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With local market saturation, the thought of bidding for international deals sounds so appealing. An untapped market you have yet to try. But have you thought about your procurement process? Making the right call is key to securing sales and streamlining your processes.
This blog delves into how a centralized IT procurement approach can help a Value-Added Reseller bid and win international sales opportunities.
In-market (or decentralized) procurement is often the default option for VARs, distributors, and their clients. This is mostly because the VAR does not have a physical entity in the foreign country, does not possess the customs clearance expertise, does not want to take on the import risk, and does not have the means to get the goods to the foreign destination.
While this option is completely achievable, there are various downsides that may impact your making this decision in the future.
1. You will lose out on the deal (or even partly)
By having to work alongside your foreign counterparts in the sale, you will either have to share the deal with them or risk not even taking a chance to bid.
2. Higher quotes = less likely to seal the deal.
Using your in-market reseller contact will inevitably lead to international markup of the prices – these bigger quotes may make or break the deal for your clients.
3. Operational complexities
In-market purchasing increases the risk of potential stocking issues or not meeting brand requirements for the client. On top of this, you will need to raise multiple purchase orders from the various in-market suppliers. Overall, various soft inefficiencies come into play – things like multiple time zones, currencies, and so on.
Transactional foreign exchange (FX) risk that the value of a currency will fluctuate against another currency, potentially causing financial losses. When buying products in your supplier’s currency, any appreciation can impact your bottom line, and you may pay more than the contracted price.
The Benefits of a Centralized Purchasing Approach
For a VAR, centralized IT procurement is when you and the client procure the technology requirement using one entity with one centralized purchase order. In this situation, the reseller is usually compensated on the global deal based on the rationale that the buying decision was made locally, through a local relationship, and closed by the local team. The rationale of the client may include that their global IT budget is based centrally with this entity or that they seek other benefits of this model such as simplicity, speed of stocking, staging, and consistency.
Central procurement solves all the issues that are present with a decentralized approach.
1. You stay in control of the deal.
2. Using your own purchasing chain, you can reduce costs for your clients (i.e., through bulk orders), making the deal more appealing to your client.
3. You source the gear according to your standards and your client’s requirements.
4. You can strengthen relationships with your clients as you provide a complete solution.
The next question is, how to deploy the gear to the foreign sites and this is where an Importer of Record steps in.
How an IOR Can Help You Land the Deal
The major pain point you will face is not getting the deal but fulfilling the logistics portion of getting those goods to the foreign sites.
If you have ever shipped IT hardware, you will know about the import risk and the complexities of clearing dual-use tech gear through customs. Specialized IORs understand the risks and regulations put on tech gear. On top of this, they also understand the nuances of different country’s customs.
Through a Delivered Duty Paid (DDP) shipping solution, you are able to service your clients while the IOR handles global trade compliance, logistics, and customs clearance.
Don’t let geographic boundaries restrict your sales.