DEVELOPING A DISTRIBUTION NETWORK

In collaboration with

In Southern Africa

What you will learn in this workshop

Sonia Galat,CEO & Co-founder Africa Business Venture

What is your experience in Africa?

• Specifics of Africa Southern region• Key challenges • Solutions to develop an effective distribution network• Role of intermediaries in your strategy development

Introducing Africa Southern region

A COMMUNITY

• SADC: Southern African development Community (1980-1992)• 14 States• Goals: achieve regional integration; economic development• 3 main languages: English/French/Portuguese

REGIONAL TRADE*

• Total imports (up to date) : USD $91,608.15 (million)• Total exports (up to date): USD $89,151.33 (million• Total population (up to date): 277 million

GROWTH PERSPECTIVES**

• Real GDP growth in 2016:- Angola: 3.5%- South Africa: 2.2%- DRC: 5.5%- Madagascar: 5%- Zambia: 5.5%- Mauritius: 3.9%- Mozambique: 6.8%• Source: www.sadc.int, 2016

** Source: www.IMF.com, 2016

key challenges for establishing a distribution network?

• Market data and information• Develop a strategy • Finding a distributor; sales agent and other intermediaries• Expanding a business

Market data and information

• End Consumers behaviour defer from Europe• Prevalence of small retail units• Consumer goods: need for manufacturer to reach large volume• Difficult for companies to gather data = poor sales growth as products do not get to the

right places

Travel

How to develop an understanding of the local markets?

Do research

Learn about local

Distributi-on

Challenges

Read about

the country

Developing a strategy

Market research Strategy Local partner

Questions to answer:• Where is a need for your products and services?• What is the good country to do business in?

Step 3:Position

your offering

Step 1:Define your

strategy

Compared with local producers, you will be disadvantage. Make sure that your offering is: • Unique• Better• Cheaper or equivalent to local products

What is my product/ service?

• Simple products• Services that can be

provided electronically or from homeland

• Product with installation• Customised product• Customised service or

solution

Step 2:Identify

your offering

Characteristics

• Not client specific, possibly country or region specific (examples: wine, cheese, regional product)• Can easily be sold through a distributor, no additional service

I am selling a simple product

Finding a local partner

• Create awareness with potential foreign distributors• Internet marketing• Trade shows

• Sell directly to the distributor and leave the rest to him

What could be my approach?

Characteristics

• Delivery follows the same process as for local customers (software; machinery for example)

I am selling services that can be provided from abroad

Finding a local partner

• Internet sales, local distributors/agents or a combination• For internet sales: set up payment process• For local distributors/agents: set up an incentive structure and provide them with marketing tools

What could be my approach?

Characteristics

• Not client specific (equipment etc..)• Distributors need to be trained before they can sell or deliver the product

I am selling Product with installation, integration or training

Finding a local partner

• Identify potential distributors and select one or a few• Train the distributors and help them market your product• Manage and evaluate your distributors

What could be my approach?

Characteristics

• Client specific, made to order (bespoke)• Distributors serve as the channel for your contact with the customer

I am selling customised products

Finding a local partner

• Decide upon distribution or agency agreement• Set up exclusive distribution per country/region/market segment • Negotiate a distribution margin • Train distributors in the sales process

What could be my approach?

Characteristics

• Although standard components may be used, strong interaction with the client is needed to get to the right results

• Consultative selling process

I am selling customised service or complete solutions

Finding a local partner

• Work with a dedicated and specialised local sales partner• Fly in or relocate own sales support and project delivery staff• Work on a joint marketing and sales plan that involves presentations, exhibiting at trade shows and collaboration

with industry organisations

What could be my approach?

Growing your market

2011: creation of the COMESA-EAC-SADC Free Trade Area (FTA)• Common Market for Eastern and Southern Africa (COMESA),• East African Community (EAC),• Southern African Development community (SADC) met and signed a

declaration launching negotiations for the establishment of the

Key numbers:• 26 countries• Combined population of nearly 600 million people• Total Gross Domestic Product (GDP) of approximately US$1.0 trillion.

Main goal:• strengthening and deepening economic integration of the southern

and eastern Africa region.• Reduce barriers at customs

How to know if my product is subject to tariff barriers?http://www.tradebarriers.org/

SUMMARY OF KEY MESSAGES

The SADC region is a very attractive region for foreign businesses and continues to generate interest

South Africa is the main market in the region

Development of a distribution network shall take local constraints into consideration and necessity to gather

market information to define an effective strategy

Be careful when selecting your distributors and consider the support you will need to provide to assist your

distributor

Importance of intermediaries:

Definition of a strategy and market data

Finding relevant distributors

Be an extension of your team

In collaboration with

Thank you very much for your attention!

Visit us at:

www.africabv.com

Follow us

Africabv

africabusinessventure

africabusinessventure