Using trading partners such as Agents or Distributors can be a very effective way of growing a smaller business overseas – using third party resources, skill sets and experience to develop your overseas trade can deliver a scalable, sustainable, profitable and flexible export business model.
Doing business with Agents and Distributors is one of our most popular face to face and on line workshops. The business owners and managers who participate these are a mixture of individuals who already use Agents and Distributors and want to increase the value of their channel management and those who want to build a network from scratch. At the beginning we ask the question …..
Agent or distributor – What is the difference?
it is quite surprising how many people are not really sure – they kind of know, but they are not really clear – so let’s clarify it once and for all……..
A distributor
is a reseller – they buy goods or services from you, and then resell them (usually for a profit). This in effect means that the contract of sale is between you and the distributor (they are your direct customer) and subsequently between the distributor and the end user (or their customer). A distributor will often hold stock, and will hold more legal liability in the transaction with the end user. The Distributor makes their money from the profit of the sales that they make.
An agent
is a sales facilitator – in this case the contract of sale is between your company and the end user (and all the legal ramifications associated with that). An agent provides a customer facilitation service – they may merely introduce you to the customer, or they may find the customer, sell to them (on your behalf) and provide post sale customer service – it all depends on how you set the relationship up. The agent is then paid a commission (or a fee) by your company for the services that they provide. The Agent will not hold title to any stock and hold a more minimal legal liability with the end user customer.
What are the advantages of each?
As with all routes to market there are a number of advantages and challenges associated with each – for a more comprehensive look at these, and the advantages and challenges associated with other routes to market please feel free to download our quick headline checklist – you can find this at https://exportsavvy20.com/checklists-and-guides/ (9 routes to market options) – it is free of charge.
How should you choose?
Choosing the best route to market is one of the six key decisions that you will make as you build an effective export business model that is scalable, sustainable, profitable and flexible. Choosing the right route to market can be the difference between your international trade succeeding or failing. It is a primarily resource decision, however there are also a number a number of local regulations that should be considered such as local trading laws. ExportSavvy can provide you with a framework and some tools to help you to consolidate your thinking when making this important choice.
Want to get more ‘ExportSavvy’? – Why not register and join our fast-growing International Trade Community at https://exportsavvy20.com/get-started/
