By Ron Sidman

Early stage JP companies eager to grow often look at international distribution as an easy solution. Don’t be tempted to take this route prematurely. I suggest you saturate the US market before you venture off to foreign lands.

Don’t get me wrong, I am all for companies going global—when the time is right. However, the low hanging sales-enhancing fruit will be in the good ol’ USA until just about all your products are available just about everywhere you want them to be in this country. Even so, quite often companies that are still struggling to establish market share domestically believe that starting to establish international distribution is a solid growth strategy. Here’s why it should not necessarily be a priority:

It will take more of your precious time than you think it will.

The tendency is to think that all you have to do is find a good distributor in each country and then just wait for the orders. The reality is that the potential sales volume in foreign markets is typically quite small compared to the amount of time you and your key people will need to spend getting yourself up the learning curve and catering to the special requirements. Add potential “lost in translation” communication complications and you can see how time spent may add up. The payoff from spending that same amount of time on domestic sales expansion is probably much higher.

It’s likely to be less profitable than domestic sales.

There will be sneaky added costs that you might not be anticipating. Most likely you’ll need multi-lingual or local language packaging if you want your products to sell which will require smaller, more costly production runs. Unless you hedge the local currency, you may suffer from currency value fluctuations. Claims of defective merchandise can also be problematic and costly to resolve. And, product design customization may be required (see below)

Consumer tastes and behaviors may not be the same as in the US.

When my company first started selling in Japan, we learned the hard way that some of our most popular products simply were not appealing there whether due to aesthetic tastes, different parenting practices, or even extreme quality sensitivities (even though we made a quality product). So foreign rates of sale may not parallel what you’re used to in the States.

Competition may be tougher.

There are likely to be fierce local competitors in each country with potential price and retail relationship advantages and an eagerness to retain their distribution regardless what it might take.

Legal and regulatory requirements and processes are likely different.

You may need to comply with safety regulations that go beyond or are in conflict with US regulations. And violations may be handled without the due process you’re used to in the US. We once had a parent in the UK who complained that our booties left a red mark on her son’s legs. We ended up having to appear in a local UK court to defend ourselves—and lost.

Oversight is much more difficult.

We take for granted that we can easily visit stores to see how our products are being displayed, what the competition is up to, and how consumers are making buying decisions. But much of what is happening in foreign countries will be invisible to you unless you’re in a position to globe hop regularly. This makes it more difficult to anticipate and diagnose sales issues and opportunities.

Next Steps

Expanding internationally should definitely be a part of every JP company’s long-term vision. But don’t jump across the pond until you’ve accomplished your US distribution goals or you’ll be slowing down your sales and profit growth rather than speeding it up.

If you’d like more information or assistance from me regarding your unique challenges, consider taking advantage of JPMA’s Executive Mentor Program. Check the JPMA web site for more information or contact Steve Clark at sclark@jpma.org.