If you are considering selling products to Europe here are 4 crucial things to know:
- There are over 500 million people in 27 member countries in the EU. Understand that they are joined economically and to a certain extent politically. But never forget they are defined by their differences. The French and Brits have a love- hate relationship. The Germans are well respected in Europe, but unique in their way of doing things. The Spanish are considered by some to somewhat hot headed and poorer than some of their larger northern neighbors. The main point is that all the countries in the EU are different. This fact needs to be really understood when selling in Europe; it effects how you do business with people, how you sell, how you market and frequently has an impact on the design of the products you sell.
- It’s a common mistake for US companies to think that they can sell their US products without changing them at all. In nearly all cases it is important to make some changes to your products. You need to localize. Rules, regulations and certifications need to be met. For example consumer electronics will have to pass RoHS, WEE, CE and other directives. Products generally must adhere to local safety standards which fortunately are frequently the same in different countries – but NOT always. On top of these requirements, you have to take into account local packaging regulations and needs. But this is only the start- you then need to be sure that the product you want to sell is acceptable to the consumer in the country in which you sell. Are the colors right? Is you packaging suitable for the channels you are going to selling to? Is the design acceptable? Is the product the right size for smaller EU homes? Don’t expect the same answer in all EU countries! Spend the time to get it right. $1,000 spent now could save $10,000- $100,000 later.
- In most cases you will find that selling in Europe will lead you to either working with a Distribution Partner or setting up a company yourself in Europe. Many US companies think that they can simply find a rep or two in Europe and sell directly to retailers. It normally does not work like that. Retailers like to have local representation. They like not having to hold too much stock; they like having a local company to hold responsible should any problems occur; they like conducting business in their local currency. Aligning yourself with a good Distribution Partner is frequently the best way to get started in Europe. Occasionally you will get lucky and find a Distribution Partner who can cover many countries effectively. More likely you will need to have a Distribution Partner in each country. Finding the right partner is as much an art as a science and you are strongly recommended to use external resources to help identify or vet your potential targets.
- Pricing is just as important in Europe as it is in the US, so spend time thinking about it. Do not simply repackage your US price list. Do your homework and work out how the product needs to be priced and how it can work, given the supply chain and channel strategy you adopt. Look at selling in local currency as an option, it might be right for you.
One final thought. Only 4% of US companies export. Europe with its 500 million people represents a huge untapped market for many US companies. It cannot be ignored. By doing the right research and preparation before entry in Europe, companies can make potentially huge contributions to their bottom line.