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6 tips for doing business with European home decoration and home textile buyers

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Takes 15 minutes to read

The European market for home decoration and home textiles is very competitive and diverse. If you want to succeed on this market as a supplier from a developing country, there are many aspects to take into consideration. In this study, we offer some key tips on topics such as the European business culture, providing quotations and defining your unique selling point.

1. Communicate clearly and honestly

Successfully doing business on the European home decoration and home textiles (HDHT) market relies heavily on successful communication. Communicating clearly and honestly is an important part of European business culture, which allows you to manage expectations and avoid misunderstandings between you and your buyers.

Language

Doing business with European buyers in the HDHT industry generally requires good knowledge of the English language. If you share a language with your European target market (such as France or Spain), this may give you a competitive advantage. Often however, English will be a second language for both you and your European buyer. This makes your communication style extra important.

Communication style

Clear and honest communication is key to a good business relationship. It can be fun and refreshing when you and your buyer have different backgrounds, as long as your communication is clear. European HDHT buyers usually communicate quite directly, and they expect the same clarity from you. Especially when things do not go as expected. For example, if your production is delayed, you should inform your buyer as soon as possible. Let them know the reason for the delay and when they can expect your delivery. You can also offer alternatives.

European buyers generally expect you to respond to emails within a day. If a buyer emails you a complicated request, you should acknowledge that you have received it and let them know you need some time to sort it out.

Good communication has proven particularly valuable during the COVID-19 crisis, which disrupted the day-to-day business operations of buyers and suppliers. In situations like this, you need to stay in contact with your buyers and inform them about the specific situation in your country. Tell them how that may affect your production and delivery in the short term. Ask them if their needs have changed and, if so, what the consequences will be for you. Reaching out to each other in a supportive manner can strengthen your relationship in the future.

Tips:

  • Communicate in correct English, or in your shared language.
  • Be to the point, realistic and honest in your communication.
  • Be clear about what you have to offer.
  • Reply to messages from your buyers as quickly as possible.
  • For more information on the short and long-term impact of the coronavirus pandemic, see our study on how to respond to COVID-19 in the HDHT sector.

2. Meet new buyers ‘face to face’

Digital communication is key to international business, and has become even more important after the COVID-19 pandemic. It is particularly useful once you have a well-established business relationship with your buyer. However, while the pandemic has shown that a lot can be achieved online, you should not underestimate the importance of actual face-to-face contact. Especially when you are getting to know new (potential) buyers, personal contact can help you to gain trust and build a long-lasting relationship.

While email may seem quick and effective, meeting new buyers in person often yields far better business results. It makes it easier for you to share ideas and backgrounds, talk through challenging issues and build a basis of trust.

When travel restrictions are lifted and events can take place again, trade fairs are a good starting point. These events let you combine business meetings and networking activities with catching up on the latest trends and developments. Either meet your buyers at the fair or visit their office while you are in Europe, so you can meet multiple prospects during one trip and save travel costs. Another option is to invite potential buyers to visit you in your country. This will give them a good impression of your company, your products and how you work.

However, while international travel continues to be restricted and the opportunities to meet in person are limited, you will have to stick to digital communication. You can make the most of this by giving your buyers a live virtual tour of your business and use video calls for meetings that would otherwise happen in person. This way you can still meet your buyers ‘face to face’, but long distance.

Tips:

  • While you cannot meet your buyers in person, plan online meetings with them via tools such as Skype, WhatsApp or Zoom. Preferably with video, if your internet connection supports it.
  • When visiting a trade fair, make sure to schedule appointments with potential buyers. Do not plan this too far in advance. You can call several weeks before your visit and let them know you will be at the fair.
  • When inviting potential buyers to your country, make sure you make time for them, treat them well and give them a realistic idea of what you have to offer.

3. Show buyers you are committed to their business

Buyers find it important that you show interest in their business. They appreciate producers who help them solve or prevent potential problems and think of creative solutions, rather than purely focusing on sales. Finding out how you can be of more service to your buyer will make you a better partner and eventually help you sell more products. Focus on long-term relationships, be proactive, show that you are willing to make a commitment, and stay involved with the business. Buyers will value this, and it will boost your business over time.

Tips:

  • Show your buyer that you want to make a commitment. You can do this by, for example, pre-stocking part of their basic collection, investing in product development, or tendering with transport agents to get a better deal.
  • Think of ways to help your buyer. For instance, can you offer to use alternative raw materials that save costs or increase design flexibility? Or, can you consolidate orders on behalf of your buyer?
  • Share risks and responsibilities with your buyer. This can be working capital, testing procedures, cost of certification or exclusivity deals for a specific buyer.
  • Share new developments in your company that you think could be relevant for your buyer. For instance, let them know if you are using new techniques or raw materials, new packaging methods or materials, or logistic developments.

