Market entry strategy for exports to Spain

If Spain is a relatively unknown market for you, you need a clear market entry strategy. This may be different from the strategies you have used so far, as the market structure and the competition is different.

Key in your market entry strategy is some market research. Of course there are reports on market size and market growth, but often these are general. Specific knowledge on how your product is perceived and what your competitions is, is harder to get but more valuable.

Oppportunities for international business in Spain

Spain is a vibrant and diverse market where you have good chances of introducing a new product. As of the latest data, Spain has a population of approximately 47 million people. According to the World Bank, Spain’s GDP per capita was about $30,370 in USD as of the last reporting year.

WHAT DO PEOPLE IMPORT IN SPAIN?

Spain imports mostly energy, vehicle parts, and packaged medicaments.
Most important import partners are Germany, France, China, Italy and the Netherlands.

HOW TO FIND YOUR SPANISH AGENT OR DISTRIBUTOR?

Most businesses have their headquarters in or around the capital Madrid, or in Barcelona, in the Northeast. For consumer goods, Mercadona, El Corte Inglés and Centros Comerciales Carrefour were the largest retailers in value terms in Spain in 2017. Within grocery store-based retailing the competitive environment is quite concentrated, with Mercadona having by far the largest share, followed by Centros Comerciales Carrefour and then Dia. For B2B distribution channels may be much longer, with many middle-man in place.

To find the right agent or distributor, it is important to have knowledge of the Spanish language, since many people don’t speak English. Knowledge of the local culture and business habits is also important.

Five ways into a market

Your entry model decides your cost, your speed and how much control you keep: sell directly from home, work with an agent, appoint a distributor or importer, sell online, or open a local office.

Control and investment move together. Direct and online selling are cheap to start and easy to stop. A local office gives full control, but needs staff, registration and often a local company.

Most companies start light, prove that there is demand, and only then invest.

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Entering the market in Spain in three steps

Step 1

Validate the demand

Check market size, competitors and price levels, then speak with five to ten potential buyers. Their reaction tells you more than a general market report.

Step 2

Choose channel and price

Pick the entry model that fits your margin and your capacity, and calculate your landed cost: transport, duties, VAT and the margin the channel will take.

Step 3

Pilot, then scale

Start in one region or with one partner, agree what success looks like after six to twelve months, and expand the country plan only on those results.