Tejraj is looking for a company to help him expand to Europe. How can he find a distributor… and is that even the right option?
We are a women’s lifestyle sneaker manufacturer based in India, but we also have our own registered company in France. Our products are pure leather, and range from €100 to €125. Currently, we are selling on Amazon India, through an online distributor, and have our product in stores in india.
I am more interested in the European market though. Our product will soon be available in stores in France and I want to sell on Amazon UK and France through FBA. But because we are based in India, I am looking for a third party vendor to assist us, and do it on our behalf.
— Tejraj P., India
Getting into new international markets is always best done using service providers or partners, in some initial capacity. Why invest in everything yourself and run the risk that the product underperforms, or you end up with monthly overhead and no ROI? Leveraging existing services can provide a stepping stone to test things.
First things first…
Why are you selling to a distributor in your local market?
By going direct, you would control the buyer experience and ensure control over all interactions between buyer, service and product quality feedback.
I guess I see a lot of this and it still perplexes me. Manufacturers using third parties for activities they could easily set up and run themselves, or have a service provider set up and run for them. Why not have a better margin and more direct interaction with buyers? Why add a layer in the middle that likely also sells other brands and items, and thus isn’t nearly as focused on building positive experiences around your product?
Manufacturers might like to know that there aren’t any real advantages to using ecommerce-only resellers anymore. Really, think about it:
- Ecommerce and the internet mean everything is connected. You can get your product in front of buyers all over the world by never leaving your local office, home or bed. The world is at your fingertips. If you’re connected to the World Wide Web, you’ve just gone global in your slippers. You don’t need a company “connecting” you to markets because you can do that yourself. At least when it comes to the online world!
- It’s not hard to do it yourself, it just might seem so. I guess it’s easy for me to say that, given I do this for a living… But there you have the answer – if you don’t want to teach yourself how to get started with the 15 million articles, blogs and ‘how to’ pages out there, use service companies like ours.
- Generationally and demographically, this is the direction the world is going. Brands are selling direct. Manufacturers are selling direct. Buyers expect it because buyers are using marketplaces like Amazon as their first place to search for product. Many of the younger buyers are using their smartphones or mobile devices, and little else, to purchase products.
My assumption is that you’re an active Amazon vendor and this model fits your background? I might be wrong, but it sounds likely. Manufacturers often see “vendor” as a natural extension to their business. It’s just another wholesaler to supply without the perceived uncertainty of selling direct to consumers, and all the feared burdens, logistics and knowledge to do so. I get it, and I would likely adopt the same principle in your shoes… I think that was an accidental pun.
But let me dispel the myth – Seller Central is not harder to set up, and it’s not harder to run either. Yes, the model is different, and if you have been working in B2B-only, it’s a learning curve. But the knowledge to set it all up is literally a Google search away.
Perhaps you might be thinking of it this way. Vendor is low-margin but “easy”. Seller is high-margin, but “hard”. Why play the game of ecommerce on the hard setting? Why not play on easy and put on your dancing shoes.
Lets spin the logic a bit here. It sounds like you’re using someone to do it all for you either way. You already have a local distributor helping you sell on Amazon India. You are paying for a company to connect you to the local Indian buyer base.
Well… If you don’t want to do it yourself, why not have someone do it for you, only using your name, your account and building your listing history? Not only will you “own” more of the buyer experience, while also having more control, but you should also be more profitable because the margins will be higher per sale!
You asked about international expansion and I have derailed this conversation. Sorry if I stepped on your toes. I’ll shut up and move on now, promise!
Vive la France
I know the land of good wine, bread and cheese well, because I grew up there. France has a booming fashion sector and is known for it, so I can see why it would appeal for a good quality leather shoe product.
But France has a lot of marketplaces. Cdiscount, FNAC, Darty, La Redoute, Zalando and Priceminister are all local, notable marketplaces competing for traffic from the global heavyweights Amazon and eBay. eBay is fairly low on the list. French buyers are also fiercely proud, and do like to shop local when they can.
The good news is Amazon FBA can fulfill orders for all these marketplaces, so you can leverage them eventually.
So far, France sounds like a good idea. I’m following your footsteps.
