This post is one of the first articles that I wrote for when I started working with foreign clients. Because the question about commission or percentage was asked to me by 9 out of 10 people. Therefore, it was this article that I took as the basis of the chapter “Step № 3 – “Do not offer commission” from my new book “Your first 50 right steps to enter the Russian food market”.
So, 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 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. A new way to pay employees emerged. It included a fixed salary and a commission, but any type of payment always included a fixed salary.
When you offer a commission only 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 most cases you will not get the results 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 directly from the manufacturer. You do not want your products to be treated badly.
Finally, the attitude to intermediaries in Russia is very bad, which means that your products 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 step a bit later.
If you really want to find good customers and sell your food products 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. I will also provide more information on how and where easy to find such an employee in my book.
Business Adviser on the Russian Food Market
I hope you will be interested in my other posts:Backward