There are few occasions more exciting for a direct selling brand than the chance to go global. Exotic travel, increased revenue, international brand awareness -- a whole new ocean of opportunity awaits!
But for some direct selling organizations, there are hazards to cross-border expansion. Significant risk of lost capital, legal exposure, and potential reputation damage can put a damper on enthusiasm. From marketing to product development, few aspects of the transition are as complex and potentially risky as the logistics. If your organization is considering the leap, here are three big mistakes to avoid, and five big questions to ask your logistics and fulfillment provider, to ensure you're equipped for success.
THREE COMMON MISTAKES THAT DEFEAT EXPANSION
- Making the commitment before doing the research. We see it all the time: An executive at a direct selling organization travels to Australia and gets excited about the market potential. Everyone there loves these American products! The independent workforce is amazing! The executive comes back energized and impassioned about the opportunity, and immediately begins setting the international expansion plan in motion with an aggressive timeline. They don't want to miss the opportunity! Unfortunately, initial excitement too often turns into disappointment and costly failure as the cost and complexity outstrips expectation. Avoid this deadly mistake by stepping back to understand the full cost of opening this market, create a realistic operations plan, develop a practical timeline, and build reliable operating partnerships.
- Assuming You Can Start Selling Without Making Adaptations. Every new market has its own regulations and expectations that must be addressed. From formula ingredients to marketing claims, the regulations of each country must be understood and abided by. From a fulfillment perspective, customs, in-country transport, duties, and VAT will impact operations and pricing, and can impact profitability if not appropriately understood and addressed.
- Undercapitalization. Many direct sellers underestimate the cost of starting up in a new market. Understand the challenges of the cash-flow negative period, and put resources in place to support the expansion and prevent it fizzling out before it's had a chance to grow.
FIVE IMPORTANT QUESTIONS TO ASK PROSPECTIVE FULFILLMENT PROVIDERS
Having the right logistics and fulfillment provider in place provides peace of mind and confidence that this critical aspect of your operations will run smoothly. If you current fulfill orders out of your own facility, you may be able to handle the expansion as well, but consider that there will be a steep learning curve as well as capital investment in people and infrastructure. Accessing the right outsourced partner is often the more practical choice. Here are the questions to ask to ensure your partner will truly support your expansion.
- Do you have International-level capacity? Many 3PL and order fulfillment providers with a robust domestic footprint nevertheless have little to no experience or capability to support international ordering and delivery. Ask the provider to demonstrate existing international operations and satisfied international clientele.
- Do you have experience serving the B2C direct selling channel? Order fulfillment needs vary depending on whether the seller is an internet retailer, brick-and-mortar, or direct selling organization. Check that any prospective fulfillment provider has a robust roster of direct selling clients already on the books to ensure they understand your unique needs. Also check out this list of questions every direct seller should ask prospective order fulfillment companies.
- Do you have an established delivery network in the country (or countries) we're expanding to? FedEx and UPS do not operate in all foreign markets, and their international residential delivery options can be costly. An experienced 3PL in that space should have an established network that provides stability and cost savings in country.
- How will your systems interface with ours? Get your fulfillment provider's IT department talking to your IT department about compatibility, integrations, and the interfaces with which you'll communicate internationally. Locking this down prior to expansion will eliminate many needless headaches during expansion.
- Will there be a local operations manager, or will the relationship be managed from the U.S.? If your expansion will be managed internally from the U.S., with only a virtual office in-country, then you may not need your fulfillment provider to offer a local account manager. On the other hand, if you're aiming to open a substantial market in-country, with a local headquarters, call center, and other operations, then you want your 3PL to match that with an account manager on the ground, who can be the point person for local operations.
If your organization is considering an international expansion, we're excited for you! We love to see direct sellers grow into new markets. To ensure your success continues, be sure to develop a comprehensive project plan that addresses all aspects of operations and logistics. That project plan can then become the template for all future expansion projects. Also consider hiring a consultant experienced in developing a cross-functional team and structuring a project plan to reduce the learning curve involved in opening a new market.
If you'd like to chat with an experienced international logistics professional about your specific company's plans, contact us online or by phone at 866-SPE-SEND.