OPINION The reality of export business
Steve Reece outlines the cornerstones for succeeding when expanding your business out of the UK
AFTER POURING heart and soul (and significant investment) into developing toy products, a prudent business should always seek to find export sales opportunities to maximise return on investment, reduce the risk of relying on our home market alone and to increase the long- term sales potential of our organisation. The challenge though is that it isn’t always easy to establish our product lines in other markets. Moreover, significant
risks are involved including stock and bad debt risk, failure to comply with local regulations and cultural expectations and distribution partners badly managing our products and
brands to our long- term detriment. There are several potential paths we can take to expand outside our home market. From setting up direct
distribution overseas, to strategic regional partnerships down to more of a whoever places the order gets the stock approach, anything goes. But when we analyse companies achieving significant long-term export growth, there are certain fundamental factors evident. Firstly, success in the home market is a prerequisite most of the time. If it won’t sell in your market, it probably won’t sell in other markets either, so why burn relationships
with potential partners when the total number of companies we can work with in each market is finite? We can score a few one off deals with this approach, but that’s hardly going to deliver long- term success.
construct a plan to get there based on ‘stepping stones’. Reps, distributors or licensees as door openers leading eventually to direct distribution. Although this approach is a little sneaky, it’s also very common.
Success in the home market is
a prerequisite most of the time. If it won’t sell in your market, it probably won’t sell in other markets either.
Secondly, a plan based
on getting from A to Z is in place. If a company’s goal is to eventually build up subsidiaries across multiple markets, they will
Finally, market understanding is pivotal. Some products and brands work in some markets, but not in others, for reasons of culture, pricing, retail
Steve Reece runs a leading consultancy to toy & game companies. Contact him via his blog:
www.stevenreece.com Don’t suffer from seasonality Peter Slee explains how to avoid a Christmas ordering headache
FROM ONE viewpoint, the toy industry is like any other. Brands and manufacturers need a great product, with an appealing message to catch the eye of retailers and consumers. However the toy industry has one major difference: Christmas. Without question, other
retail sectors achieve vast growth at Christmas, but in our experience, nothing matches the seasonality felt in the toy sector. Spark Response, part of the Spark eCommerce Group, provides order fulfilment to brands including Micro Scooters, and Toys R Us, and believe me when I say we understand the challenges of the Christmas period.
We’ve just completed our busiest Christmas in our 30 year history. Micro Scooters, fresh from another fantastic season, are now planning for Christmas 2014 and beyond. Spark was appointed to
provide both eCommerce and trade order fulfilment to Micro Scooters in 2012. A key factor in the decision to appoint Spark was our ability to meet seasonal demand, whilst offering the flexibility in fulfilment out of season. With Micro Scooters
achieving such phenomenal growth over the past few years, and having outgrown their own warehouse, they also required a fulfilment partner who could provide a foundation for their ongoing
growth. Particularly in managing order fulfilment for their hundreds of independent retail and department store customers. Managing trade order
fulfilment efficiently presents unique challenges. Hugely diverse order quantities, specific labelling and product identifications, unique delivery processes, pallet dimensions, and other factors all apply.
Couple this with the surge in demand leading up to Christmas, and often, you can have quite a headache. By outsourcing order
fulfilment to an external provider, inevitably a brand will hand over control over their stock, and depending on the location, they may find themselves hundreds
of miles from their inventory. In Micro Scooters’ case, those concerns were soon diminished. With Spark providing both eCommerce and trade fulfilment, we’re able to utilise shared inventory, reducing the overall stock holding and removing the headaches felt. By providing scalability and
flexibility to brands, we’ve allowed them to concentrate on their core business, product development, sales, marketing, and planning for further growth.
With Christmas 2013 behind us, we look forward to seeing how successful 2014 will be for our friends at Micro Scooters.
Peter Slee is managing director at Spark Response, part of the Spark eCommerce Group. He can be contacted at
peter.slee@
sparkresponse.com or on 0191 495 9999. 18 March
www.toynews-online.biz
landscape, etc. So an obvious success factor is a focus on delivering more of what works on a market- by-market basis. Those organisations who
blindly push the products they want to sell versus starting with finding out what actually works, what their customers, or their customers’ customers really want, are normally setting themselves up for a whole load of huffing and puffing without achieving the desired results. The UK market
represents between three to six per cent of global toy sales (depending which figures you believe), so there’s huge opportunity out there, but only for those with a winning approach.
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