How to Export to Australia: Market Entry Secrets with local expert

Marcus: 1, 2, 3, 4. Hi, I'm Dmytro Shvets, your host at the Start Global Insights, where I interview experts from different countries about local business secrets and international expansion experience. DS: Today we will talk about the very far away country, and at least, for Ukraine. But I think that this country is far away for almost all countries of the world.

And, usually you don't think to start your international business with this country. But, in, any case, the country. Quite interesting for many businesses. And, today we'll talk about Australia and, to go deep, and understand how the market works and how you can sell your product to this country.

I invited my guest today, Marcus Alexander, a managing partner of Codu Group. this is the Home Furnishings supplier. Hi Marcus and, welcome, to the show. Marcus: hi.

Thanks for having me. DS: Let's start with yourself and, could you describe, like what you do now? Yeah. What is your business and, maybe some words about your past experience?

Marcus: Yeah, definitely. So, we founded the CODU Group back in 2000, and the coder group was built around the premise of bringing Ukrainian homeware products into the Australian market. it originally started with a throw blanker business, and that was on the back of, Australia's love and passion for wool and wool products, knowing that we used to be one of the biggest exporters of wool in the world and the availability of wool products. The Ukrainian market as it was being for domestic.

So we, that sort of what we. Take one product from one market and put it into another market. and we soft launched that in late 2000, early 2001, and that was the launch pad for what, what is now known as the co group. which yeah, we, we provide furniture, homewares all sorts of products into the furniture and DIY market here in Australia, but primarily out of Ukraine.

DS: I know that, you've had also the experience before that, being a, a supplier to large retail chains in, in Australia, and you also work at the distribution site as well. Marcus: Yeah, I've, so I've been involved with Bunnings, which is Australia's biggest, home improvement, retailer. Similar to what you might see of Home Depot in the US or epicenter in Ukraine. I've been involved with them, with a couple of different businesses over the last probably 16, 17 years.

and prior to that I was involved with, the, the brand Heinz, which you might have in Ukraine. Ketchup. And working across. the grocery channel with our two major supermarkets here at Woolworths and Coles.

Can you give us some kind of, overview, of the players? 'cause as far as I have, studied, there are not many of them. So, it is not the monopoly. But, still, the dominant, presence of, main players in home improvement, market, is in place.

Marcus: Yeah, in Australia, we call Australia the home of Duopolies . So most of our retail chains are in forms of two, except in DIY. It's probably the exception. We have one big player called Bunnings, and then we have a few smaller players and a, and a lot of specialists.

So Bunnings might be the generalist where you can buy your pipes and your wood and your hammer and everything you need. But you might go to a specialist to buy specialty power tools or plumbing supplies or bathroom products, et cetera. So the market's worth about $48 billion. It's a quite sizable market, and Bunnings probably controls a little less than half.

there's a couple of other small generalist players, and they're predominantly run organized. Franchises of independent retailers. In America, there's a retailer called Ace Hardware, and that operates in the similar model. We have what's called the Independent Hardware Group, and that's worth about $4 billion into our market, and they're primarily a group of organized independent retailers that buy as a group, or behave as a group to, to leverage their buying power against the, the local wholesalers and, and global suppliers.

It was interesting for me that when I was preparing for the interview, I was, looking at the size of the retail market also. And, it was interesting that you have like one of the top, biggest, world markets, in, in the home improvement retail in DIY stores. And I thought that the, so comparing to that digits, the population should be also big and, and also the, the country is so big, it's like more than 7 million square kilometers. I, I, I think, and still you have only like almost 30 million people, which is like even less than in, in Ukraine when you are looking at the country and when they are trying to enter that, is it.

so that you should. See on some geographical areas that are highly populated and, not like spreading your attention to all, all over the whole Australia. Marcus: yeah. So in Australia, you're right, we have very large land mass, but primarily everyone lives on what's called the eastern seaboard, so on the very east coastline.

And that coastline covers Melbourne, Sydney, and Brisbane. On the west coast, we have a smaller city called Perth, which is about four hours flight from the east coast to the west. but primarily everyone lives on the water because we have beautiful beaches and we have a, we have a beach going culture. But as far as your comment in regards to market size, we, we have a very affluent market.

