Agents, Distributors
and Commercial Representatives constitute a very effective
marketing channel for exporters. It is extremely beneficial
to have your own man in overseas markets who, with their
understanding of local language, culture and market
trend can promote your products to right customer segments.
This is extremely cost effective compared to more traditional
alternatives like opening branch office or subsidiary.
An effective market representative can multiply your
sales significantly at a very reasonable cost. |
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| The common forms of representation are:
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| |
| Commercial Agent
They are generally individuals or small firms who do
not purchase or maintain inventory. Their most obvious
advantages are knowledge of local language and close
proximity to existing and potential customers. They
usually solicit orders on behalf of manufacturer/exporter
(also called principal) and get paid a commission (a
percentage of net sales) and/or previously agreed fee.
Buyers place purchase orders directly or the agent place
it on behalf of the buyer. Agents usually do not get
involved in shipping/delivery. |
| Distributor
Distributors (also known as dealer, wholesaler or stockist)
are larger than commercial agents with better financial
resources. They usually maintain sales network with
in depth product knowledge, qualified sales staff, physical
facilities and financial resources for performing all
export marketing functions. They advertise, promote,
order, purchase, transport, stock, deliver, finance
and even provide after sales service of your products.
Distributors differ from agents in their ability to
maintain a continuous inventory of products and spare
parts for prompt delivery and reliable customer service.
Distributors are compensated in the form of discount
from gross export sales and usually enjoy other facilities
like credit, promotion support etc. |
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| Distributor or Agent - How to Decide ?
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Appoint Commercial
Agent, if...
- It is an accepted distribution method in the country
you are exporting to;
- You are entering the market for first time
- You do not want to invest more
- You do not need to maintain inventory in that country.
- You want to maintain direct control of sales of
your products overseas. Since agents sell products
on behalf of their principal, they must sell it at
the exporter's price, under specified conditions and
with prescribed representations
- You intend to benefit from corporate identity and
intend to conduct business under your own name
|
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Appoint Distributor, if...
- It is an accepted distribution method in the country
you are exporting to;
- You have been in the market for sometime and gathered
basic knowledge
- You are satisfied that the target country is important
for your marketing plan and you wish to upgrade your
existing marketing set-up
- You need to maintain inventory in the foreign country
for faster delivery, financial incentive or whatever
reason
- You do not wish to invest in your own distribution
network
- Your corporate brand identity in the country is
not essential
|
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Source: Archival Issues
of FAIDA |
