Choosing between an agent and distributor for your sales abroad
Your marketing strategy dictates the way you will sell, distribute and deliver your products in another country. There are many options for you to effectively commercialize your products, helping you to save time and money. Many businesses rely on either an agent or distributor to help sell their products in foreign markets. However, it is important to understand the inherent differences between the two before you decide to delegate your sales to a third party.
Agents scout out customers and get orders. They are paid by commission. As official representatives of your company, agents can be authorized to draw up and negotiate sales agreements with clients. Under normal circumstances, they do not receive a commission unless they sell your product or service.
When should you opt for an agent?
- You want to keep tight control on your distribution costs
- You want to have several points of sale that cannot be covered by your sales team
- You want to quickly open new markets and the agents you are dealing with have deep insight (and great connections) of the local market and targeted clientele
Contrary to agents, distributors buy your products or services in order to resell them to customers. They set the sales prices, offer financing options to buyers, and take care of warranty and service issues. In addition, they are often responsible for customer service.
When should you choose a distributor?
- Your products require inventory in several points of sale
- Your products target a very specific market segment on a national level (ex.: selling medical equipment to veterinarians)
- The sales of a product cannot generate enough commissions to cover the cost of a direct sales force or agent.
You don’t need to partner with a third party to sell abroad. You can use your existing sales team if your company has few clients, your products require highly technical knowledge, or if you simply want to exclusively sell your products.
While many opportunities are available, make sure you weigh their pros and cons. Marketing and selling your products in other countries takes careful planning so that your international market development initiatives are aligned with your overall business goals.
Ministère de l’Économie, science et innovation. Processus de sélection d’un agent ou d’un distributeur. Gouvernement du Québec. https://www.economie.gouv.qc.ca/fileadmin/contenu/publications/outils_aide/gestion_entreprise/processus_selection.pdf.
Leclerc-Louvier avocats. Agent ou distributeur : Quel intermédiaire à l’export? Leclerc-Louvier avocats. Leclerc-Louvier avocats. Agent ou distributeur : Quel intermédiaire à l’export? Leclerc-Louvier avocat. http://www.leclerelouvier-avocats.com/actualites/AGENT-OU-DISTRIBUTEUR-QUEL-INTERMEDIAIRE-A-L-EXPORT. 9 mars 2015.
Gagnon, Jean. Comment cibler et choisir les bons marchés. La Presse. http://affaires.lapresse.ca/portfolio/exportation/201210/01/01-4579121-comment-cibler-et-choisir-les-bons-marches.php. 1er octobre 2012.
Barry. Differences between agent and distributor. Murphy Marketing. http://www.murphymarketing.ie/differences-between-agents-and-distributors/. 17 février 2016.
Discuss it with Jean-François.