How to do business in Europe

For a USA company it’s quite difficult to be able to get your successful product into the European market.  I’ve seen many companies struggling and doing several ways to penetrate the EU market.

Direct sales:

Direct sales is an ideal channel for you in case you have no intention to grow your business.  You immediately grasp the popularity of your product and get a higher margin.

Grey distribution:

One of the big issues when you want to outline a strategy is that your current sales network in the USA is usually already quite active selling your USA made products to the European market.  The disadvantage when a US distributor does that, they typically do this at dumping prices.  Making it impossible for a European distributor to compete against those companies.  Final customers will do shopping and see the ex-works USD net price, mostly online and then compare it to the euro sales price of your local distributor who already had to add around 4% import duties and 10% transport fee and this his margin of typically between 30 and 50%

So you’ll have to first do your homework in the USA.

Distribution sales

Well: you’ve finally decided to find a matching distributor for your business.  Don’t forget, a distributor is there to earn money on your products.  If you do already direct online sales through your website you will have to at least offer a discount on that pricing of around 40-60% ; in this way it will pay for the distributor to be able to import the goods, pay for transport, stock them, and resell them with a profitable margin.

As for Europe, the moment you enter a market officially that one distributor is allowed to sell anywhere to Europe, so exclusivity does not exist anymore, having said that, most distributors though are not active throughout the whole of Europe. 

Language is still key.
the more south you go, the greater success you will get by translating your catalog, or finding a local distributor or agent in those countries.  So it’s a must for Italy & Spain, and the preferred path to market is to have then for each of those countries a distributor, since most of  these countries, customers want to purchase in their local country, this is also valid for France.

Type of distribution

Dependent on the complexity of your product you would select the type of distribution.  If your product is straight forward, then you might be better off with a catalog distributor that has divisions in each country, the challenge is then to get your product into the catalog.  When this is difficult, you’re left over to set up a distributor that covers some countries.  Don’t forget, the discount that you give on your product will be less when the distributor only offers logistical value.  The more you expect from your distributor, such as active seeking for customers in their country.  The more discount you need to give, also protection will be required in some way, don’t do the mistake by combining a channel like RS components with several value added distributors.  RS will steal the business away that your high value distributor has worked on, so will demotivate your distributor network. 

How to remain top of mind,

the more north you go, you’ll need to show repetitive innovation to have tools in the hands of the product managers to promote your product.

When selecting a partner distributor, analyse how many different product lines a distributor has, if they have a big list, surely you’ll be a number too.

Share on a regular basis marketing material, such as video’s, tutorials, samples, …

Europe in a nutshell

Innovation & machine construction is done in the west: ranked in importance so go for Germany, France, UK, Italy, Netherlands, Sweden, Austria, Spain, Denmark, Belgium

Eastern Europe is still, eastern Europe: a word is not a promess

If you’re seeking for a single distributor, Belgium is the way to go, they are people that are accepted by everybody and are quite central located with the necessary language set  (the Dutch are not fully accepted in Germany or in France)

Don’t make the mistake to have a UK distributor to handle the EU business.  Due to Brexit, you will want your products fully cleared into Europe and VAT free commerce, transport is so much easier once the goods really arrived into the EU.

Don't have a German to handle the French business.

Austria is a dumping market for Germany

an Austrian distributor is the way to go forward to reach Czech Republic, Hungary, Slovakia, Slovenia, Croatia in one go

a Swedish distributor is the wa to go forward to reach Denmark, Finland, and the baltic states  (take care: Sweden & Denmark have still their own coin)

The Irish prefer to purchase from Europe instead of the UK, remember they are also in the EURO

final customers think quite regional even within their own country:  a French company still requests for a distributor in his "région" , 

where to set-up a distributor:
- setting up a distributor in Spain is better in Catalunya then in Madrid
- North of Portugal (Porto region)
- Italy (Milan region)
- south & west of Germany (don't do it in the former east of Germany, or in the North)

....

How to Do Business in Europe - International Fastener Show (fastenershows.com)