compuBase
 

A quick guide for American or Japanese IT companies looking to sell their products in Europe


I.    Differences between the IT landscape in Europe and the United States

II.    Who to work with first.  (Who can help you.) 

III.    How compuBase can help you.



I. Differences between the IT landscape in Europe and the United States
 
Thinking that distribution in Europe is the same as in the United States would be a serious mistake in your market approach. Apart from linguistic problems, the main differences stem from the history of computing itself.
 
IT distribution in Europe was developed in opposition to direct distribution in the United States. When it comes to technology, the big American players have always preferred to take a direct customer approach, largely because the technology was expensive, difficult to explain and required specialists.
 
It was only when computing became democratized and the price/volume ratio was reversed (the price decreasing and the volume increasing) that IT companies turned to the large distribution chains and wholesalers, but their initial DNA was still geared to direct sales. When American (or Japanese) companies wanted to set up in Europe  various barriers: linguistic, legal and commercial, soon made them realize that a direct approach just wouldn’t work. They therefore turned to other companies to represent them (publishers,  importers, wholesalers), often buying some of them out after a while. 

In the United States, with just one language you can work a market of over 320 million inhabitants, and if you then add three other languages (Spanish, Portuguese and French) you can reach a market of nearly one billion people. In Switzerland there are 8 million in habitants for 3 languages… In Europe there are 750 million inhabitants and 24 official languages with as many fiscal and social laws as there are countries.

This means we have a very granular economy and this granularity implies significant physical distribution costs, high financial risks and  high costs for market education …which is the wholesaler’s job.

To sum up without giving an archeological lesson on the economics of new technology:
 
  1. IT in Europe was built on distribution whereas in the United States IT was built around the client.
     
  2. Europe is a very granular market which makes the distributor’s role very important for those who distribute physical products.
     
  3. English is widely used but you can’t do business in English alone, you need to have a relay of local partners to help you. 

There are different ways to approach Europe, depending on your needs:

  • You have strong technological products and want to invest on a small scale
    >> Northern Europe which includes the United Kingdom, the Nordics (SE,NO,DK, FIN) and Holland are for you. These countries are quick to integrate new technologies (and to use English)
     
  • You have a product that addresses the very large international groups
    >> Concentrate your efforts on the main financial capitals: London, Paris, Madrid, Milan, Berlin, Brussels, Amsterdam, Munich with a headquarters in Luxembourg.
     
  • You have a high volume product
    >>Concentrate on the top 3 countries (DE, UK, FR) then on the top 5 (Top 3 + IT, SP)
     
  • You just want to expand your US sales territory
    >> Set up in the UK (it’s simple and they speak the same language)
     
  • You really want to set up in Europe
    >> Set up your business in the UK, but hire a non-English boss, or set up on the continent (Paris, Amsterdam, Munich)
     
  • You dislike  granular distribution
    >> Avoid southern Europe (Italy, Spain)
     
  • You like R&D and subsidies
    >>France is the place for you!
     
  • You have a product that doesn’t require physical distribution and you don’t have to physically meet your clients
    >>Stay at home, get a good PR company and do some lobbying.
 
Of course the above are clichés, but they are nevertheless close to reality.

 

​II. Who to work with first
 
Obviously the answer depends on your products. There are several ways to find the answer:
 
  1. Find the right professional organisation (if possible a trans-national one) and sign up for it. In a short space of time and for a fairly small cost you will soon find the ones that matter. EuroCloud for SaaS and Cloud Computing, Comptia  for distribution...
     
  2.  Subscribe to ICTNews,  a daily digest of the professional IT press in Europe (in English)
     
  3. If you distribute physical products  wholesalers will of course be important: Arrow, Avnet, Tech Data, Esprinet, Ingram…
     
  4. Tradeshows are still  reliable, even if they are not as effective as they used to be e.g.: Cebit…
     
  5. Various groups on LinkedIn are also interesing entry points
     
  6. There are hundreds of consultants specializing in different fields (you can find them on LinkedIn) or companies specialising in helping you find your first distributor, VAR, integrator…  


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