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How to find overseas resellers.

For the past ten years, international consultant Randy Green has been advising software companies on export opportunities. suddenly, she says, "The overseas market is taking off. We're getting 20 calls a day."

But Green, who represents a consortium of European and Japanese distributors, admits that many developers lose interest when they discover how complicated the international market is. "It's like driving through an empty parking lot at night," she says. "You don't know where you are or where you're going."

To simplify the problems of dealing with dozens of different countries, Green's organization has been trying to develop standard contracts and establish a matchmaking service for developers and international distributors. She recently offered this advice:

Don't give away world-wide rights to anyone. "Rule number one," says Green, "is that you should never sign an exclusive international distribution contract with a U.S. distributor like Softsel. If you sell through Softsel, no other international distributor will touch your product."

Look for middle-tier distributors. Green says most countries have three kinds of distributors: a top tier that sells only products from Microsoft, Lotus, Ashton-Tate, and other large companies; a middle "value-added" group that actively promotes a few hot products; and a mass market tier that carries titles "nobody else wants." Middle tier distributors do the best job in the long run, says Green, even though they may need as much as a year to get rolling. Thirdtier distributors are usually the easiest to find and may provide quick access to a new market, she concedes. "But don't sign a long-term contract with any of them.")

Do your homework. Green points out that plenty of resources exist to help companies find potential distributors. Hardware vendors usually know a lot about overseas markets (Apple is particularly helpful, she notes). Licensing companies, consultants, magazine publishers, and the U.S. Government also provide useful leads. In addition, Green's own organization has put together a good list of macintosh distributors and is working on a comparable PC list. 'But the best way is to talk to companies in the U.S. who have products complementary to your own that they're already selling overseas."

Check out distributors in person. Before signing with any overseas distributor, it's always a good idea to make a personal visit, says Green. "Everybody says they're the biggest and the best. But a lot are just dealerships."

Expect to give bigger discounts. Unlike their U.S. counterparts, says Green, value-added distributors overseas provide extensive product support--including translation and localization, marketing, and dealer training. To compensate for this effort, they generally expect to be given discounts of about 60% off list. If an overseas distributor takes on full manufacturing responsibilities, she adds, a royalty of about 30% of net sales has become standard.

Protect distributors from the gray market. Because prices in overseas markets are often substantially higher than in the U.S., a lot of gray market software often moves into international channels, undercutting the efforts of local valueadded resellers. One solution: Add a sticker to all domestic copies that says "Not for sale outside the U.S.'
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Copyright 1989, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:software packages
Author:Green, Randy
Date:May 15, 1989
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