Researching and Finding Overseas Distributors

​One key question that arose during the September 30 Minnesota Trade Office seminar http://mn.gov/deed/business/exporting/  was how to find an overseas business partner.
It is a daunting task to research and select overseas distributors.  This is not a customer search it is a partner search that entails significant risks to be mitigated.  I remember Roy Stromme, an attorney and friend (an unlikely combination), once told me when I was doing M&A work to look primarily at former customers, suppliers and neighbors as initial prospects.  He was right, you want strong histories and references when looking at a partner relationship. 
There is simple preparation that needs completion before you start looking for a partner. What is this preparation?

1. Complete a profile of your most successful distributor either in the US (if not foreign business) or overseas (if you have one).  You need to know which traits you are looking for in a distributor partner.
   1. What skills do they have made them successful? 
   2. Was it their sales team, leadership, location, local marketing, ease of doing business that was the key to their success?
2. Review your web site.  It will be the first impression you give a prospective distributor and you want to appear to be a successful willing business partner.  This will most likely be the first impression when approaching a new partner-make it positive and inviting.
   1. Is your latest update within the past year?
   2. Is there a listing of current distributors?
   3. Is there a distributor information form on the web site that can be completed?
   4. Is there an overseas customer testimonial somewhere on your web site?
3. Assign someone responsibility for overseeing the distributor recruitment process that can respond to inquiries within 48 hours.  It is responsible to have someone that has a bias to action to keep the recruitment process moving along.

There are both primary and secondary sources of finding prospective distributors.  Primary sources are already in your industry and will probably be known to you.  Chances are that they will be able to “hit the ground running” with your products and have good product learning capabilities.  Secondary sources do not have industry knowledge, but have success within that geographic market will have stronger supplier, logistics and management skills.  Their salespersons will not have the industry or product knowledge necessary to “get out of the gate fast.”  Generally primary sources are preferred because those salespeople within the organization will sense early wins and $ to make your products successful in that market.
One finds the primary sources at your current trade shows, conferences and in industry publications.  I generally look for referral sources:

1. Large end user domestic customers that have overseas operations.  Obtain foreign contacts from these current accounts, their buyers, and ask them how they buy your types of products in their market.  One precaution-do not submit to selling direct or it may confuse your negotiations with a prospective distributor.
2. Complementary suppliers.  Most distributors carry an extensive line card of products.  Who are the complementary manufacturers in your industry?  Look at the complementary distributor web sites and find out who they partner with.  Then, follow up with the complementary partner as you do your industry networking and gather information on the success of those partners.
3. Competitor distributors.  How do your competitors go to market in that country?  Do they use distributors?  Do they use multiple distributors?  Have they terminated any previous distributors?  You may be able to learn from competitors in this process.

Secondary sources of distributors can be derived from governmental sources wanting to promote exports.  They are usually not industry savvy, but can provide good demographic data on the target country and local resources at a fraction of the cost to hire an outside consultant to assist you with translation and transportation.

1. The US Department of Commerce offers a manufacturer/foreign distributor matching service called the Gold Key Program.  More information can be found at http://www.export.gov/salesandmarketing/index.asp .  I have used this program with limited success. The problem is that the local foreign service offices do not know your industry and have many clients to serve.  They cannot do an adequate job with such a broad program for your narrow market niche.
   
2. Local state offices such as the Minnesota Trade Office has many educational resources, search capabilities and networking resources to help you, but cannot properly find overseas distributors.  I found the Minnesota Trade Office to be a tremendous resource for country knowledge and networking with other local companies as they have done business in that specific country-use them for that.
   
3. You will also get unsolicited inquiries from either your inbound Customer Service Center or web site from prospective distributors.  I also reply promptly and professionally to these requests asking them to complete a prospective distributor information form.  This process vets prospective distributors that are trawling to add product lines to their line card.  The good respondents start a meaningful open dialogue.

Having found prospective distributors from both primary and secondary sources, I have learned one thing: Use all sources at your disposal at this stage of the distributor recruiting process because you never know which candidates will emerge.  Follow every leads to its conclusion because not all search tactics work well for all markets and not all foreign markets are equal.  Contact me if this is a project you would like to outsource.
Good hunting!