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New market penetration depends on smart delivery

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COVID-19 vaccine rollouts worldwide have triggered the reboot of delayed expansion plans, which will challenge the efficiency of a company’s existing delivery process.

That’s according to Grant Marshbank, CEO at VSC Solutions, who said, “The winners in the global expansion race will be able to adjust products, prices and distribution channels according to local preferences”.

“It is definitely not as simple as striking a deal, loading products on a truck and delivering the order in the exact same way you would in your main operating country,” he added.

Steve Johnson, Growth & Innovations Director at the Strategic Projects division of Frontline Market Research agrees. “The challenge with new market penetration – especially into Africa – is complexity,” he said.

“The continent contains around 50 different markets – each one with its own political, social, legal, cultural and economic character. Needless to say, the logistics involved in selling to Africa can be overwhelming,” Johnson added.

Selling a product for a few months via large supermarkets when consumers prefer buying from small stores or street vendors can be a “catastrophically expensive” lesson to learn, Marshbank warned.  To reduce this type of costly mistake, he advised that the research effort from the initial viability phase be extended into the so-called “Route to Market” phase.

Basing delivery decisions within the Route to Market plan on actual local data rather than generic theoretical simulations will increase both the short- and long-term success of an expansion plan.

“Great local market research is however only the first step. Companies also need to ensure that everyone from factory to warehouse to distributors follow the approved Route to Market plan,” Marshbank said.

In addition to being well-researched and implemented with integration, a Route to Market plan should be flexible to allow for seasonal fluctuations and unforeseen changes throughout the supply chain. Due to the skills gap, South African companies often struggle to assemble the required talents to fulfil all these requirements, Marshbank said.

He added that it was for this reason that VSC Solutions had joined forces with Frontline Market Research to offer companies with expansion plans well-researched route-to-market and territory expansion capabilities supported by strategic supply chain optimisation services.

He said capabilities offered by the partnership will also assist companies focusing on local markets with their continuing growth efforts.

“The pandemic has changed buying behaviours among South African individuals and organisations to the point that a vendor’s supply chain strategies may no longer be relevant,” said Marshbank. “To conform to new buyer requirements, companies need to review and potentially overhaul its current supply chain models and existing processes.”

He said a comprehensive supply chain strategy – whether local or global – must achieve three goals: alignment of sales efforts with buyer needs, seamless cooperation between the sales processes and distribution tactics, and supply chain model that is logical, cost effective and easily adaptable to the evolving needs of buyers.

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