A mistake I see time and again is exporters giving away exclusivity without even trying to bargain a better deal. Don’t do it! LYNDA SLAVINSKIS
By Lynda Slavinskis
Here’s a mistake I see time and time again: New exporters giving away exclusivity at the drop of a hat because they believe that they may not find another interested importer and really just want to get the goods over there.
Every importer is going to ask you to be an exclusive distributor of your goods in their territory.
But a word of warning – exporting is like being at a Hong Kong night market – you have to BARGAIN!
Before giving away exclusive territories, consider the following:
- What reputation does the distributor have in that territory or territories?
- If they want the whole of the EU but only have an existing distribution network in the UK, consider exclusivity only in Britain and then the first right of refusal on the other countries.
- Always, unless you are really desperate, set minimum sales quantities to justify the exclusivity, with the remedy being that the exclusivity rights are able to be taken away if the distributor does not meet the minimum sales quantities over a certain period.
- You can tier the minimum sales quantities over a few quarters to give them a good start, but this is essential to show them you mean business.
- If you wish to give them something else for their efforts, you may consider giving volume-based discounts as well as exclusivity.
The message of this blog – you are a big bad exporter! Do not give anything away for free!
It will not only earn you respect in your business transactions, but will enable you to work with your distributor to garner the most sales potential for your product overseas.
Lynda Slavinskis is an outgoing, intuitive and commercially savvy lawyer. She has worked in-house at Sussan Corporation and Tattersall’s and now assists small and medium businesses with import, export, leases, franchising, employment and general business advice as principal solicitor of Lynda Slavinskis Lawyers & Consultants. Lynda is on the Victorian State Government’s Small Business Advisory Council.
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