Selecting an appropriate distribution channel helps ensure your products reach paying international customers. As we discussed in our “international marketing and developing a distribution strategy” article, international distribution involves both the physical movement of goods between countries and the marketing and sales of those goods to customers in a chosen foreign market. The physical movement of goods has been extensively covered in our modes of transport section and our free online module on how to choose the most appropriate mode of transport. This article introduces you to intermediaries that could assist you in reaching international customers. In particular, we will focus on the role of international sales agents and distributors in international marketing.
What role does a Sales Agent play in Marketing for Exports?
An international sales agent could be an individual or a company acting as an intermediary for the seller, i.e. the exporter or manufacturer. The seller, usually referred to as the “principle”, contracts the agent to act as its representative in a designated foreign market. As such, the agent’s responsibility is to identify potential customers for the exporter’s product or products, engage in negotiations and secure orders from potential buyers. The sales agent also provides additional assistance in marketing for exports by providing the exporter with valuable foreign market information.
What role does a Distributor play in Marketing for Exports?
A distributor purchases goods from the exporter to resell them in the market concerned. The distributor thus becomes responsible for their marketing and liable for all costs incurred should they not be sold. However, although the exporter has technically signed over ownership of the goods, they still maintain an interest in their pricing, branding and sales growth. A distributorship agreement is a partnership between the exporter and distributor to ensure that the product concerned is successful in the foreign market and, ultimately, benefits both parties financially.
What is the Difference between a Sales Agent and a Distributor in International Marketing?
An international sales agent never becomes a party to the main sales contract and never acquires ownership of the goods. Thus, a sales agent bears no liability for any costs incurred should any goods not be sold. A distributor, however, takes full ownership of the goods and becomes responsible for their sale. A sales agent works solely on commission and tends to be cheaper than utilising a distributor because the distributor needs to be compensated for the amount of financial risk liability they bear.
This article only explores a few elements of working with sales agents and distributors. There are, however, plenty of crucial considerations you should make before engaging the services of an international sales agent or negotiating an international distribution agreement. Thankfully, Trade Forward Southern Africa, in collaboration with the International Trade Institute of Southern Africa, has created a FREE online E-learning module on Contracts of Agency and Distributorship. Click the link, sign up for free, and be notified of any additional export assistance that could help your business grow! The TFSA School of Export also has additional modules on Incoterms®, marketing for exports, developing an export marketing plan and various other topics.
To sign up to the School of Export CLICK HERE.
If you already have a profile, CLICK HERE to login to begin the module.