U.S. expansion for your direct selling company
If we look at the success of direct selling within the U.S. market compared to the rest of the world, the U.S. is the top contender due to its size and opportunity. For the most part, international companies keep U.S. expansion in their foresight and see the States as the holy grail — if you can ‘make it’ here, you can make it anywhere.
China, the competition, is also highly sought-after due to its healthy economy and a demand for health/wellness and beauty products. However, the Chinese government experiences various inconsistencies when it comes to managing MLMs, which bottlenecks a company’s progress and oftentimes leaves them no choice but to shut down.
The U.S. can be a tricky and unforgiving market, but when approached correctly, it can mean unbelievable levels of success. We’ve seen international companies like Vorwerk from Germany make their footprint on U.S. soil, as well as China’s Joy Main Int., Noevir from Japan, and Norwegian company Norwex. These examples have landed in either California or Texas, the two largest territories for direct selling in the States — and California alone is the world’s fifth largest economy in general!
This means the U.S. is prime real estate for up-and-coming MLMs or successful ones that are looking to broaden their scope of business. But it also means the framework of this business plan must be properly drawn up and the right people must be in place to execute the strategy.
To help you get started on this endeavor, take a look at these six tips:
1. Lay of the land
There are countless markets within the U.S. with many contrasting differences between each. So first thing’s first, you must research the various submarkets to determine which one(s) may best align with your company and its goals.
Mike Sheffield, president and founder of The Sheffield Group, emphasizes how “markets are determined based on the product offering and its demographic.” Sheffield and his team have helped many companies with U.S. expansion and to scope out the best markets based on the product line, target audience, demand, etc.
Additionally, depending on the type of company, the business launch may vary. A direct sales/MLM company must launch with a national platform immediately as distributors will be attracted to and recruited nationwide. And a party plan company should have a regional focus to then expand as it grows in a more controlled manner.
As you get further down the expansion process, Thinkbox HQ CEO Brian Palmer encourages you to perform critical market tests. Palmer and his team help clients plan various small events to gather feedback from potential distributors or customers in different areas, which then helps to uncover the most beneficial routes to take before the official launch.
2. Dollars and cents
Depending on the assets you bring from your home market, your funding needs may vary. But launching internationally also requires hiring, new office locations and warehousing, legal support, etc. Understanding all the financial requirements up front will save many surprises that may come along in the launch process.
To get started, you’ll need to make arrangements with a merchant account provider for taking payment for product sales. This is an extensive process though as most providers require you to have a U.S. corporation, a U.S. bank account, an EIN, a physical U.S. address and a U.S. signer. You may be able to find some providers that don’t require all of these, but it won’t be easy.
As you discuss the financials, be sure to think about a contingency plan in the event that something falls through. Do you have a safety fund if you go over budget? What additional measures can you take to supplement your funding? Like any business venture, there are many moving parts and if one project gets sidetracked, it can hold up the process entirely, which then can affect investments.
3. It’s all about the product
Your market research helps to support the ins and outs of product distribution and how to market it. But now you must understand and develop product pricing, packaging, promotion and educational literature for both consumers and distributors, etc.
Everything must be branded with an American look and feel. This is critical to show a true commitment to your new market. Every country and distributors around the world act in incredibly different ways based on cultural expectations, and U.S. distributors are no different.
The Sheffield Group includes a Strategic Planning Workshop for domestic and international clients to create a blueprint for a successful launch. During this session, Sheffield and his team help clients create a task list and project management system for the necessary product distribution steps and marketing strategies.
4. Tech transition
Today’s technology helps make business processes run faster and more efficiently, but clients must also ensure they have the best systems in place for international communication and connectivity. “Some technology, like commission engine software or third-party logistics, from a home country may not integrate natively with tools in the States,” says Palmer, “It’s one of the biggest challenges of U.S. expansion we help our clients overcome.”
American distributors heavily rely on technology and social media to run their businesses far more than their counterparts outside of the U.S. In order to succeed in the U.S., an international business must embrace the fact that today’s successful distributors run their businesses almost 100% from mobile devices.
Pele’s Grace, a Japanese skincare company that recently launched in Hawaii, looked to Palmer and his team to assist with its technology transition and buildup of their social media presence. The Pele’s Grace team was intentionally transparent with their goals and were very open to our cultural differences with tech and social, which has helped them gain the right traction since launch.
5. Boots on the ground
There’s a quote that says, “You don’t know what you don’t know.” And there’s a lot you most likely don’t know about the U.S. and how businesses successfully operate. So, take the time to find the experts that have lived and breathed the market(s) you’re interested in.
In addition to having someone who’s experienced and knowledgeable of the market, you need someone who can begin recruiting and distributing prior to launch. Waiting until after launch to assemble your team will hinder new business.
Personally, I’ve supported the direct selling industry since 2007, so I’ve seen the trends, the demands and the changes over the years. A company’s first couple of hires will typically be a General Manager to help the incoming business get set up logistically and also an experienced Head of Sales to begin developing the sales strategy and systems. It’s clear that having a professional on the ground that understands the U.S. distributors is key to a successful launch.
6. Experts and experience
Rely heavily on advisors and those who may have already completed this journey. Seek out the people that can share their experience and guide you through the difficult hoops — chances are, they had to crawl their way through those hoops or didn’t even know they existed.
Sheffield stresses the importance of consulting the professionals that can guide your company through the process from start to finish. Sheffield advises all of his international clients with, “Don’t assume that what works in your home market will work in the U.S. marketplace. Associate yourselves with competent and experienced advisors and corporate staff that are familiar specifically with U.S. expansion.”
Even when it comes to U.S.-based companies, it’s encouraged to hire locally when opening overseas — don’t bring U.S. individuals into unfamiliar territory. Failure to invest in someone who understands the specific market nuances and not having a strong launch team in place can become one of the most costly mistakes for a company.
Of course, it’s not all sunshine and rainbows in the U.S. There are challenges that newcomers must navigate carefully, specifically the Federal Trade Commission (FTC). It’s no secret that the FTC has been at war with companies like Neora and Advocare, but that hasn’t slowed direct selling companies down here. In fact, it’s actually ignited a fire throughout the community to continue to prove MLMs as legitimate direct selling.
U.S. expansion is an incredible feat for a company to accomplish, and for many, this strategy can be a significant source of revenue and can positively impact even more lives. Connect with the trusted advisors and your experienced peers to begin drawing up the blueprint for your next company adventure.