Q: How did you get into the business of trade representation?
AJ: It happened quite organically. I’ve lived and worked in UAE for 26 years, and during that time along with my partners, I’ve started and operated multiple businesses in different industry sectors. While I was the Chairman of the Middle East Council of American Chambers of Commerce, I spoke to so many trade delegations offering market entry advice and guidance, that one day my husband asked why I gave all this advice for free? So there you have it! My consultancy business evolved from that golden question.
Q: What does trade representation mean exactly?
AJ: We work with US state trade organizations and individual companies to figure out if opportunity exists for their products and/or services, if they can be competitive, what the best market entry point may be, how to adapt their business model for success in the Arab Gulf, and then it begins from there – identifying distributors, JV partners, project tenders. We deal across all industry sectors and every vertical market imaginable. It’s interesting work, every day we take a deep dive into something new combining that with our regional market knowledge. Presto! We’ve saved a company lots of money and time doing something they most likely would have struggled with, and possibly given up on if they tried it themselves. Wasn’t it that book, Good to Great that said you have to get the right people in the boat all rowing in the same direction, or was it a bus?….anyway, that’s what we do. We call ourselves trade training wheels and official hand-holders. The next thing you know, these companies are cruising along on their own, generating a new revenue stream from a very fertile market.
Q: What are the 3 most common mistakes companies make when entering the ME market?
AJ: I only get to give you three? I could write a book on this single question. Let me speak specifically to the consumer electronics vendors that DISTREE supports. Fortunately for these guys, I also have specific market knowledge from my own past experience in distribution. The number one mistake is that vendors jump too fast into a distribution commitment. You will find across every industry that there are Brand Collectors; those companies that just want to list your brand on their website and throw your name around to plump up their product mix. Vendors need to take their time, to do their due diligence to identify a partner who will commit to creating, growing and supporting a distribution channel for their brand. Don’t let anyone muscle you into jumping in to fast. We often use the analogy of love; you need to date first, get to know the potential partner, before engagement and marriage. Remember, distribution contracts in the Middle East are like Catholic marriages; very difficult to get out of!
Second common mistake? Don’t give away the entire region all at once. What I mean by this is every distributor will tell you that they have a strong retail channel across the entire region. This may be true, or it may not be. Best to give them a starter region, like UAE, or UAE, Bahrain, and Qatar. If they are a good distributor, they won’t mind the challenge. Once they have proven that they can be successful in the initial territory, give them another. The other side of this coin is, as a vendor, never appoint too many distributors within the same territory. You’ll find the disti’s will spend all their time challenging each other rather than positioning themselves to compete with your true brand competitors. Loyalty is important in distribution. Take the time to choose the right partner and then stick with them.
Third most common mistake? Once you have found your solid distribution partner, listen to them. This market is extremely price competitive, and the retailers dictate extreme terms including mandatory rebates to payment for display space. If you are fortunate enough to find a distributor that is committed to growing the market on your behalf in the long term, support them. Get creative. Nothing frustrates me more than working with a client that expects our markets to work the same as their domestic market, or other international markets. Flexibility and creativity will be what makes or breaks your success in the Middle East.
Q: Any other pointers you would like to offer?
AJ: I love what I do, and I feel very passionate about helping companies be successful – I’m also never short for words! So let me give you a few other tips.
It doesn’t matter how fabulous your product is, or what amazing market share you have in your domestic market, if your distributor can’t get your products on the shelf, it’s over before it’s begun. Relationships are how business works in the Middle East. If your distributor doesn’t have those retailer relationships, they won’t be able to get your products listed with the stores. Just put yourself in the retailer’s shoes; he’s got only so much store/shelf space and a gazillion products being offered to him every day. He has to make the informed decision of what is the best value proposition for selecting new product listings. He is going to look at the distributor representing your product. Does he have a good working relationship with XYZ disti? Has XYZ disti been supportive in the past when he needed to rotate stock? Has XYZ been generous with sponsoring end caps and special display space? Does XYZ come with interesting new ideas? Do he enjoy working with XYZ? All of these things factor in just as much as the quality and popularity of your products.
OK, well I could ramble on forever but one last tip. Time turns at a different pace in the Middle East. It’s a ‘hurry up and wait’ business environment. Being American of Dutch and German descent - culturally for me, I want everything on time, and I cant stand to wait. But I also had to adapt. If you expect that it should take a week, be prepared to wait a few. If you think the business plan should be with you or the executed contract returned by a certain date, relax. It’s cultural. It doesn’t mean they are not that interested – don’t misinterpret the signals. When we say “Enshallah”, the literal translation is “God Willing” but the common understanding is “When I get around to it”. Your patience will be tested but in the long run, successful penetration of this strong, cash-rich retail marketplace will be worth it.
Anne Jafery is Managing Partner of Channels MEA, a UAE based agency that helps create trade opportunities for international clients who wish to enter the Gulf markets.
Channels MEA is teaming up with DISTREE Middle East to offer vendors who are new ot the Middle East market, an exclusive service which includesan intriductory service to local distributors, Dubai retail tour, market insights and exhibitor package at DISTREE Middle East.