4. Make a professional quotation

To offer your products to a potential buyer, you need to provide a quotation. Your quotation has to provide all relevant product specifications. The product description should be extensive enough to clearly differentiate product A from product B. It should give the buyer a good understanding of the material, dimensions, techniques, colours and other relevant details of your product, illustrated with a picture of the product. You should also include your trading terms, which specify details such as sampling options and payment terms.

Your quotation should also contain your prices, including the currency and a clear indication of which costs are included. This depends on the Incoterms. These delivery terms specify the rights and responsibilities of the exporter (you) and the buyer. You can offer buyers a discount on higher order volumes, meaning that the more they purchase, the higher the discount. However, such volume discounts are less relevant for companies that make and sell hand-crafted HDHT products.

In the HDHT sector, margins depend on the length of the distribution chain, the market segment and the type of product. In general, the consumer price is approximately 5-7 times the free-on-board (FOB) price in the country of origin. For example, in Table 1, the FOB price is set at €10.00. Depending on the segment your product is designed for, the consumer price ranges from €41.00 in the low-end market to €65.50 in the high-end market.

Table 1: Example of the price breakdown per market segment

 

Low margin

Middle margin

High margin

 

FOB price

€10.00

€10.00

€10.00

Your FOB price

Transport, handling charges,
transport insurance, banking services (20%/15%/15%)

+€2.00

€12.00

+€1.50

€11.50

+€1.50

€11.50

Landed price for
the wholesale importer
 

Wholesalers' margins (50%/75%/90%)

+€6.00

€18.00

+€8.60

€20.10

+€10.40

€21.90

Selling price from
the wholesale importer to the retailer

Retailers' margins (90%/110%/150%)

+€16.20

€34.20

+€22.20

€42.30

+€32.70

€54.60

Selling price excluding VAT
from the retailer to
the end consumer

Selling price incl. VAT (20%*)

+€6.80

€41.00

+€8.50

€50.80

+€10.90

€65.50

Selling price including VAT
from the retailer to the end consumer

*VAT rates in Europe range from 18% in Malta to 27% in Sweden. On average, these percentages are approximately 20%.

And last but not least, you have to specify the expiration date of your quote to let the buyer know until when your offer is valid.

Tips:

  • Study the different types of Incoterms, including what your and your buyer’s rights and obligations are.
  • For a more elaborate overview of the various trading terms and how to work with them, see our study on terms and conditions, which also explains the benefits of having your own terms and conditions.
  • See our studies about promising export products for more product-specific insights into prices and margins.

5. Define your unique selling point

Your unique selling point (USP) defines what makes your product better than your competitors’. It is what convinces buyers to do business with you instead of another company. Use your USP in your sales pitch and marketing to stand out from the competition. Your USP can be based on various characteristics of your product and company, as well as on broader factors. For example, if you offer a product that your country is particularly known for, you can link your brand to that. These are some of the key topics you can explore in your USP:

Product

You can create your USP around the characteristics of your product. For the HDHT market, it is important to show that you are authentic, particularly in the mid to high-end market segments, where your best opportunities are. Offering something special instead of a generic product will help you get the attention of European buyers.

There are various ways in which your product can be special. For example, sustainability is currently a hot topic in Europe. Using materials that are natural (from renewable sources), local, certified organic, recycled, reused or upcycled is a good way to play into this. Developing innovative concepts, for example, to extend the lifecycle of your products or add functionality, can make your assortment truly unique. Traditional techniques, motifs and materials can make contemporary products stand out by providing extra context and story.

Makers

The story and transparency of your value chain have become very important. Because of the internet and social media, today’s consumer is more aware of production processes and working circumstances. Millennials, much more so than previous consumer generations, often ‘vote with their wallets’, meaning they express their values through their consumption. They care about social and environmental issues and buy products that they perceive contribute to a better world.

Being transparent about your value chain builds trust. Showcasing your origin’s story is also a good way to promote your product; telling people where your product is made, who makes it and how, and why you make it. It allows you to communicate how you care for your staff and their families, and how you contribute to your local community. Having a fair trade or other social and environmental certification to support your origin’s story can be of great value.

Service

The service you offer can be a great USP. European buyers very much appreciate a responsible and reliable supplier that offers consistent delivery and quality. To excel in this area, you should provide great customer service and be able to solve problems quickly.

Shorter lead times are becoming increasingly popular, as consumers expect products to be delivered quickly. Buyers are also changing their collections increasingly often, which requires lower minimum orders. Services like customised design and sample development are also highly appreciated in today’s market. More and more buyers focus on their own style, and the products you supply are often part of a wider collection. Being able to quickly and professionally develop products together with your buyer gives you a competitive advantage.

Price

You can also compete on price, if you can offer your product at a better price than your competitors. If you do, you need to ensure your potential buyers that this does not mean that your product is of lower quality. As the HDHT industry is quite broad, look at the competition in your market and find out whether price is a dominant factor for your type of product. However, competing on price alone is difficult, as you may enter a race to the bottom.

