03 May 2024 There is No Better Time for Mexico Manufacturers to Enter the USA/Canada Market than Now! But….
Written By Jeff Newkirk, Disruptive Products LLC | 6 min read
The time to expand into the U.S. and Canadian markets is now! Recent geopolitical events, trade disputes, and supply chain disruptions have created an unprecedented opportunity for you to grow your business by expanding distribution into the United States and Canada. Retailers and manufacturers are actively seeking reliable partners in your region to shorten supply chains and ensure consistent inventory flow.
Don’t miss this critical window to secure new contracts and establish your company as a key player in these lucrative markets. Some of the issues which we have experienced and which should be addressed by the manufacturer are:
The customer is almost always right
Be sure to understand that the major retailers in the USA and Canada currently have thousands of factories they are dealing with worldwide, so they do not have a lack of manufacturing options. They also have others banging on their door to do business with them. What they lack, and are starting to seek, is sources of manufacturing closer to home without an ocean adding enormous time to their supply chain. These major retailers and many Original Equipment Manufacturer (OEM) customers are not going to adapt to the Mexican factory’s unique way of doing business, or the Mexican factory’s pace. A sense of urgency is needed, and that is going to take a new mindset for many Mexico factories if they desire to penetrate the US retail landscape and, more importantly, properly service and sustain the business they are granted. If they do not see a sense of urgency, U.S. businesses simply have other options they can work with.
You need dedicated personnel at the factory who will work with a counterpart in the USA to facilitate the relationships necessary to succeed
This is an area that cannot be ignored as the typical company, whether buying OEM or having their own private label retail products for their shelves, expects a timely response (24 to 36 hours) to all inquiries and questions. They are accustomed to getting almost immediate answers from factories in East Asia, placing a PO, and having those durable goods made and shipped within a short period of time.
They are looking for the same from Mexico and Latin America. To break the cycle of their continually going to East Asia (and possibly placing their supply chain pipeline in jeopardy of disruption again), the factories in Mexico and Latin America must respond in a timely manner. For example, a potential OEM opportunity is presented for a certain type of sports ball. Inquiries have been sent, but no response has been forthcoming – for weeks. Cultural differences are understandable, but this was an easy project to execute with an exceedingly large volume of units.
Understanding price to value on all products
Given Mexico’s geographical proximity to major markets such as the USA and Canada, manufacturers can benefit from considerably shorter lead times, efficient overland transit options, and the absence of duties or tariffs, providing a tangible head start against competitors. This advantage is especially noteworthy when compared to the high tariffs and container rates associated with importing goods from East Asia. By considering Mexico as a production base, businesses can not only reduce their logistical costs but also enhance their market responsiveness. It’s advisable to collaborate with an experienced consultant in the USA to meticulously determine realistic pricing strategies based on projected retail outcomes, ensuring that your product remains competitive while also securing a healthy profit margin. This approach not only cultivates a stronger market position but also aligns with efficient supply chain management practices.
Adjusting your products to fit the USA / Canada market
What you manufacture currently for your home market may differ from what is needed or desired in the USA market. Modifications in color, size, or features may need to be changed, and you must be willing to make this happen on a case-by-case and timely basis. Retail cartons also differ as to standard master pack quantities. You may offer a product in master pack quantities of 12, but a retailer such as Walmart USA requires a much smaller master pack, which is determined by the measurements of your box and how it will fit on their shelves.
Scalability, customer service, and EDI are all essential
Achieving success as a supplier in today’s competitive market requires more than just quality products; it necessitates scalability to handle large orders, proper certifications to meet industry standards, exceptional customer service to address clients’ needs, and an in-depth knowledge of Electronic Data Interchange (EDI) for efficient transaction processing. It’s pivotal to be prepared to offer unparalleled service from the moment an order is received until it’s shipped, ensuring a smooth and satisfactory customer experience. Employing at least one fluent English-speaking staff is essential to facilitate clear and effective communication with your clients. Moreover, being familiar with web-based 3rd party applications not only enhances operational efficiency but also streamlines your supply chain management, making it a significant asset for seamless operations. To stand out as a supplier, you must be ready to go above and beyond in every aspect of your service delivery.
The BIG beast in the room
Do not overlook the importance of using Amazon as a starting point in the USA. Amazon.com is the largest worldwide e-commerce selling platform. Want to sell your own brand of products in the USA? Then start on Amazon. But a word of caution: if you think you are just going to throw your items onto Amazon.com and expect success, you are sadly mistaken. Amazon is a process that needs the right USA partners to manage it. The positives can be many, with the biggest being that you are controlling your brand messaging and, therefore, your own destiny. Our company, Disruptive Products, starts by validating the product(s) you are interested in pursuing on Amazon, and the data that we extract will answer many questions before you proceed.
Look at the USA and Canada as incremental business to your ongoing domestic business
The approach to take is to set a strategy that will work for your business and to treat this area as good, incremental business income for your company – the “icing on the cake.” Patience is required when selling to retailers, and it could take up to 12–16 months, depending on when they start looking at product re–sets on their shelves. So, this process is a marathon and not a sprint. Most major retailers will want you to provide evidence of ongoing programs you may have in Mexican retail chains as well as initial e-commerce business in the USA (Via Amazon or other platforms). In fact, it is almost a requirement with most major retailers unless they are looking for you to make their own private-label products.
In conclusion, the time is right if the manufacturer is ready. Mexico is on the verge of becoming a first-destination source for manufacturing. Develop an initial plan and budget to pay for a thorough exploration of the potential opportunities that may await your company in the USA.
For a further glimpse of what Disruptive Products LLC is all about, visit our website at: https://www.disruptiveitems.com/
