Hedge Your Bets

Nothing is certain in this world, especially in recent years.  If you were only distributing in one market and your demand were interrupted, perhaps due to economic downturn and your market’s diminished disposable income, market preferences, competition, government regulations or any other reason, you would be out of business.  This also applies to importers.  If you were sourcing all of your products or components from one place or company and you were no longer able to receive them, or at the same price, you would also be out of luck.  For this reason, it makes sense to put your eggs in multiple baskets to protect your company from disruptions.

Increase volume-->Economies of Scale-->Profit

We don’t need to explain Business 101, but if you are not able to gain additional share of your current distribution market, it makes sense to increase your market size.  By gaining a share of additional markets, increasing sales, it is probable that you will be able to increase profit with little or no added fixed cost. 

Find Different Markets For Your Products

Whether or not your target market exists abroad, you may find that your product has a different use, market segment, or market position capable of generating sales.  If domestic demand for your product is diminishing due to market conditions, you may still be able to thrive internationally.  For example, the manual credit card runners that are all but extinct in the U.S. might be essential in an area with sparse or unreliable electrical infrastructure.  Better yet, a convenience good that you sell in your local market may be considered a luxury item abroad and provide you with a heavy margin.  For example, a wine that you can purchase for a few dollars in Spain could sell for 30 in the New York or Shanghai.

Take Domestic Market Share from you Foreign Competitors

If your competitors are in your backyard taking market share from you, you had better be in theirs’ as well.  Cross-subsidization from extra-national cash flows can allow you to maintain or improve your competitive position.

Take Advantage of Developing Markets/Economies

With economic development comes disposable income, demand for products that were previously unknown and needs that were previously unrealized or unrealistic.  Many times, economic development also creates outputs that need homes and capacity to produce.  This is a continuous process that continually becomes easier to benefit from due to the global trend of deregulation.  You don’t have to take advantage of it, but you can be sure your competitors will.

If you hadn't noticed there is an economic sea change taking place.  Economic prominence is shifting towards rapidly-developing markets.  This is not something to be feared.  It is an opportunity if you are willing to adapt and have the foresight to take advantage of it.

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