Small business: Export markets - Greg Thompson

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Greg Thompson, general manager of FootScience International, an exporter of orthotic insoles, based in Christchurch.

General manager of FootScience International, Greg Thompson.
General manager of FootScience International, Greg Thompson.

Exporting has always been a fundamental part of their business strategy and they use distributors in offshore markets. Thompson is currently travelling in Tennessee.

What are your main export markets and how much of your business is exported?

Nearly 90 per cent of our sales are from export markets. Our main overseas markets are Australia and Europe, and within Europe our largest markets are the UK, Russia, Denmark, Poland, the Czech Republic, Sweden, Switzerland, Germany and Austria.

How do you manage the exporting business?

Our major markets are all managed by distributors with exclusivity at a geographic or market sector level. In some countries where we are attempting to grow our business we general have non-exclusive distributors. Exclusivity is earned based on performance.

Why did you choose to go through distributors?

It's simply a numbers game. We are operating in a niche market where a percentage of the population will need or want orthotics. The larger the population, the more opportunity for sales. Managing that remotely is simply not an option unless we hire and deploy a lot more sales staff - with the risks and logistics that that entails. Local presence and on the ground market knowledge is vital, and it allows us to focus our efforts on top quality products, support and service, and on research and development to stay at the forefront of our industry.

What are the costs associated with having distributors?

Using distributors means that there is another mouth to feed in the supply chain. However the costs are greatly outweighed by the local presence and networks our distributors offer. Distributors also contribute significantly to the costs of marketing our products.

How did you find the right distributors?

It took lots of research by ourselves and other organisations such as NZTE, lots of hard graft to qualify interest and ability, and a touch of luck. Having a product that is widely recognized as one of the very best available also brings potential distributors to us.

Would you take the same route for future export markets?

Yes, where we can find a strong and committed distributor. We are now looking at new ways of getting our products into countries where there is considerable interest in our product, Formthotics, but where a distributor has yet to be identified. Direct online sales will feature in our future, and the use of social media is increasingly important.

Do you have any help on advice with currency hedging? Is this a concern given your strongest export markets?

We believe that a currency hedging policy is a vital element in a strong and successful business plan. Our advice is to monitor closely, take advice from the experts, and act fast and within the terms of the hedging policy - to do otherwise places too much risk on the business.

What are your biggest concerns with exporting at the moment?

The strength of the NZ dollar is a major concern, but over the past few years we have learned to live with these rates, and operate our business successfully despite that high value. The economic situation in many European countries is also a concern, and we monitor those economies on a regular basis.

Tips

• Expect to struggle and even lose money in the first couple of years when entering new markets. But if you do things right, and put appropriate policies and procedures in place - and stick to them - then the initial efforts will pay dividends.

• Do your homework! Understand your market thoroughly before venturing into new countries or market sectors, but do the research as quickly as possible. Procrastination gives your competitors the opportunity to establish themselves before you are out of the starting block.


Next week, we will continue to discuss the whys and wherefores of exporting. Let us know what information would be of interest to you and we will search out the experts who can help. We might look in more depth at currency hedging which would be relevant in the current roller coast environment. Let us know where you need help.

- NZ Herald

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