“Your first 50 right steps to enter the Russian food market”.
Step №3 – “Do not offer commission”
This is a fact that a lot of business rules and customs accepted throughout the world do not work in Russia. If you want to enter the Russian market, work according to Russian business rules.
The first mistake many foreign companies trying to enter the Russian market make is they offer commission on sales. I get about 30-40 emails a day and 80% of them offer commission-based cooperation. I can honestly tell you that the size of this commission does not affect the decision-making in Russia. For example, I was offered commissions ranging from 4% to 50%, but I do not work with these customers anyway.
Let me share with you several reasons why you should not offer a commission on sales in Russia.
You do not want to look unreliable.
Firstly, it has not been accepted to work for commission in Russia for many years. It was happening in 1990s, after the collapse of the USSR, when people were taking up any work to feed themselves. There was a new way to pay employees that included a fixed salary and a commission, but this amount always included a fixed salary. Always!
When you offer a commission to someone in Russia, they will simply look at you as an unreliable partner and will not deal with you. Even if anyone agrees, in 99.9% of cases you will not get the result you want.
You do not want to have unreasonable prices.
Secondly, no good company in Russia will ever communicate with an intermediary that you hired on a commission basis. In Russia, everyone knows how to count money and everyone tries to buy only directly from the manufacturer.
You do not want your product to be treated badly.
Finally, the attitude to intermediaries in Russia is very bad, which means that your product will also be treated badly. This is the most important reason why working with distributors in Russia is a bad idea. I will talk more about working with distributors in a separate article a bit later.
If you really want to find good customers and sell your food product in Russia, I recommend that you hire an official representative in Russia. You do not need to have an office in Russia or a legal entity, you just need one person to be fully devoted you your product. In the next steps I will also provide information on how and where to find such an employee. Stay tuned!
Business Solutions in the Russian Food Industry
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