reps, distributors, new employees, or doing it themselves.
We’ve been seeing a lot of growth and success with our foreign startups and manufacturers throughout North America by applying our “part-time” or “outsourced” model to allow for pinpointed solutions to the challenges mentioned above.
For example, our model allows our clients:
- Retail expert with 10-25 years on BOTH sides of the retail buyer’s desk along with a track record of growing new product brands.
- Specific allotted hours per month for a growing retail presence – costing thousands less than an entry-level employee – with no penalty for pausing or canceling partnership.
- Faster new and repeat POs due to stronger North American channel relationships with a combined focus on sell-through and back-end management.
Thanks for reading! If you’d like to learn more about our model, send Yohan Jacob at yjacob@retailbound.com.