If you focus on low price, you need to have a specific structural advantage related to that. Mostly this means a production process that is both very low cost and high capacity. This process could be either highly mechanised or very labour intensive with extremely moderate worker fees, using low-cost raw materials. You need to consider the effect of such strategies on social and environmental sustainability (pollution, low wages, depletion of raw materials, etc.). The benefits of offering low prices should not outweigh poor sustainability performance.

An example of a successful marketing story is Wax Industri. Their homepage not only showcases their product (candles), but also highlights their commitment to fair-trade values. A company video further visualises Wax Industri’s award-winning social performance. The company has also added a highly relevant section on COVID-19 and connects this to their fair-trade USP through their support for the local community. Even the description of their production process is linked to the benefits for their village. This consistency makes for a strong USP.

Tips:

  • Involve all your employees of the company in the process of defining your USPs. A good USP is accepted as shared value throughout the whole company.
  • See if your USPs relate to any current trends to emphasise their relevance. For more information, check our studies on trends that offer opportunities on the European HDHT market and trends for specific promising export products.
  • Communicate your brand and its USPs consistently in all your marketing activities and materials, across all platforms you use to promote your product. This includes websites, newsletters and social media.
  • Include your USPs in your sales pitch. For more information, see for example Hubspot’s guide on how to make a sales pitch, including tips and best practices.

6. Comply with your buyer’s requirements

A product entering the European market has to comply with mandatory legal requirements. These requirements are mostly related to consumer health and safety. In the HDHT industry, they involve anything from making sure no harmful chemicals are used to the safe use of electrical fittings for lighting. Some requirements focus on the protection of endangered plants and animals.

In addition to the mandatory legal requirements, European buyers often have extra requirements. An increasing number of them demand Business Social Compliance Initiative (BSCI) or Ethical Trading Initiative (ETI) certification. There are also niche-specific requirements, such as organic and fair-trade certification. In general, sustainability values make your products stand out. Think of sustainable raw materials and production processes and the impact your company has on the environment, the wellbeing of your workers and society as a whole.

Before entering into business with European buyers, spend some time looking at the additional requirements buyers may have. This will make it easier to do business with them, as you are already up to date on their needs and requests, which will give you a head start.

Tips:

  • For more information, see our study on buyer requirements for HDHT.
  • See our studies about promising export products for more product-specific insights into prices and margins.
  • Ask your buyers and prospects for their specific requirements, so that you can prepare. They will see your inquiries as a sign of professionalism and commitment.

Look for organisations that can support you

Governmental organisations and NGOs that support international business activities can often help you with your export. To get started with your export activities, you can contact embassies (both those of your target countries and your own), chambers of commerce or export promotion agencies in Europe.

In addition, Business Support Organisations (BSOs) fund export-related activities such as market research, matchmaking and trade fairs. Look for BSOs that can provide you with information on the specific market you are targeting.

Important European or international BSOs that could support you are:

  • Centre for the Promotion of Imports from developing countries (CBI) – CBI supports companies from developing countries in exporting to the European market with export coaching projects and market intelligence on various key sectors;
  • Swiss Import Promotion Programme (SIPPO) – SIPPO supports BSOs in their export-related promotion and services to exporting companies in the areas of market intelligence, matchmaking and networking;
  • Import Promotion Desk (IPD) – IPD seeks to promote the import of certain products from specific partner countries, bringing together the interests of German importers with exporters in emerging markets;
  • International Trade Centre (ITC) – ITC is an agency of the World Trade Organisation and the United Nations working to enable export success of small and medium-sized enterprises (SMEs) in developing countries;
  • Enterprise Europe Network (EUN) – An European Commission initiative that helps companies to innovate and grow internationally through international partnerships, advice and innovation;
  • Open Trade Gate Sweden – Open Trade Gate Sweden facilitates trade and aims to increase exports from developing countries to Sweden;
  • World Trade Centers – WTCs stimulate trade and investment opportunities for international businesses and economic development agencies looking to connect globally and prosper locally.

Being part of an export promotion programme (ECP), such as those of CBI, will help you find out what your USPs are and how to capitalise on them in your marketing and promotion. Improving on all the processes in your company to meet the demands of European buyers is an integrated part of the programmes, as well as tailor-made assistance on entering the European market. ITC’s ECP also helps you improve all aspects of your export competitiveness, from your export strategy, to your marketing and production capabilities, to your transactions.

Tips:

  • Check our current and upcoming export promotion projects and programmes for the HDHT sector.
  • Contact the BSOs (or visit their website) to see if they have interesting export-related projects for your target market.

Read our other tips for exporting to Europe

This study has been carried out on behalf of CBI by Globally Cool B.V. in collaboration with Remco Kemper and GO! GoodOpportunity.

Please review our market information disclaimer.

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