Do your homework before entering the U.S. market

(Nov. 1, 2007) Henry Allessio doesn't beat around the bush when he talks about the U.S. aftermarket to foreign suppliers hoping to do business in the States.

"The U.S., has the biggest, and most competitive, aftermarket in the world," Allessio says. "Plus, we have a pretty complex business environment. Success isn't a slam dunk for every company; you really have to know what you're doing if you want to compete with the big guys."

Allessio, the managing director of Walden Consultants, Ltd. regularly conducts corporate strategy, marketing, competitive analysis and acquisition planning assignments for foreign and domestic clients. Yesterday, Allessio spoke to a packed crowd at the Sands Expo Center, all of who were on hand to hear the type of strategic advice that will help them expand their sales to the U.S. aftermarket.

"You just can't expect to get off the plane, come to Vegas and start writing invoices for sales," he warns, when asked about the topic in a follow-up interview. "The U.S. has the largest aftermarket in the world, and has attracted to its shores every large parts supplier in the world. The industry is very contentious; every day you're dealing with the biggest and the best."

Allessio's presentation reviewed several market requirements that differ from the home markets of aspiring offshore suppliers. Pricing, profit margins and relative size of key market segments can vary dramatically in Europe and Asia. Leading parts suppliers in America have the potential to benefit from scale economies and, as a result, make it difficult for low-share entrants.

By choosing specific customers in America, a supplier's available market and pricing levels become defined, and could be restrictive. That is why Allessio recommends that would-be suppliers define, in advance, the proper focus and balance of their resources in relation to sales opportunity.

"Too often early relationships are established that cannot deliver targeted business returns," Allessio adds. "With proper planning, a small share of the American aftermarket can yield an attractive volume of business for offshore parts suppliers."

Allessio, who has spoken many times on this topic, says what he has to say doesn't change that much because he is talking about the U.S. market. However, one of the ideas he has been introducing to overseas suppliers during the past few years is the importance of building an online presence.

"I like to tell audiences that one of the ways they can consider coming to the U.S. is through online services," he says, after leaving the stage. "This will help them leapfrog some distribution levels. You can't assume this is a given for every country; many of them don’t come with the capability of creating a viable online presence right away."

If there's one thing suppliers should take away from Allessio's seminar, however, it's that the needs and requirements for a company entering the U.S. market may appear daunting, but they are not impossible.

"If you listen to what I have to say and are willing to go back to the drawing board and do what is needed, you’re going to be able to break into the market," he says, in closing. "If not, well, you may just have to wait for buyers to come knocking on your door. But that's not really a proactive business strategy, is it?"