Breaking into the American Technology Market An Essential Guide for Foreign Manufacturers

Breaking into the American Technology Market

An Essential Guide for Foreign Manufacturers

© 2012 Global Marketing Partners, Inc.No part of this eBook may be reproduced in any matter without the express written consent of Global Marketing

Partners, Inc.

Disclaimer This guide was written based on a several decades of combined experience in launching thousands of products through hundreds of companies in the channel. While we hope this guide is helpful and offers you some wisdom and new insight, our attorneys want you to know that it is not designed to incorporate every piece of information anyone would need to know about working with these resellers. Likewise, all products are different and results vary widely, so use any advice provided here at your own risk.

Breaking into the American Technology MarketAn Essential Guide for Foreign Manufacturers

© 2012 Global Marketing Partners, Inc.No part of this eBook may be reproduced in any matter without the express written consent of Global Marketing Partners, Inc.

Disclaimer This guide was written based on a several decades of combined experience in launching thousands of products through hundreds of companies in the channel. While we hope this guide is helpful and offers you some wisdom and new insight, our attorneys want you to know that it is not designed to incorporate every piece of information anyone would need to know about getting into the American technology market. Likewise, all products are different and results vary widely, so use any advice provided here at your own risk.

3

The American IT Supply Chain 2-Tiered Distribution Channel

Global Marketing Partners, Inc. | 28038 Dorothy Drive Agoura Hills, Ca. 91301 USA | All Rights Reserved @2012 Global Marketing Partners | September 2012 Edition

The “channel” - the two-tiered (wholesale) distribution supply chain. In this chain, manufacturers sell information technology (IT) products to distributors who sell to resellers who in turn sell the hardware and software to end-user businesses and individuals.

Manufacturer Distributor Reseller Consumer

• 60% of all IT products bought and sold in the U.S. flow through the “Channel”

• 5 billion+ of credit extended to the IT channel each year

• 2 Million+ configurations annually• 50,000+ individual customers monthly• 150 Million+ items shipped each year• 100 Million+ software licenses managed annually

GLOBALTECHNOLOGYDISTRIBUTIONCOUNCIL

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Pre-Launch PreparationEight must-do’s before your launch (1-4)


1) Study the Market Estimate the market size & potential Run a Competitive Analysis Do your SWOT Analysis

2) Set GoalsA Goal has: Qty, Revenue, and DateKnow where you are going before you throw yourself into the trip

3) Fix on a Channel Sales Strategy Direct (requires extensive domestic infrastructure) Brick & Mortar Retail (most expensive) e-Tail (least expensive fix costs – popular for emerging vendors) Solution Providers/VAR resellers (marketing & training at the distributor

and reseller levels)

4) Choose Your Target MarketTarget end-user Target Reseller Target DistributorWho is your customer and how will you get to them?Carefully choose the partners with whom you will be spending your time and resources

5

Pre-Launch PreparationEight must-do’s before your launch (5-8)


5) Develop a Marketing Plan How will you promote your product in the U.S.? How will you support your

customers? 3 layers of marketing plan: Consumer, Reseller Co-op, Distribution Customer service and support – key to U.S. success

6) Put together Your Financial Plan Product price strategy Allocate resources and commit to marketing budget Understand all your costs Allow for Currency Fluctuations Plan in advance how you will measure your success & ROI

7) Do Your Legal & Regulatory Due Diligence Patent and trademarks infringements search, get insurance. Material safety

datasheets may be necessary for transportation, find an U.S. attorney ahead of time.

8) Establish a U.S. Point of Presence Third party warehouse and logistics for shipments out, returns warehouse, toll-free

customer service number , etc.

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U.S. Market ExpectationsWhat to know about Consumer Expectations


End-User Expectations

Home & SMB Consumers: Value. Ergonomic. Compatibility. English. Support. Warranty. Available @ Favorite Store. Returnable.

— In Stores: Eye-catching-confidence-inducing Packaging. Stocked Deep.

— On Internet Store: Strong Reviews. Rich Content.

Business Consumers:

— Immediate Customer Service (preferably free)

— Easy to find “contact info” on website (company’s address and phone #, not just an email us form to fill in)

— Downloadable Drivers

— Trouble Shooting Guide, FAQs, Usage Tips on website

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U.S. Market ExpectationsWhat to know about Packaging


Packaging Expectations

Retail Strategy

— Always invest in good design.

— Don’t get creative on size and shape stick with the standards.

— Consider anti-theft if over $100.

— Hanging package design should also stand-alone.

Internet/VAR Strategy Only

— Outer box can serve as shipping to cut re-pack cost. (but clearly marked)

— Package design shifts to inserts. (re-confirm confidence in buying decision – avoid buyer remorse)

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U.S. Market ExpectationsWhat to know about Shipping


Shipping ExpectationsStudy Your Partner’s Routing Guides(fines for non-compliance)

Bar Code: EAN/UPC Version A on all product packaging and master cartons (www.gs1ca.org)

Packing Slip: Required w/each shipmentIf the shipment has multiple Purchase Orders and/or multiple packing slips, a Master Packing Slip is required

Minimize Small Parcel Shipments A shipment is defined as the total number of cartons shipped on a given day to the same distribution center from the same vendor location. Shipments over maximum allowances should be sent via LTL.

