Role of distributors & agents in exporting business

As a manufacturer or exporter who is willing to step into some foreign market, you should better be starting in a safe and calculated manner. One relatively safe and secure method is to start with indirect exports and see the response. There are many ways to start indirect exports, but the most widely used method is to hire the services of commission agents or get into a contract with some distributor. Although, their roles may sound a bit similar, both of them differ at some points. Let’s look into the role of these two in detail.

Agents:

Also known as commission agents, they are responsible for selling your products in foreign market. They are experienced campaigners and quite familiar with the market you are going to target. They know the customers and their needs. However, the thing to remember is that they are solely responsible for selling your products. They do not buy from you directly; neither do they involve themselves in delivery or after sale services in most cases. Their source of earning is the fixed commission on every sale (or gross sales, they will make for you).

Commission agents must be able to meet following requirements before you hire their services.

Should be having loads of experience

Check to see if the agent also deals in some of your competitive products

Past record of sales and the stats for business they have provided to other exporters in the past

How much of the market that agent can cover on his/her own and to what extent

Do they sell to end users or businesses?


Distributors:

Unlike commission agents, distributors normally purchase the product from you (at low rates) and then sell it in the market, all the time maintaining some inventory with them. Given, they also provide after sale services, they are more suited if your product needs some installation work or requires after sale services.

Distributors should be financially stable

They must be good in inventory stocking and warehouse management

Should be having technical information about the product (train them if needed)

Should be ready to work at price margins you are willing to offer

Be careful when going into a contract and think over the clauses many times before signing

Distributor should be capable of running or managing the advertising campaign if needed





Now, whether you should go for agents or distributors? The answer to this question will depend on your product and preferences.