We have very high wages, very high disposable income, and how that reflects into DIY is. To do a job to renovate a house means it's gonna be expensive because the trades people that do the job also have very high wages. So, so if you can get them, they're very high in demand and they're very hard to get. They're very expensive.

And that is a segue. To why people are doing it themselves. Because once you've bought the raw materials, all of a sudden, often the labor to do the job is more than the raw materials. Okay.

So to save money, people will do it themselves. DS: Interesting. Interesting. So did that, that is not an obvious, fact.

I would say yes. So if, and usually if you think that the salaries are. Quite high. And, the, the income is quite high then, in most countries you don't do it by yourself.

It's like a predominantly the situation in, in, developing countries with low incomes. But, it is interesting that, you have the different, situation in Australia. Marcus: Yes. Some of that, some of our trade people are.

The highest paid people in this market. There's limited number of people that want do that job, and that pushes prices of trades up. Also, our median house prices are quite high. Um And we predominantly live in freestanding homes rather than apartments.

So, there's a lot of work. We're very house proud people, just like Ukrainians are. So everyone wants to have nice houses and often those jobs can be quite expensive. DS: Okay.

Mm. What is the situation with, go-to-market strategy? Let's, let's take an example of, I don't know, Ukrainian furniture brand that would like to enter Australian market. What would be your kind of advice or roadmap that you would suggest them to take?

Marcus: There are three sort of channels to working in the Australian market. One is to work directly with a retailer. So if, if you can find the retailer you wanna work with and build the relationship with that retailer, that's obviously channel number one. In the current climate, it's probably quite tough.

Because retailers are pretty rigid, you know, there's not many people that are willing to travel into Ukraine at, at the moment, so it would have to be people that are willing to go out and meet people at fairs and logistics in Ukraine can become challenging at, at, at the moment. It, it's not unachievable by, by any stretch. It's definitely achievable to be done, but it's just not as easy as if you were to go buy a product in China or in, in another manufacturing nation. DS: Is it about the time of delivery or the, the challenges and instability?

Marcus: It's more around it, it's a combination of the two, to be honest. Like the, the lead time at the moment can, to get a container out of Ukraine to Australia is between 60 and 90 days. And. You need to have the right people to be able to get containers out of Ukraine.

At the moment, if you have the right people, it can be done. but it, it's just not as simple as working in some of the other markets due to the current situation there. But there are pros, there are pros and cons to everything because I, a big advocate on Ukrainian products, I believe are some of the best in the world. I can, I believe the pricing and value proposition.

It's some of the best in the world. It's not the easiest place to do business with, but the value is exceptional. DS: Okay. So the direct way is the, the first one.

Then, you said that, before I interrupted you, you, you said that it is quite challenging to, to get in Yes. To, into the retail channel. Marcus: So the next thought of two options, to work with an international agent. Or to work with a local distributor.

So an international agent is someone who has that, that relationship with the retailer, but can represent your brand and take a small commission, you know, in the middle of, of doing those transactions. The challenges with international agents is they often represent lots of different factories or lots of different brands, and they can become transactional in nature. So. If you present a product and the retailer is interested, sometimes they'll take that product to five other people and what we call shop, shop the market, find the best deal, and and may not have your best interests at heart, but they do give you access to the global market.

So it's, it's definitely an option. An option that I really believe in is having local distributor. So if you build a partnership with someone who's on the ground. You have buy in together, you know, you become partners.

So you, you both have a level of trust. you offer the retailer flexibility that you know you might have stock in their warehouse ready to go. you, you have that relationship, they have that relationship with the retailer. You have that relationship with them and that, that's my, what I believe has been our success working with all the different retailers, in Australia is we have great partners in Ukraine that do an unbelievable job.

And we trust them and they trust us. And then we have great partners here in Australia and we. Have that level of mutual understanding all the way through from the factory floor to the retailer's floor that that, that, that we can deliver value and we're trustworthy supply. DS: So the, the best way is to find a local distributor and, it will be like your.