Proper Palletization; stacking, stretch-wrapped/banded

Use a shipping company that provides tracking on your shipment and can provide proof of delivery.Do not ship via Postal Service.

Avoid TheseCommon Errors

• Non-compliance with Small Parcel Maximums

• Incorrect barcode/UPC label used on product

• Failure to provide Packing List

• Incorrect Standard Pallet used

• Pallet mis-stacked or mislabeled

• Weak pallet or carton material

• Excess or Double Shipments

• Shipping Product to Wrong Location

http://www.gs1ca.org/

9

Your Website’s Channel RoleChannel Partner Expectations


Rich Product Content Source – 3rd party data fulfillment companies

get most product content straight from your website

Customer Service & Resource Center– Contact info– Drivers, manuals, etc.

Drive Sales– Direct Sales & Provide Leads to Key Resellers

(selling direct off your website weakens channel relationships and full solution sales participation)

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The Distributor’s RoleIn the channel


Economies of Scale• One-stop source for resellers• Ship delivery on any order size• Cost effective fulfillment of Web sales• Most accurate/best in class• Breaks bulk: Receives product on pallets or case packs

then pick, pack, & ship • Stocks Product

Access to Resellers• Big distributors sell to 50,000 + U.S. resellers • Preferred source• Supplies credit on aggregate orders & consolidates payments• Serve all types of resellers• Vendor marketing opportunities to touch resellers

Custom Reseller Services• SLA guarantees with big resellers• EDI interfaces• Custom Private Label drop ships to end-users• Pass-through marketing

Note

Larger distributors

rarely provide

importation services.

(small regionals may but lack

reseller bandwidth)

NoteProduct stock limited to six weeks of inventory(will rotate out excess stock)

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DistributorsWhat they Expect from Manufacturers


Profit•$50 + distribution cost•Most favored nation pricing•Stable channel pricing structure•Back-end Rebates

Sales•Drive sales to resellers•Co-op marketing support•Minimum sell-through•Growth

VARsSolution ProvidersSystem IntegratorsSystem BuildersGov/Ed ResellersB&M Retailerse-TailersInternet Resellers

VARsSolution ProvidersSystem IntegratorsSystem BuildersGov/Ed Resellers

B&M Retailerse-TailersInternet Resellers

VARsSolution ProvidersSystem IntegratorsSystem BuildersGov/Ed Resellers

CE FOCUSVARsSolution ProvidersGov/Ed ResellersB&M Retailerse-TailersInternet Resellers

Major U.S. Distribution Companies

DistributorsWho’s Who and Who They Serve


13

VARs & Solution ProvidersWho’s Who & What They do


VARs/Solution Providers/Integrators

Integrate Solutions

Layer Service

Trusted Advisor Role with Customers

Support B2B Customers

Major U.S. Technology VARs

Accenture ACS ASAP Software Atos Origin ADPAxciom BAE BearingPoint Booz Allen Hamilton Brightpoint BT Global CACI Capgemini Group CDW Ceridian CGI Group CognizantCompuCom Computer Science Corp

Convergys Deloitte Consulting Diebold Dimension Data DST Systems DynCorpEDSFidelityFiserv Galileo by Travelport General Dynamics (AIS) Getronics Harris IKON Office Solutions Insight Enterprises L-3 Communications Lockheed Martin Metavante Northrop Grumman

NTT Data PC Connection Perot Systems Qwest Communications Raytheon Technical Services SAIC Software House Int’l Siemens IT Tata Consultancy Services Unisys Verizon Info Sys World Wide Tech

Retail & eTailers

Provide Traffic (opportunity to sell)

Merchandise Product

Avenue for Promotion

Build Brand Awareness

Software RetailersElectronic Boutique /GameStop (4400+)

Computer & CE Stores ABC Warehouse (41)Apple Stores (125)Best Buy (1200+)Fry’s (34)H.H. Greg (84)MicroCenter (21)P.C. Richard (51)

Mass MerchandisersCVS (6200+)Kroger (2500+)Radio Shack (6000+)RiteAid (5000+)Target (1500+)Walgreen's (6100+)Wal-Mart (4100+)

Warehouse ClubsBJ’s Wholesale (170)Costco (529) Sam’s Club (580)

Office SuperstoresOffice Depot (1200+)Office Max (9000+)Staples (2000+)

Military ResellersAAFES (147)EURPAC (53)Nexcom (44)

Entertainment ResellersBlockbuster (7800+)Discover Channel (45)F.Y.E. (800+)Musicland Group (900+)Toy’s R Us (1500+)Virgin Megastores (11)

Internet Retailers4Sure.comAmazon.comAntonlineBestbuy.comBuy.comDelleCost.comGatewayInsightNewEgg.comOutpost.comPC ConnectionPC NationZonesScholasticStaples.comTechDepot TechWaveTigerDirect

Major U.S. Technology Retailers

Retailers Internet and Brick & Mortar


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NEED MORE INFORMATION ON LAUNCHING IN THE US MARKET?


Ready to Launch in the USA? Call GlobalWe can set you up with a U.S. office, get you national distribution, design a product launch campaign and start selling your product to resellers.

Rachel ZachariaBusiness Development Manager

[email protected]

www.globalwrx.com

http://www.globalwrx.com/

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Breaking into the American Technology Market An Essential Guide for Foreign Manufacturers