Once you are export ready you can decide how you want to enter a new market. Let us evaluate how an agent or distributor can help with exports.
Agents work as your business representative in the local market and can use their local networks to obtain orders for your products. They usually work on commission. They can support in various ways including:
- providing local market intelligence
- advising on local regulatory requirements
- providing advice on product adaptation and client expectations
- helping with end user feedback
- assisting in forming programs and policies for the local market including warranties, guarantees
Many companies decide to work with distributors because of their large networks.
- has more control over marketing, pricing etc
- is responsible for storing and transporting goods in the foreign market
- can provide insights into the local market and better customer satisfaction
- can be an important source of information regarding business processes in the local market
Difference between Agents and Distributors:
Some of the differences are:
- An agent does not take title to the goods and thus will not assume any risks. A distributor has control over goods and will maintain an inventory to sell to clients.
- An agent can make suggestions about pricing but does not have the final say in it. A distributor decides on the price that allows him to make a profit. A distributor may want to buy from you at wholesale price as he/she assumes all risks.
- A distributor will accept payment from end users. An agent usually does not accept payment directly.
It is important to do your research before you decide to enter into an agreement with an agent or a distributor. Prepare a set of questions to get more information. Below are a few suggestions:
- What is their experience in selling similar products?
- What networks dos they have in the local market? Are they part of local chambers of commerce or similar organisations?
- What major accounts have they handled in the past? What are the main marketing successes?
- Is there a conflict of interest if they decide to enter into an agreement with the present exporter?
- What type of software do they use to track inventory and customer feedback management?
- Do they create a marketing campaigning tailored to products that they represent?
- Can they provide references?
Researching and interviewing prospects will help you make the right choice.
Questions? Email us at email@example.com