Saturday, June 30, 2007

Heaven Fresh Distribution Startup Strategy for a New Country

Heaven Fresh is in the business of marketing and distribution of air and water purifiers. Just like any other marketing and distribution company, the biggest challenges for us in a new county are:

1) Finding "the perfect" partners

2) Reaching out to potential customers

3) Expanding the distribution network

Finding the right people

If people are the biggest asset of any business then the right people can be the difference between the survival and death of a micro-multinational in a brand new market within weeks of starting the operation. With limited capital and time, there are various challenges to face. Anyone managing the new office must be very well aware of that and must be ready (both physically and mentally) to take on this challenge. 

We believe that the kind of commitment that a new Heaven Fresh office needs can not be expected from an employee. For each new office/distribution center, we need a partner with entrepreneurial spirit,  who wants much more than a regular job. Therefore, instead of seeking employees we seek "partners" who get personally vested in the business and have a sense of ownership. These partners share the Heaven Fresh vision and are prepared to take on a difficult task.

When selecting a new partner, we try to make sure that this new partner will not only be able to handle the new office but will also be able to contribute his/her skills and talents for other HF offices as well.  The new partner can be someone who's already involved in similar business and wants to join a global team or he/she could be a fresh graduate from a college/university  and is willing to give whatever it takes to make things happen. For example, our partner in Germany, who is managing the Heaven Fresh Germany office,  was already involved in air purification business when he decided to work under Heaven Fresh umbrella.  He had years of engineering experience under his belt and had quit his job to start the business. On the other hand a young graduate with Master's degree in computer science took on the responsibility for the UK office realizing that his duties will not only be limited to software development and IT work but will also include shipping & handling of the daily orders, loading & unloading of the containers, accounting, customer services as well as the management of the every day business affairs.

Immediate reach to potential customers:

Reaching the targeted retail customers as soon as possible after setting up the office in a new country is extremely crucial for a micro-multinational company like Heaven Fresh.  If we are to achieve our goal of breaking even in just 3 months,  we must be able to reach out to the customers who are already prepared to buy our products.  This immediate cash flow is the life line for a new Heaven Fresh office. 

There is no better media than the Internet search engines and an e-commerce web site to get that much needed cash flow to sustain the new office. If a web surfer is searching for the words like 'air purifier', 'air cleaner' and  'air ionizer'  etc.,  it simply means that he/she is already thinking about purchasing such a device. The simple fact that the generic key words are being used to search for an air purifier also suggests that the potential buyer is not interested in a particular brand.  So, if we can just manage to steer the web surfers to our web site, we have a huge chance of closing that sale. 

With four of our web sites (US, Canada, Germany & UK), the first sale came in within 48 hours of launching each web site.  Each sale from the newly launched web site puts more money in the company's account to be spent on pay-per-click advertisement to direct more potential customers to the website. While pay-per-click programs such as Google Adwords, Yahoo Search Marketing, Shopzilla and are great to get the sales cycle started with just a few bucks, the real value is to get the new web site ranking high in natural search (the non paid search results of Google, Yahoo, MSN and other engines).  Out of all the search engines, Google is my favorite as it rewards us for our hard work in other countries. Just to give an example,  our first web site for Heaven Fresh USA ( ranks high for key words like 'ionic air purifier'.  When we launched our UK web site in November of 2006,  Google automatically associated the UK site to the US site as both share the domain name, the company name, the slogan, the products, the site keywords, the site structure and the cross links  on all the Heaven Fresh web sites. On the other hand Google is smart enough to know that the new site is geared towards the UK market from the company phone numbers, the physical address and the sales currency etc.  The Heaven Fresh US web site might not be much of an interest to a web surfer in the UK as there is Trans-Atlantic shipping involved there. Therefore, the new UK web site automatically gets the weight of the established Google rank of the US site  This visibility in the search engines (paid & non paid) not only helps us get the retail customers but also attracts distributors who are looking to resell air and water purifiers in that market.

Our rule of thumb is that the online sales must stop the initial bleed of the company bank account within first 12 weeks. Beyond that any further investment in the business must be reserved for the growth activities instead of the working capital.

Expansion of the Distribution Network

As a consumer products marketing company, expanding the Heaven Fresh product distribution network and using all the possible sales channels are the key factors to grabbing a significant market share in the new country.

Establishing a distribution network can be an expensive and time consuming undertaking for any company. Anyone involved in consumer products marketing knows it very well that each product has a limited life cycle. Depending on the stage a product is at during its lifecycle, different strategies and sales channels can be adopted for distribution.  In a micro-multinational company, it is very important to identify the life cycle stage of the products  in a particular country as this stage can vary from country to country. Taking an approach that a particular market is not ready to entertain or spending the time and money on experimenting with the wrong sales channels can spell disaster for a small company. We learned this the hard way in Heaven Fresh Middle East offices (United Arab Emirates & Saudi Arabia) where we made certain assumptions that were only valid for relatively mature European or North American countries. The good thing is that we recovered from our mistakes and managed to turn those offices profitable. 

Depending on the resources available and the market conditions, we either use direct sales approach, establish a network of small distributors, put the products on the shelf in the big box chain stores or sell through home shopping TV networks.  This is a simplified version of our efforts to expand the distribution network of Heaven Fresh. An entire book can be dedicated to the consumer product distribution in 21st century as well as the most effective ways to do it in a micro-multinational environment. I will write more in bits and pieces on this topic.

At the end, I have to say that we are very excited about our latest endeavor to run the 30 minute Heaven Fresh infomercial to sell products on TV. The infomercial will debut in Canada on 7th of July on Shop TV and will start on Best Direct TV in the UK on 30th of July, 2007.



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