Big Deal Landing the sole distribution rights for a foreign product.
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A random sighting of unique Italian sandals poolside in MiamiBeach, Florida, turned into a successful exclusive distributorshipfor Joseph Reina, co-owner with wife Laurie and son Mike of SensiInc., a footwear distributor in Tempe, Arizona.
A friend of Reina's first noticed the sandals on the feet ofa sunbathing American Airlines pilot in the summer of 1983. Uponfurther inquiry, Reina discovered the distinctive plastic sandalswere produced by Sensi & Co., a footwear manufacturer in Italy.Convinced the sandals could take the U.S. market by storm, he flewto Italy to meet Lorenzo Sensi, owner and creator. There he formedthe foundation for a healthy partnership and obtained the exclusivedistribution rights for North America. In March 1984, the firstshipment reached American shores.
Foreign Concepts
Although the process went smoothly for Reina's company,it's not always easy for U.S. businesses to obtain exclusivedistribution rights for a foreign product. The methods used toachieve that status vary greatly among companies and acrossindustries. But according to Joseph Zodl, trade consultant andauthor of Export-Import: Everything You and Your Company Need toKnow to Compete in World Markets (Betterway Books), thefundamentals are the same. "[The foreign company] needs anincentive to work with you on an exclusive basis," explainsZodl, whose experience spans 20 years. "The question thenbecomes, Why should [they] choose you over someone else?"
In Reina's case, that was accomplished in face-to-facemeetings with Sensi; for many American companies, however, faxesand phone calls will suffice. To cover the bases, Zodl recommendsyou show the potential vendor the extent of your distributionchannels and outline which stores you'll market the product to.Also, assure the vendor you have a capable sales force; prove yourabilities by showing a track record. Determine your marketingstrategy, and let the vendor know how much time and moneyyou're willing to invest in promoting the product.
Most companies on the prowl for U.S. distributors will respondto inquiries within a day or two by fax, usually with pricinginformation. "Most people interested in exporting to the U.S.are very enthusiastic," says Zodl. If you need help findingleads, attend a trade show. Even if the event is held here in theStates, you're bound to meet a handful of foreign companiesseeking U.S. distributors. The U.S. Department of Commerce isanother helpful resource for international trade information;contact the Trade Information Center at (800) USA-TRADE, or visitits Web site at http://www.ita.doc.gov .
More than a decade ago, Reina brought Sensi sandals to areceptive American market, selling 85,000 pairs that first yearalone. For 1997, that number should exceed 250,000. Such phenomenalsuccess, however, could never have been achieved without the strongbond Reina built with Sensi.
Says Sensi Inc. vice president Mike Reina, "You can havethe best product in the world, but if you can't get cooperationfrom your [vendor] in a foreign land, you're not going to makeit."
Come Together
Forming a strong relationship with your foreign partner isessential. Trade consultant Joseph Zodl offers these tips to helpyou put your best foot forward:
DON'T:
- consent to a commitment you can't keep. If youwon't be able to sell $1 million worth of widgets, don'tpromise it in the contract.
- expect the seller to know what you want. Never assumethe foreign company understands your expectations.
- overemphasize the contract. Think business, not legal.Use the contract to lay the groundwork for the relationship.
DO:
- retain a customs broker. An experienced professionalwill help your foreign shipment meet the applicableregulations.
- conduct research. If you learn how business is done in acertain country, you can minimize problems.
- prepare to pay upfront. Most international shipmentsmust be prepaid with a letter of credit.
Contact Sources
Sensi Inc., 1769 W. University Dr., #175, Tempe, AZ85281, (800) 537-5238
Joseph Zodl, (602) 906-0678, http://www.idt.net/~eximport.