Spot of tea
The land of apologizing and tea drinking, the UK, is also an intelligent territory for expansion. You clearly speak English, so less language headaches maybe.
The UK also has its share of marketplaces, but Amazon and eBay are more dominant. Unlike France where getting a foothold means having presence in more channels, the UK has less need for this the fashion category.
Again, Amazon FBA has you covered.
UK or France… or Germany, or elsewhere!
I am prone to over-simplifying topics and I am certainly prone to forgetting not everyone does this for a living… but what do you need help with? Amazon’s pages and support will walk you through a new Amazon FBA shipment to France. They will help you with documentation around shipments.
If you didn’t want to use FBA, there are many 3PLs in both countries with setup packages and hand-holding services. You need to ensure you get the details on the paperwork right around consignee, import duties and other lovely, and truly enjoyable, totally non-wasteful paperwork. Have I ever mentioned I love paperwork? No sarcasm here. Promise.
Using a distributor for ecommerce is again something I need to flag though. Again, don’t get me wrong – I see the ease of use. You sell B2B wholesale to a distributor, and let them do the work. A distributor can help with brick and mortar retail coverage. I see merit in engaging distributors who will try to get your product physically in stores.
But why are you considering Amazon FBA if you’re using a distributor? If you are using Amazon FBA, that means you’re not using Vendor, you’re using Seller Central. That’s an account in your name, and where you can set up FBA orders for all of Europe if you want to. That means you’re just one step away from creating your own listings!
Amazon’s Pan European FBA services mean once the product is in a UK or French FBA distribution center, Amazon’s own system will make it easy to move product from UK to FR… or DE, IT or ES! By using Amazon FBA in one country to start with, you are effectively a few clicks away from localizing product in all major European territories.
So… what the heck is the distributor going to do for you? They aren’t going to offer any value as far as I can see.
You don’t need a distributor for the ecommerce aspects of your international expansion. I am biased here, but in my opinion you need a marketplace services company right now. It’s rare that I have the chance to mercilessly plug our company’s services with a Reader’s Question, but it makes sense to explain what companies like ours do. We’ll help you set up all those Amazon seller accounts, set up FBA for Pan European regions, and help you decide what to sell on other marketplaces in each territory. We’ll set it all up, run it, report on it, help grow it and work with you on other related topics. That’s what a marketplace services company does.
There, done. Sales pitch over. To be fair, we’re far from the only company that does this. You have many service providers to pick from who do this for a living. When it comes to selling online internationally, distributors are no longer a manufacturer’s only hope. In fact, they aren’t a requirement for ecommerce at all.
And remember – even physical retail buyers increasingly check product online first. If you want to get more product in stores, having your product listed on major marketplaces will often help. In North America, it’s increasingly a requirement!
A word to the wise
Amazon has grown a lot. Being a big company, it has power and leverage. Being a big company, it’s not an easy fight if something goes wrong. Buried in Amazon policies are a few sentences any brand or manufacturer should be aware of.
Basically, if you manufacture product, Amazon reserves the “expectation” to work with you directly via a vendor arrangement. When Amazon expects something, consider it a rule. If you sell as a vendor, Amazon may not allow you to move to selling third-party on the marketplace.
This might seem unfair, and indeed maybe it is. Why would you not be allowed to sell directly on Amazon Seller Central, just because you happen to be the brand? You could argue you should have more right to shape the terms of how your products are sold on Amazon, as the brand owner and manufacturer.
Amazon doesn’t agree. Amazon is a retailer at heart, and gives resellers the option to pick between Vendor and Seller. But manufacturers and brands need to be careful about using Vendor. If they use it and realize they could be making a lot more money using Seller instead… it might be too late, and Amazon might block the transition completely.
So if you’re just starting out as a manufacturer or brand on Amazon, be very careful about which model you adopt. We would always encourage selling through Seller Central, as it offers more margin, more control and more long term gains. Vendor however might work for you – and it’s quicker if B2B is all you know.
The more successful you are on Vendor, the less likely you’ll easily move to Seller, and Seller is where margins, pricing and buyer interactions are most within your control. Choose wisely.