Borrowing their brand and trust to them from the retailers. So it'll be easier for you to enter the, the market. But coming back to, retailers and, being direct, do you have any advice how to do that? with what?

To start, where to look for the category managers or buyers. who are the person that you should contact and in which way? Marcus: Yeah. there's, there's a few options.

One is you can, you can get on LinkedIn and you can start pitching people. You know, it's very easy to find different people on LinkedIn. The other option is to, to go to fairs and present your product, in a standard and international fair. Very often, especially our buyers, like Bunnings, will travel and I've traveled with them to many fairs.

and met lots of different people, DS: meaning not in a, in Australia. Yeah. So that, that can be the fair in, in Europe or in us. Marcus: Yeah.

Correct. Yeah. So I usually, there's many fairs in Germany. I don't know why Germany becomes the fair capital of Europe, but, I've, I've traveled through, Germany.

I've traveled first with Bunnings in India, in China, so yeah, usually that's where the world sort of comes to meet. You know, as a marketplace. The other option I is like, a funny story for me, but someone actually just, just sent me samples in, in a, in a package. Like I didn't even know who they were and they ended up being one of our biggest suppliers.

That was, they were, we was, I was making, I was in the. fabrics in a window furnishings business. And a factory just, they sent us a bunch of really, really nice curtains and I was like, I've gotta find out who these people are and, and, and literally the art of the cold call. It, it just does not.

It, it, it, there's something special about it. I think there's like the element of, of surprise of like, of, of novelty. Like it's just something that you don't expect. And I think it's underdone.

I really do. I think people need to, to spend more time, like obviously you can't send a chair or furniture, but if you have something. You know, it's important for me, I think, to tell the story. Tell the story of your brand, what you're doing.

Why are you different, why are you special? What's your, you know, your proposition. and I think if you do that in a, in a nice sort of surprising way, it has a lot of cut through. You know, these people get pitched Every day of the week.

You gotta think, how am I gonna be different? How am I gonna get noticed? Because there's hundreds of people pitching them. So I think, I think the element of surprise is a really nice touch.

DS: Interesting. So the cold calls, were cold sales, are possible, but you need to be really unique and different from other thousands of letters in their email box. And then this spamy messages in LinkedIn. Yeah.

So you need to surprise. your buyer, what are the criteria or, or how the buyer from retail chain is selecting, the supplier? What is, most important for. Marcus: Yeah, it's, it's really the value proposition.

It's what can you bring, and when I talk about value proposition, it's more than just product and price. It's country of origin is important. In Australia, there's a perceived quality, you might say, around European products. So when you say something is made in Europe.

There, there's a perception that that's a much higher quality product than something made in China. And With that, with that comes, it's called pricing power, which means we can demand a higher price because we have a high quality product. I think brand is really important. Packaging is really important.

You know, Ukrainians do such a good job in their branding and their content that they put online is, it's some, it's some of the best in the world. The photography, the rendering. The style that, that Ukrainians have. It, it's very Scandinavian, it's very market leading.

You know, I think Ukrainians are, are very proud of their presentation. It's, you know, so I think, I think that sort of cuts through in the psyche of, of how you present your products. You know, you should be really proud of how you present it, make go to the effort to do it. and yeah, and bring, bring the trend and style.

DS: I usually say, well, when I see how people are working with distributors or retailers, they're like selling them the product. And I say that, when, when you're working with local partner, then you should sell not the product, but the, the result of corporation. Yeah. So like, if you sell the furniture, then this furniture should help the retailer.

To earn more money with you than without you. And, from your perspective and your experience, how deep, should one, investigate and research the market and calculate how, economically feasible it'll be for the partner? Marcus: I think it's, it's, it's critical. It's gotta make good business sense.

And I think what we call it is we call selling the story. You know, we, we've gotta tell the story of how this product or how this range has an impact for everyone. And it becomes a win-win scenario. You know, it becomes a win for the.

The manufacturer to gain more business and enter a new market, it becomes a win for the, the local distributor who makes a margin and builds their business. And it becomes a win for the retailer and essentially for their customer who's delighted with the product. You know, it looks great in the store and then the customer gets home and they, you know, it, it delivers what they want. And they enjoy using it or they can build memories from it, you know, and we see evolving in this.

