Anybody have experience expanding internationally?

[thesignexpert]

So, long story short, I have been working on a website/service called ProSignRepair.com for a couple of years now. We have been growing fairly well and currently have subscribers taking cities all across the U.S. (Here is a link to the most recent growth map) I recently expanded the service into Canada since it seemed logical for a number of reasons (English speaking, close geographic ties, similar currency exchange rate, similar sign industry culture etc.). We quickly picked up some more cities and have good prospects to continue growing.

Here is my question(s). What experiences have any of you had in operating sign services (or any businesses for that matter) in other countries? I would like to continue expanding as I have received inquires from the UK, Australia etc. Additionally, I would like to expand the site to include multiple language support so we can service Spanish speaking countries next. The website does provide smart phone apps, a central web hub for marketing/processing and physical goods (free pads of sticky NOTICE notes) so I assume we would be subject to all sorts of potential international issues.

Any thought?

 

[Fred Weiss]

We have two different experiences. First with our Scrappy™ Friction Feed Adapter in the late 1980's and early 1990's and also with our clip art products. There are two points that come immediately to mind:

1. These markets can be extremely good as compared to the U.S. market. Our Scrappys, for example, sold more units in New Zealand than in California, Texas, New York and Florida combined. Sales in Western Europe of Scrappys exceeded the U.S.

2. The majority of distributors, agents, licensees etc. in non-U.S. markets will seek exclusives for their markets and will then wait for orders without any active sales efforts.

 

[thesignexpert]

I just read an article in Inc Magazine (I think it was the February 2014 issue) that describes exactly what you are talking about Fred. This company had signed up a bunch of distributors who all wanted exclusivity and then did practically nothing to promote the product. They ended up with one distributor who was selling more in their area than all of the other countries combined. Great right? When they visited this distributor they discovered that they weren't even selling the product for its intended purpose and were instead using it as a new-age, align your chakras, kind of gimzo. I almost laughed out loud at when I read that.

With the ProSignRepair.com concept being an online system / mobile app, and having exclusivity already built into the business model, do you see this as a problem? In it's basic, core functionality, it is a tool for the sign repair part of our industry. Just like any tool, it has to be used or its useless. We also work directly with the sign shops who want it rather than a product based, distributorship type structure.

Why did you feel you needed to work with distributors for your clipart products? With the ease of selling / distributing online I would think it would be more profitable to market directly.

 

[Fred Weiss]

I just read an article in Inc Magazine (I think it was the February 2014 issue) that describes exactly what you are talking about Fred. This company had signed up a bunch of distributors who all wanted exclusivity and then did practically nothing to promote the product. They ended up with one distributor who was selling more in their area than all of the other countries combined. Great right? When they visited this distributor they discovered that they weren't even selling the product for its intended purpose and were instead using it as a new-age, align your chakras, kind of gimzo. I almost laughed out loud at when I read that.

With the ProSignRepair.com concept being an online system / mobile app, and having exclusivity already built into the business model, do you see this as a problem? In it's basic, core functionality, it is a tool for the sign repair part of our industry. Just like any tool, it has to be used or its useless. We also work directly with the sign shops who want it rather than a product based, distributorship type structure.

Why did you feel you needed to work with distributors for your clipart products? With the ease of selling / distributing online I would think it would be more profitable to market directly.

Distributing digital art as collections has been greatly affected by the internet but not in a very positive way. The ease of sharing or redistributing art files has greatly impacted and the only way anyone has ever come up with to reduce the theft is to tie the art to a printed user guide or distribute as individual files. As such, shipping is still required. So for me to fill an order to a buyer in Australia, with proof of delivery, I am looking at more than $100 for a single collection that might not even sell for that much. As such, a distributor makes a lot more sense.

Then you get into the cost of marketing. When you are not selling a big ticket item, the costs of advertising, trade shows etc. eat you alive. It's very easy to spend the better part of $10K a month on trade journal ads and a booth at ISA with lodging, travel and the rest will set you back $15K to $20K. You have to sell a lot of Scrappys or clipart to make a profit. So it makes more sense to just give a generous discount to a distributor and see what happens. And you're tying into a marketing resource that knows their market and is known in their market far better than you can ever expect to be. Plus you get larger orders that are still respectable profitwise.

These days most digital art publishers have gone to direct sales since distributors are spending their time selling systems and media. We also have put our images out to microstock sites which has proved to be a good decision. Basically, I have come to recognize that it is far more difficult to market product than to create it.

 

[Locals Find!]

some things you may want to think about expanding internationally is licensing. Many countries are going to require you to register as a Foreign corporation to do business with them, also many municipalities will also. Even though your web based. Check local laws and with an attorney familiar with international business.

Also, with Canada it has been my experience that some areas are heavily french speaking. I would look into expanding that language before Spanish. Also, with spanish your going to need to keep in mind different dialects. The spanish spoke in say Rio, is entirely different than the spanish spoken in Mexico. Also you have Portuguese in many areas of the South American Market, along with German, and French.

Also, customer support is an issue to look into as you expand languages how are you going to offer support in those languages if someone calls you? Will you be subbing out to a support center that has qualified people speaking those languages?

You might also want to check out how doing business internationally affects your businesses taxes. I know when I sell international real estate I get taxed higher on my income from the foreign sale than a state side sale. I also get eaten up by fees associated with exchanging the money and wire transfer costs. It's still profitable for me, but you have to make sure it will still be profitable for you.

I hope this helps these are just a few things I have experienced in my limited international dealings and most of mine have been real estate related.

 

[thesignexpert]

...Basically, I have come to recognize that it is far more difficult to market product than to create it.

Holy cow, isn't that the truth!

 

[thesignexpert]

Also, with Canada it has been my experience that some areas are heavily french speaking. I would look into expanding that language before Spanish. Also, with spanish your going to need to keep in mind different dialects. The spanish spoke in say Rio, is entirely different than the spanish spoken in Mexico. Also you have Portuguese in many areas of the South American Market, along with German, and French.

Yes, I have already run into the French issue with the province of Quebec. Apparently they have a law that requires any advertisements / postings have french first and then english. Part of the ProSignRepair.com system uses "NOTICE" stickers to let sign owners know that their sign is out. With this law, it would require that we create a whole new set of NOTICE designs to comply with their particular regional law. We would also have to have a French translation for the website and the mobile apps...

I don't think we are ready for this just yet, which I why I would focus the next expansions into Australia, New Zealand, UK etc. If we can avoid the software translations and be able to provide tech support in English we can continue to grow for a while yet.

I have experienced some of the various Spanish dialects (Specifically "Mexican" versus Castillian in Argentina). I wonder if there is enough of a trade similarity in the various Spanish shifts that would ameliorate that issue?

 

[premiercolour]

isn't great American market big enough? Rest of the world isn't like here in America. People make much much more than many other countries'. People here pay much more property taxes (100 times property taxes from my country). It is because people make more; they spend more. For instance, while rest of the sign shops around the world using compatible inks; not too many people using compatible inks here in USA in percentage wise. I think America is one of the few countries that has lock on Mutoh printers. Lock on mutoh units in Asia? Well because people have to use compatible inks to compete with each other - because people don't maker hat much money to buy genuine ink products; mutoh will not sell. Therefore, Mutoh is not locked in many countries except in America or in result no sale.

I would focus in America unless your operation is big like IBM, Apple one day While you would need to spend customer service in different languages; making return labels, absorbing international return fees; figuring out Canadian customs, whatever there is; you know the drill. Use that valuable time of yours to focus in America.