Distributor, sales agent, importer, wholesaler, etc are all terms that are used in the search for business partners both nationally and internationally.
We have noticed, looking at the ads posted by our users on the Globartis business platform, that these terms are sometimes used confusingly. The main reason is that people from different countries use different terminology.
In this article, we want to briefly explain the differences between these terms.
The Sales Agent
The sales agent is the intermediary who takes care of putting the parties in contact, for example, a producer of goods with a seller.
The sales agent takes care of finding customers, managing the negotiation, and receives compensation if the negotiation is successful.
The main characteristic of the sales agent is that he does not acquire ownership or possession of the goods sold.
The sales agent remains the contact person for the customer he has found, so he takes care of managing the customer in the long run. However, in some cases, the parties can agree that at some point the external agent no longer takes care of the customer and the management goes directly to the sales department of the manufacturing company.
Who are sales agents?
Sales agents are usually individuals who have extensive experience in a specific sector and who have many contacts in one or more countries.
It is not very common, however some medium-sized companies offer the “sales agent service” among the others.
How they are paid?
It depends on the contract signed with the client company. Usually, they do not receive a fixed salary, but they received only commission on transactions.
When should you contact them?
If you are planning to export in a new market, hire a sales agent is a good solution to find a local buyer. Also, an experienced sales agent should help you to have feedback about local customers and the business environment. Moreover, they can help you with product compliance and regulation.
PROs and CONs
The good aspect of the sales agents is that you pay it only if it achieves results. If you want to export abroad, he will take care of local buyers and you (or your sales force ) should not go directly there to meet local customers.
Moreover, you should find local buyers in a short time.
The main negative aspect is that a sales agent is essentially a broker. So you will have to pay his commission which can be high. In the B2B market is should happen that the sales agent sells directly to final customers. However, in the B2C market, it is common that the sales agent looks for other local distributors and in that case, the sum of the commissions of all the intermediaries could be too high to sell good volumes of product/service.
Sales agents are called also with different names like agents, brokers, and international brokers. Moreover, some small “export consulting ” firms or import-export consulting are essentially sales agents.
From my own experience, I have heard that some companies call their sales employees as sales agents. This creates a lot of confusion because the internal salespeople are completely different figures than the sales agents we described earlier.
The distributor has a very different role than that of the sales agent. The distributor acquires ownership and possession of the goods sold by the manufacturer and resells them in the selected market.
The distributor has a much more active role in managing the business compared to a sales agent. By purchasing the goods the distributor takes a much greater risk.
The distributor basically has these tasks:
- Buy products from the manufacturer
- Agree on the terms of transport (in this regard, you should read our articles about INCOTERMS)
- Store the products in its warehouse
- Resells the products on the market
The distributor can resell the products directly on the market (if he has his own sales network), or it can supply the products to other shops, resellers, etc. It should happen that a mix of things: the distributor has its sales network, but also supply to external retailers.
Other roles of the distributor
The role of the distributor can be much more complex, especially when it acts in an international context and plays the role of an exclusive importer of a product/service on a specific local market.
In this case, the distributor/importer also takes care of the marketing strategy by defining prices, promotions, and communication.
Usually, when a distributor/importer is fully involved in launching a brand in a market, an agreement is signed to have the exclusivity on a specific geographical area, this is because the importer is committed to making marketing investments that will bring results in the medium-long run.
If you start a relationship with a distributor of this type, the distributor becomes an important strategic partner.
Who are distributors?
The distributors are small and medium-sized companies, but also large ones with more than a thousand employees.
This aspect is little known by most people, but often even multinationals use distributors/importers when they want to enter into a new market. It is not surprising that the these kind of distributors are large companies with hundreds or thousands of employees.
How they are paid?
As previously written, the distributor acquires ownership and possession of the goods and it resells them to final consumers (B2B or B2C), or other local retailers.
The manufacturer and the distributor agree on a transfer price, which is the price at which the good is sold from the manufacturer to distributor. Subsequently, the distributor sets the retail price at which the good is resold on the market. However, it is common that distributors and manufacturers decide together the retail price.
When should you contact them?
The distributor is the key to exporting into a new market. Unfortunately, finding a solid and professional distributor is not easy, in many markets, the distributors of certain goods are few and perhaps they are already busy selling products of your competitors. In these cases, you should find new distributors that may not have a strong experience selling your product, but have some experience in the sector.
The term distributor is quite used all over the world, however, when it comes to international distributors in some countries it is used to call them importers.
We have seen that in some announcements on Globartis, some users use wholesaler/distributor/importer/sales partner/local partner as synonyms.
How to find distributors and sales agents?
- Personal contacts: the best solution is to ask companies that are in your industry, but with which you are not in a direct competition, if they have contacts of good agents or distributors.
- Google search: some agents/distributors have well made and indexed sites, however, most do not have a proper site and are difficult to find (you can use the Google Advanced Search to find better results).
- Globartis business platform: you can post your announcement on our business platform in which you specify that you are looking for an agent or distributor in a specific country.
- International Chambers of Commerce: International Chambers of Commerce offers the service of seeking local distributors.
Globartis Research Team