2026. It's like a lot of this emotional selling, you know, how does this product make you feel when you use it? You know, how does it impact, your life? Mm.

And I think that's like an evolution of, of product marketing. We're no longer thinking about, you know, the product's function or, and we're thinking about the product's brand and how does that brand or that product make me feel during the transaction and after the transaction. DS: And to find a distributor if you're willing to sell to, Australia via distribution. I think the approach is quite the same.

Yeah. So the channel sales channels are the same and, the approach to sell your product is, similar. Marcus: Yeah. I would say you would look at your target range and then investigate who are the brands behind delivering that range and how you would fit in.

With, with those brands, maybe you sell a more premium product in that portfolio of that distributor, or you sell a more entry level product so you can sort of compliment, you know, on either side the top or the bottom. Maybe you sell a more innovative product. You know, something where they're, they're selling something that's been in the market for 20 years, but you've evolved that product and taken it to a new level, and that's missing from the market in our. Wardrobe business.

We took, traditional DIY wardrobes and we dressed them up with what we call milled fronts, which is like what you expect to see in a kitchen. You might see like the textured doors in a kitchen. That was quite common in. Custom made furniture, but it was, it was nowhere.

It wasn't anywhere in DIY furniture. So we took, we took the concepts from custom made and brought it into DIY so it became more affordable for the market and instantly we saw, excitement and traction in the market and, and lots of people came to us looking to arrange that product within there. different retail chains. DS: Talking about the brands, how easier it's to enter the market.

Is it with, private label, like when you, produce for the brand of the distributor or with the own brand? Marcus: I think it's traditionally easier to come into the market with a private label brand, whether that's the retailer's private label or the distributor's private label. And that's because often they've spent. Of millions of dollars educating the market in that brand and building trust in that brand.

if you were to bring in a foreign brand, it's often higher. Like it takes significant investment to build credibility in that brand. Maybe the marketing that you've done in other countries may not work in this country. You know, their cultures are very different.

It takes a lot to build a brand. in the Australian market, it's very, very expensive. In saying anything can be done, you know, it can be done, but it, it's, it's a tougher battle to win. It's a, it's a much easier battle to, to go to market and work with another brand and and build ranges together.

DS: And if you calculate how much you should, price, your product, can you share some general understanding what part of the price is left at the retail site, and then what part of the price is left at the distribution site? Marcus: Yeah, that's a good question. In, in our market, we're very lucky that all of, most of the big retailers are, are listed on the stock exchange and they publish their results. So very often we can, we get very good transparency to see what their gross margins are.

I haven't checked Bunnings lately, but I know most products in Bunnings would range between depending on the different products between. Probably 25 to 60 or 70% margin. Like that's a pretty wide, wide range. but there'll be some products that are there to be like, lost leaders to be exciting.

So they might be running at low margin and then there'll be some more premium products that might be running at high margin. And, and there's different. There's different variabilities, sometimes products that are very large, it's harder to get bigger margin versus products that are smaller. Yeah.

It, it's a real combination that builds the business. and then as far as the distributor, yeah, different distributors work on different models. people will distribute from 20% to probably 50, 50% margins and maybe, maybe a little bit more. DS: Clear.

And the general supplying market for Australia historically was Asian region. Yeah. Or who is the supplier for Australia? Marcus: China is the supplier for Australia.

But there's, there's a lot of sensitivities around the China, Taiwan situation and the vulnerabilities that that brings to the table. You know, if there is, conflict, there's gonna be an expectation. Around the world of like what we've seen in Russia with big sanctions and companies walking away from China. All the retailers are, are conscious of that challenge.

And you know, if, if that does happen, these people, businesses will shut overnight because There's, there's such a saturation of Chinese product. I think also there's no competitive advantage for me to bring another Chinese product to market versus all of my competitors. There is a competitive advantage to me bringing Ukrainian product because I'm the only one bringing Ukrainian product to market, which means I have a European product. So there's a, There's a, a natural perception that my product A is better in quality, and B, I'm not competing against.

