Trade
leads are very important aspect of international
business and considered an inexpensive way of
getting new buyers and consequently export orders.
However, like many other Internet hypes, we need
to realistically examine and understand it in
terms of who places these leads, why and most
important how to use them effectively for expanding
your international business.
How Reliable
are Trade Leads ?
Mushrooming dot com greenhorns
announcing 'yet another' revolutionary market
place will like you to believe that these trade
leads (also called RFQ) are export orders waiting
for your taking and what a fantastic opportunity
awaits you from thousands of companies floating
millions of trade inquiries. What is wrong with
this concept, as is wrong with many other Internet
hypes, is the assumption that this additional
information can be easily assimilated into a business
enterprise and made useful without any cost whatsoever.
Nothing could be further from the truth as major
problem with trade leads is that many of them
are of questionable value.
Does that mean we should always
remain skeptic about these leads and avoid them
like plague ? This is folly on the other extreme
- with care and imagination you can turn them
into real opportunities. I have seen them happening
and there is no reason why you can not do it.
The purpose of this article is to help you look
at these leads realistically and offer suggestions
on how to deal with them profitably.
There are many kinds of trade leads
like business opportunities, foreign govt tenders
etc. For this discussion, we take the most prevalent
type of offers in WWW- message placed by private
company or individual to buy or sell a specific
product/service within a reasonable period of
time.
Who
Places Trade Leads ?
Foreign distributors know exactly
where to go when they want to buy something for
resale. They do not have to place a trade lead
to procure anything except in very rare cases.
Then why such proliferation of trade leads ?
The advent of Internet has dealt
a serious blow to traditional distribution system,
specially in overseas trade. In more specific
terms, middlemen are in serious danger of loosing
substantial business. Earlier, foreign buyers
like retailers had little option but to buy from
local supplier who usually imported the stuff
in bulk and distributed in local area. Importing
in small quantity was neither feasible nor economic.
With the advent of Internet, retailers
can now reach sellers in distant countries, see
their products in websites, negotiate a favourable
price and buy in small quantity. There is no dearth
of exporters who are prepared to sell in small
quantity at regular intervals.
This direct buying by retailer
at a favourable price in turn puts pressure in
local market and distributors feel hard pressed
to find new suppliers, new products and most important
lower price. So what was once a rather lengthy
distribution chain of seller to exporter to importer
to wholesaler to buyer, is increasingly loosing
middle players . Agreed, large part of International
trade is still dominated by traditional distribution
system but the trend is towards marginalisation
of middle men, facilitated by an open medium like
Internet.
Then
why this skepticism ?
Like other things in life, reality
is never in black and white - there
are always shades of gray. So,
alongwith serious buyers looking for serious sellers
there are sundry others ranging from window shoppers,
arm-chair international businessmen to potential
buyers exploring the market. So, we find trade
leads posted for variety of reasons like:
-
Advertisement - pure and simple
product promotion (seller in the garb of buyer)
-
Find price (usually to put pressure
on existing supplier)
-
Find out about competitors
-
Locate alternate or additional
suppliers
-
Find suppliers for new product
-
Begin negotiation for a later
purchase
The
challenge - How to separate wheat from chaff
There is no manual or specific
rules - but common sense, observation, care and
imagination will help you locate the more potential
leads and manage your time and resources that
much better. Following are some guidelines (based
on my experience since 1997) that you may consider:
Find
Reliable and Exclusive Source
If you talk to people who actually
sell in foreign markets, they will privately tell
you that their best leads are the ones which they
generate themselves usually by direct mail. It
is far easier to cultivate a trade lead into business
when they come from exclusive source, not available
to zillion others or lying in some free bulletin
board. The options are clear - either invest in
research to locate buyers or take professional
help. There is no free lunch - there had never
been any.
Be
wary of peeping Toms
Look for keywords that might indicate
the intention - if the guy is gathering information
and has no intention to buy. Be suspicious of
companies who ask for detailed information about
manufacturers' prices but do not identify themselves
as distributors looking for new lines.
Be
careful of large orders
Be very wary of companies who post
trade leads for large orders and are not easily
located in any company or industry directories.
These are often small companies who will issue
an RFQ (request for quotation) for large quantities
in order to get a lower price and then will try
to order a very small quantity at that price.
Mind
the language
Do not be unduly influenced by
flowery language or very specific requirement.
Do not pre-judge the lead - exercise all precautions
required in international business. Many small
manufacturers get trapped by this.
Check
the market
If you are not a manufacturer and
outsource products - be careful of locked market
activities. This trade lead will specify a particular
product. Your company contacts the manufacturer,
hoping to make a commission on the sale, only
to find out that the manufacturer already has
representation in that country and will not sell
the product to you for resale to that market because
they want to protect their distributor relationship.
Letter
of Intent ?
Generally Ignore trade leads offering
"letter of intent" or "letter of interest".
Jack
of all Trades ?
Generally ignore companies who
claim to deal in any commodity traded on world
markets and who are placing trade leads. Traded
commodities such as coffee, sugar, urea, oil and
gold are handled by well established companies
in well established markets. These companies usually
do not place trade leads in order to do business.
Do
not Believe in Overnight Success
Be very wary of international business
scams designed to separate you from your money.
Be suspicious of anybody who prefers phone conversations
to written documents. Do not get sucked into fantastic
business opportunities which promise to yield
you huge profits with no risk. Learn which countries
and areas have a reputation for spawning international
business fraud and avoid them like the plague.
Never respond to business opportunities which
require you to make wire transfers in advance
of receiving goods or services.
Understand
the virtue of patience
Understand that most foreign distributors
do not make fast buying decisions. It is not at
all unusual for an initial order to require 9-18
months from the time of the initial solicitation
depending upon the cost of the item.
Develop
relationship
Instead of treating the leads as
'export order' with a hit or miss attitude - use
the opportunity to develop lasting relationship.
Understand buyer's requirements and offer solution
accordingly. Do not indulge in monologue on your
products - make it a dialogue on how both the
companies can stand to gain from a mutual understanding.
|
