Thursday, September 27, 2007

Building product distribution network in USA

Heaven Fresh has been operating a branch in Chicago, Illinois from the very beginning.  But for the past four years our sales in the US have been limited to the Internet only.  Although the Heaven Fresh US web site brings in significant revenues, the real business value lies in establishing an offline sales and distribution network.  It is not a secret that America is the world's largest and the most lucrative market.  But what many people do not realize is that it is also the most cut throat market in the world. If the furious competition and the lack of financing does not kill a business then defending a fabricated law suite from a large competitor can bankrupt the company.  One of the tactics that a micro-multinational company can use is to work under the umbrella of a stronger partner. Not only this strategy can help with the financing but also can shield an MMNC from the intimidating and the bullying tactics of the competitors.

We feel that we are finally ready to set foot in the US market. We have started working on setting up a distribution network in the US for Heaven Fresh products. There are several different ways of doing it and we have chosen to distribute products through small speciality retail shops. We are running an in-house telemarketing campaign to bring these small shops on board and get them to carry Heaven Fresh products for resale.  Although it is a long and tedious process, we believe that it is the most cost effective and the safest way for us to proceed in the US. We see more advantages in this approach and some of them are as follows:

  1.  We are able to use our business infrastructure in Toronto Canada for telemarketing to reduce overheads.
  2. There is no lengthy decision making on the business owner's part. He/she just needs to consult her spouse to decide whether to carry the products in the shop or not. 
  3. The payment recovery cycle is relatively shorter.
  4. The risk of non-payment is distributed among hundreds of small resellers instead of a few big retailers.
  5. The sales volume increases gradually allowing a business to reinvest the cash from gradual sales build up to finance further growth.
  6. Once the network is established, it is easier to convince small business to carry new products as well.

The biggest challenge for us  is that our margins are very thin in the US due to the furious competition. The only way we can make money is to build a large sales volume as soon as possible.  The speed, that a micro company can move with, can be the deciding factor between profitability and bankruptcy in the American market. 

We have purchased a list of businesses across the United States and our plan includes making hundreds of phone calls every week to find out if these particular businesses are interested in selling air and water purifiers. If these potential distributors show some interest, we send them product information and marketing material. The information package is then followed up by phone calls to get a 'yes' or 'no'. Sometimes, it can take dozens of phone calls over several weeks to one store owner to get a firm answer.  They key, of course, is to be persistent and not give up on a potential lead until there is an explicit 'NO' from the other side.  If one business does not want to carry the products there are few others down the road and one of them is bound to go for it.

We started telemarketing campaign about a month ago and so far the results have been very encouraging. We are still learning and streamlining the process and our goal is to have at least 500 resellers in our distribution network within one year. If anyone reading this post has some insight in running a successful telemarketing campaign to build a distribution network, I will welcome the advice.


Anonymous Electra said...

Good words.

October 28, 2008 2:05:00 PM PDT  

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