Local distributor. I'm just competing against those that distribute from Ukraine or from Europe and it's a much smaller group of people to with. So that's the strategy that, We've, and, and, and so far it's worked really well. DS: So it might be that, now it is a quite good time to, convince, local retailers to switch from Chinese suppliers to Ukrainian, for example, or other European suppliers.

Marcus: I think you, you're spot on. A, a lot of these businesses are now reporting in their, what they call their annual reports, what they present to their shareholders. The percentage, the distribution of supply chain, country of origins. So they're saying, Hey look, you know, we're down to 80% Chinese, so our risk is reduced.

we've diversified. We see that very commonly in, discount furniture, in discount clothing chains, sort of those generalist stores which keep pushing down, pushing down the, Chinese dependency to diversify more into Southeast Asia, in Vietnam, in Indonesia, Bangladesh. I still think the opportunity for more people to work in Ukraine, it's just untapped. It's, it's, honestly, it's an untapped market.

There's so much production there. The quality of products are great. It's, it, it more needs to happen. DS: This is interesting idea to have a look at, the, yearly reports of, stock listed companies.

And, that means that you actually can read their strategy and their focus on, future. sales and, that will help you to understand how to approach them and how to talk to them. We use that tactics a lot. When, when we sold our services Yeah.

Consulting services to American companies, they, that were also stock listed. talking about the Australian. Business culture. And, I know that you traveled a lot, and, you, you talked a lot to other nations and other, cultures.

Do you feel, some difference and, can you say that, this is something that is more, to Australians and, different from other, other parts of the world? Marcus: I would say yeah, I think, I think you're right. What they call a hardware store junkie. You know, I travel the world looking for hardware stores and, and understanding different people and how they run their businesses.

The Australian culture is, is very relaxed culture. We don't take things too seriously, and we believe in this, this idea of having them go and if an opportunity comes up and it looks good. We believe in this concept of we have a go and if it works, that's great, and if it doesn't work, we reset and then we have another go. So, so there's definitely a very open mind in, in Australia.

we're open to risk and, you know, we like, we, we like risk and the, the negotiation and transaction style is often quite, quite relaxed. It's not, it's not formal. Everything needs to make sense and it's, it's done in a formal way. But the, you know, I always joke, there's no, there's the guy that's, that's in the Bunnings foyer in a suit doesn't know if he's in the, you know, he definitely is not a guy that's there often.

And the guy that's there in Apollo shirt and a pair of jeans, that's the guy that's, that's winning business every day of the week. Because that's just, that's just our culture, you know, it's a, it's a bit more of a. It's a low hierarchical culture. You know, we're not, we, we, we have that more of a partnership relationship with the retailers than the adversarial style.

You know, there's the, There's the buyer, there's the supplier. Someone's gonna win, someone's gonna lose. We, we sort of say, Hey, we're in this together for the long haul. Let's work together, grow together.

Things are not gonna work, but we'll get out of them together and the things that do gonna work, we're gonna celebrate together. So that's, that's a bit more about our, our culture and our strategy. DS: Australia is still the, part of the commonwealths. Yeah.

So you, you have like a kink, Charles, is, is your kink, still Yeah. is it, somehow, somehow connected? I mean, the, the culture and business culture is similar to British, to UK. Marcus: I think it's more formality.

The, the king. They play no active role in the country. I would say they have very limited influence. It's, I suppose in the UK it's also a bit more of a, you know, it's, it's a formality, but there's a lot of people that love the royal family.

I think English culture is much more formal, much more proper. Australian culture is much more laid back, casual. Yeah, casual culture, but definitely the, the Royal family and the Commonwealth plays. I would say almost no, no role in Australian Australian culture.

We, we've had, we, we, we've had referendums. Vote, remove ourselves from the Commonwealth. Maybe, 20, 20 years ago. But they, they've failed.

