Suggestions for Suppliers Selling Product in Latin America

The purposes of these suggestions for suppliers include:

• To ensure good service to the distributors in the region;
• To encourage mutual growth of the suppliers’ and distributors’ businesses;
• To standardize the procedures, timelines and service from suppliers;
• To promote a policy of transparency and fair play, between sellers and buyers alike; and,
• To ensure long-term stability of this business.

STRUCTURING THE RELATIONSHIP

Both suppliers and distributors should recognize the mutual investment of time, resources and funds will expend in the process of bringing a product to market in Latin America.

Like in any business transaction, smooth business operations depend on relationships and trust, a quality product, timely quality of service from both sides, and, in many cases, a contractual agreement spelling out the responsibilities of both parties.

These suggestions predominately will cover the quality of product and the quality of service associated with the process. We leave the relationship building and contracts to the specific parties involved in each transaction.

QUALITY OF PRODUCT

As the supplier has often sold this product in other countries first, the supplier is expected to bring into the region a product of good quality. Poor quality products hurt all parties involved, including suppliers, distributors and consumers.

The supplier should be prepared to offer a manufacturer’s warrantee to cover defections or quality issues reported within a reasonable amount of time upon receipt of goods. It is recommended that the supplier includes a standard percentage of overstock and/or spare parts, assuming the size of the order warrants such inclusion.

If returns exceed a figure both parties agree are above an industry standard, the supplier should be prepared to provide replacement parts based on verification of the need by the distributor.

The supplier should address any customer service issues in the mostly timely and effective manner at their disposal.

QUALITY OF SERVICE

Suppliers presenting new products should provide the following:

• A product sample
• A viewing tape, in Spanish if possible (NTSC for most of the region, PAL for Argentina and Paraguay )
• FOB location and cost
• US on-screen price (if sold in US)
• Suggested on-screen price
• Suggested telemarketing script
• Suggested upsell strategy
• A listing of product Frequently Asked Questions (FAQ) and responses for customer service, especially addressing any previously-found quality issues

For Latin America , the general rule of thumb is that suppliers are responsible for providing a translated Spanish-language master show or spot. Several distributors are fully capable of providing the translation to the supplier, at a cost to be determined by the parties. Most suppliers pay for the translation because that ensures they own the translated master.

When a distributor confirms a product order, the supplier is asked to send the distributor a pro-forma invoice within 48 hours. The pro-forma invoice should include the following:

• The exact pick-up location of the merchandise
• Number of units
• Product configuration of each unit
• Price per unit
• Payment terms
• Weights and measurements of each master carton
• Exact delivery date of the merchandise
• Bank account information for wiring of funds

The supplier should make every effort to ensure the merchandise delivery date does not exceed 30 days from when the order is placed, and is preferably significantly sooner.

With a signed pro-forma, the distributor then sends the supplier the following information:

• When payment will be made
• Name of freight forwarder picking up the merchandise
• Name of the inspection company and inspection number.

The distributor then schedules the inspection with the inspection company and the pick-up with the freight forwarder.

The supplier should ensure the inspection is performed in a timely manner. Once the inspection is performed, the supplier should issue an original invoice and packing slip. Copies are sent to the freight forwarder, the distributor and the inspection company.

For products that require special documents, permits and/or clearances, such as ingestibles and topicals, these documents are to be provided by the supplier, according to the country-by-country needs of the distributors.

NOTE: While these exporting procedures vary country-by-country, the supplier should be sure to understand and adapt the procedures according to the needs of each country.

OTHER CONTRACTUAL ISSUES

Given the nature of the industry, when a distributor accepts to represent and develop a DRTV product in his territory he also accepts and is required to pay his country’s share of the media costs for pan-regional cable media in Latin America. This investment is essential to guarantee the development and success of the product in the market.

Additional issues should be agreed upon by the supplier and distributor prior to any transactions. These agreements may cover issues such as product rights, marketing rights, sales expectations, termination of rights, terms, non-competition by the supplier, etc. Whether these are contractually agreed-upon or simply confirmed between the parties is to be determined by the supplier and distributor.

By acknowledging that the objective is to establish a long term, mutually beneficial business alliance between the product supplier and distributor, all parties benefit.
 

For questions regarding these or other suggested procedures regarding launching a product in Latin America , please contact: