Around 80 percent of all German companies that wanted to gain a foothold in the Indian market in recent years did so through Indian sales representatives. They hoped for easier market access and lower economic risks. But in practice, any hopes were rarely fulfilled. An analysis by the management consultancy Dr. Dr. who specializes in India. Wamser + Batra GmbH.
India is sought after. Almost every German company has had business relationships there in the past or has recently begun to explore the Indian sales market. If you have decided to do business there, the first step is often based on working with an Indian sales agent, who either buys and sells the goods for his own account or - in the case of direct business - collects a commission. “The hope is for easier market access, which the sales representative should already have, as well as less time and financial expenditure during the market entry phase.”said Mike Batra, Managing Director of Dr. Wamser + Batra GmbH. However, the advantages of this form of market entry, which involves relatively little effort, are offset in practice by clear disadvantages that could hinder long-term business success in India:
Little/no influence on marketing strategy in India
The sales representative is the one who works on the Indian market - and not the German company! It is usually more than questionable whether the representative's communication and sales policy ultimately corresponds to the desired strategy of the German company. And then there is a lack of any transparency. “Whether the market is really what the representative claims or whether you are actually too expensive and have to offer excessive discounts or special conditions are just some of the questions that the German company can hardly answer from a distance and quickly becomes dependent on the company representative gets “said Batra.
No direct access to the customer
Long-term customer relationships are the basis for sustainable business success. However, when entering the market via sales representatives, the German supplier is usually left out. This means that the actual desired relationship with the market does not come about directly and depends on the Indian representative's willingness to cooperate.
Lack of advice and service competence on the part of the representative
The German product is often the highest quality, most expensive and therefore most complex product that the Indian sales partner has ever sold. Selling such products therefore requires greater technical expertise and more time in the sales cycle. Finding/developing (technically) competent sellers for products that require explanation is certainly a difficulty in India. It is also important to maintain the sales representative's interest. It is not uncommon for his initial euphoria to quickly dissipate when he realizes that it is not so easy to sell state-of-the-art but correspondingly expensive German high-performance products in India. The risk that the representative will then quickly turn back to “simpler” product groups is correspondingly high and the effort that the German company has invested must be written off.
Read more about the topic in the article “Lack of service from Indian sales partners
Weak conversion rate due to Indian sales
Sales representatives don't always have the best reputation in India. A direct approach from the German company is often much more effective than an approach from an Indian representative. “As a German, you are more likely to be noticed in India and have easier access to top decision-makers. Don’t underestimate this foreigner bonus!”, says Dr. Johannes Wamser, co-managing director of Dr. Wamser + Batra GmbH.
“Fat representatives”
If the sales representative achieves a sales volume with which he is satisfied, the momentum may be limited after a while and business will stagnate.
Lack of loyalty
Unfortunately, it is the exception rather than the rule that an Indian sales agent really acts for the long term. Many retailers focus on short-term success and are therefore quick to turn to a competitor if the margin is a little better there. Some “particularly black sheep” even make intensive efforts to attract German companies simply to use the German brand and German reputation to be able to approach other attractive principals.
Restart in case of break with sales representative
If, after a few years, the collaboration with an Indian representative no longer works - regardless of the reasons - and the German company wants to go its own way, the management will quickly realize that it has to start from “zero” again. In the event of a break with the Indian partner, he will leave behind neither structures, processes, market access nor customer relationships.
Mike Batra explains: “It always surprises us how carelessly many German entrepreneurs, who normally don't allow themselves to be fooled by an 'X' for a 'U', simply start working with 'any' sales representative in India without having assessed them sufficiently carefully beforehand .” Therefore, consider the risks of sales representatives and consider whether it might be worthwhile to take the supposedly arduous but more sustainable route of setting up your own sales branch.
Care in choosing your Indian sales representative – Dr. Wamser + Batra GmbH
Dr. Wamser + Batra supports European companies that need Indian sales representatives and a sustainably successful cooperation strive with this. We enable long-term and sustainable success of the cooperation because we only bring the German producer together with capable Indian sales representatives and accompany the entire process. We prevent “nasty surprises” by speaking to potential Indian partners and evaluating them in the form of a small due diligence.