I'm not sure. I'm not, DS: it's still fancy. Yeah. To, to have a kink, as a for in the formal way.

well, how long is the decision making? So if, if you are approaching the, and you started negotiations with the Australian partner, how long it'll take before decision Marcus: Australians move quickly, that's, it's the idea of having go, because until you. Have, you don't know what's, you don't know the answer, so, you know. There's, there's often times that you'll go into a meeting, you might present a product and you might get a yes there and then, um Mm.

Or you might get a yes a week or two weeks later, or you might get a no there and then, you know, this is not for us, it's not gonna fit. I think working with local distributors, if you can. If, if you can mitigate the risk for them, you know, you say, Hey, instead of making 500, I can make a hundred and put it in a container with something else. You know, a lot of them will just say, yeah, let's just have a go see what happens.

You know, we do that with product all year round. All year round. We're evolving, we're trying new things. We, we often work faster than our retail partners in Ukraine.

You know, we're often pushing them to get more new products. Out of their businesses than the, the other way around. DS: I think you're, you're the first, among all my guests, during this three years of podcast, who is quicker than Ukrainians. Marcus: Oh, we are, we are much faster than the Ukrainians.

It's, it's, it's a, to me it's a sticking point. It's a sticking point in our business. DS: Because in, in most cases, other, other cultures are complaining that we are too pushy and we want everything to be quick and and to get the answer quicker. coming back to Australia, the Idea.

So for example, when we were making the episode about the, Spain, it was also, interesting that Spain may serve as a bridge to Latin America as they have, quite good connections and, common culture. is it? So with Australia and New Zealand, can you use Australia to expand further? Marcus: you definitely can.

New Zealand is a tougher market. it's got lower wages, it's got higher costs to serve a smaller population, but we see most of the Australian retailers performing very well in New Zealand, and most of 'em are over in New Zealand. and that's coming on the back of the buying power. The buying power leveraging, you know, the, you sort of said 30 million we're sort of hovering around 27 million.

Against the population of the New Zeland of around four million. The commercial sexiness, you might say of Australia is not as, not so much in New Zealand in, yeah, it's a tougher market. but it's, it's definitely once you're in Australia and you're stable, you see most people will roll into New Zealand and sort of capture, capture their market as well. DS: And you said that the retailers are present in New Zealand, meaning that you can sell to you Australian retailers, that you will resell you in New Zealand, Marcus: correct!

Yeah. So the, our, Our supermarkets, our two big supermarkets are there. Bunnings has their infrastructure. They, they have a full network of stores there.

the independent hardware group has a sort of another franchise body there called Mitre 10. Of, of the major retailers between the, the two nations. DS: I, have the last question to you, and this is more like, maybe advice or wish from you to Ukrainian suppliers, looking to enter, Australian market, you know, what kind of, speech could you give them to do that? Marcus: well, if you haven't listened to the previous 47 minutes of this, I, I don't think you could.

I don't think you could hear much more, but, you know, we're a, we're a big market. We're an affluent market. We, we love European made products. We also love products made of natural resources, of which Ukraine is an abundance of wood, timber, wool, cotton, you know, There, there's, there's so much potential, I think, between these two countries to collaborate and to grow, and I, I would just love to see more of it.

You know, we, we work closely here with, the Ukrainian ambassador and the embassy trying to encourage more trade between the two nations. You know, I, I put myself out there a lot of the time as a person that should be, you know, I, I'm here to help. You know, even if we don't make money off it, I, I just wanna see more because I wanna see this country win. We want, we wanna win on the battlefield, but we, more importantly, we wanna win in life and we wanna live, you know, in the long term play.

So I just really encourage people to say, okay, you're looking at Europe and you're looking at America. Don't forget this little country down under, you know, we we're, we're a nice pe, we're very nice people, we're friendly. We're, we're warm, we're kind, we're more casual than than the Americans and the Europeans and yeah. And we couldn't be more proud to see more European pro, more Ukrainian products on our shelves.

DS: Great. Marcus, thank you. Thank you for sharing your experience and, your ideas and your advices. thank you for that.

Marcus: Oh my pleasure. Thanks for having me. DS: Special thanks to all listeners who made it so far, and if you'd like this episode and you would like to get more insights on international expansion, please subscribe to the podcast so you don't miss the next episode.