Three Entry Points To The European Market For African Firms
The last decade has been the golden age of startups. Starting in the US, and then shifting to Europe, Asia, and now Africa, entrepreneurs have taken advantage of the technological revolution and have launched their own startup business.
Nowadays it is possible to start a company with relatively little money through technology, and there are several ways to raise capital via venture funds and crowfunding.
Yet, the main problem for any business remains: finding customers that can spur the growth of the company.
Once upon a time, a newly-founded business would first look for local customers and then, perhaps after many years, would look for export partners abroad.
Nowadays, even a startup can promptly find business partners abroad through digital marketplaces.
For African startups, perhaps the best market to start selling is Europe, a wealthy block of countries geographically close.
There are both B2C and B2B marketplaces that offer an attractive entry point to the European market.
1). B2C Marketplaces
B2C marketplaces are online platforms that act as online distributors to the final consumer. Even in Europe, the market for B2C marketplaces is dominated by Amazon, eBay, and Aliexpress (the B2C version of Alibaba).
However, there are also some Europe-focused B2C marketplaces. Some of them concentrate on a certain niche, such as Zalando (fashion) and ManoMano (homewares). Yet it is more common that a marketplace focuses on a specific country. Some examples include Allegro (Poland), bol.com (Netherlands), Cdiscount.com (France), OTTO (Germany), Ozon (Russia), and eMAG (Eastern Europe).
It is always good to have alternatives to the cut-throat competititon of the Amazon marketplace, but it is important to know where to look for. The names that I have just mentioned are a good start.
Another feature that sellers should know about a marketplace is whether the company behind the website acts as a retailer, i.e. delivers the products to the consumer, or not. It makes a big difference.
All the names that I have mentioned are retailers except eBay and Allegro.
2). B2B Marketplaces (Bulk Purchasing)
B2B marketplaces are websites where businesses meet to trade. Usually, the transaction is between two industrial companies (for example a supplier of industrial equipment and an industrial producer) or between a manufacturer and a distributor.
There are two types of B2B marketplaces: the ones where buyers buy in bulk and those where buyers prefer to establish a long term partnership (like a distribution or commercial agency agreement). This sencond type of marketplaces are also called B2B e-partnering websites.
Although there are a few sector-specific marketplaces focused on Europe, the world of B2B marketplaces for bulk purchasing is dominated by the Asian giants and Amazon Business.
Websites such as Alibaba, DHgate, Global Sources, EC21, eWorldTrade, etc, have all established themselves during the last 20 years at a time when manufacturing in Asia was booming. Nowadays, they remain as the global B2B markteplaces of reference for essentially any part of the world.
3). B2B Marketplaces (E-partnering)
E-partnering marketplaces are B2B portals where companies establish long term partnerships.
For example, suppose that you just founded an innovative farm in Nigeria and want to export the agricultural commodities you produce to Europe. You can use a B2B marketplace such as Alibaba and place each order separately, or you can look for a partner that will buy your products on a recurrent basis, an Italian food manufacturing company for example.
Which one would you prefer?
Finding a long term partner will allow you to grow faster, as you will be able to count on a pre-ordered amount of product sold every year, which will give you steady cash flow (not many startups can say that).
Of course, finding the right partner is not easy. A lot of things can go wrong. Barriers such as language and business customs matter. But, given the high prize that can be obtained, it is definitely worth trying to find a reliable partner.
The good news here is that most e-partnering marketplaces are focused on Europe.
UpInsales is based in the UK and specializes in finding sales agents. Globartis is a technology-driven B2B website that connects European SMEs with the rest of the world. Opportunity Network partners with banks to improve the level of compliance among the members.
There is even a government-backed marketplace called Enterprise Europe Network.
Startups should not focus just on growing locally, instead, they should embrace technology and start looking for foreign buyers to grow faster.
There is ample choice of sales and distribution channels: B2C marketplaces, B2B marketplaces for bulk purchasing, and B2B e-partnering marketplaces.
Startups should choose what is best for them, according to their business and capabilities.