Commercial agent or distributor?
Besides taking into consideration several factors that may affect our corporation, when entering a new market using indirect selling, we have to decide which is the best partner profile for us. It is not possible to outline the perfect partner; however, we have to bear in mind some singularities when deciding whether to use a commercial agent or a distributor in our market entry strategy. A commercial agent is a specialized and independent intermediary that represents the exporter in a territory, and that he’s paid a commission on all secured orders. On the other hand, a distributor is usually a specialized company located in a foreign market that he is selling, stocking and marketing your product, to distribute it to all customers.
Which are the main differences between an agent and a distributor?
Product’s ownership and storage: A distributor assumes a risk; he buys and stores the product, conversely, an agent will never buy or store your product but just act as an intermediary.
Payment: A distributor buys the product: this is bought for a lower price and a commercial margin is added according to an adequate pricing strategy. Instead, an agent sells the product at a price that is given to him (by us), and he will be paid a commission.
Logistics: A distributor warehouses, distributes and delivers the product to customers, and he is also in charge of import procedures. On the contrary, the agent is not in charge of any of these actions.
Marketing and sales: Marketing and sales policies are established by the distributor, but not by the agent. With an agent, we will directly implement our sales and marketing strategies.
Post-sales services: In addition to all the other services, the distributor gives post-sales services to the clients. By contrast, when selling through an agent, it is our responsibility to give post-sales services to the client.
Given that, we may conclude that when we have few customers and with high sales value, as well as the need to apply our marketing and sales strategy, the best option is to sell through a commercial agent.
On the other hand, when we have several clients with small orders, a high turnover and we may need to warehouse the products, logistics, and post-sales services, the best option will become a distributor. Nonetheless, in order to make the right decision, it is necessary to study case-by-case, taking into account the type of product, sector, and territory.
At Ferrer-Dalmau Country Managers, we help you studying your situation and figuring out your market needs and developing the most suitable sales strategy. Furthermore, we offer flexibility, adaptation, and technical profiles for both agency and distribution services.
Contact us for more information.