The Difference between Agents and Distributors

You may already know whether you require a commission agent, or prefer a distributor who can stock products locally in the market. As the export of services from the UK has expanded rapidly in recent years and there is no tangible product to stock, so an agent is often all that is required.

However, it is worthwhile to examine the role and types of agents and distributors, as these terms are often used loosely. A distributor may refer to himself as an agent and vice versa, so it can be confusing.

The Agent

  • An agent does not have to buy the product or service from the supplier (or principal) and does not have title to (or own) the goods or service.
  • The role of the agent is to find customers for their principal in return for a commission payment on any sales they arrange.
  • Once the agent has effected an introduction, the supplier/principal will then sell the goods/services direct to the consumer.
  • An Agent does not accept financial liability.

The Distributor (or The Re-Seller)

  • Purchases products from a UK exporter/supplier and therefore has “title” to the goods purchased.
  • The distributor then sells the goods on to the final customers having added his profit to the price.
  • The selling prices and terms of sale are determined by the distributor.*
  • Buys/sells on own account in defined region

*Fixing the resale price is illegal in the UK and many other parts of the world. The most you can safely do is to have a recommended retail price (RRP).

Starting Your Export Business: Key Questions to Ask

The key questions that companies should be asking when starting to export goods or services:

  • Why do you need an agent or distributor?
  • Who to appoint?
  • How will you find the right person?
  • Where should they operate: territory?
  • What is their role?
  • When is the right time to appoint them?

Companies new to overseas markets may not be aware of the full range of options for how they can sell their products and services.

Some companies start by indirect exporting i.e. by effectively selling in the UK to Merchants, Trading Houses, or original equipment manufacturers, for example car components. Payments would be in pounds sterling on usual UK terms such as 30 days, and there is no overseas delivery to worry about.

Companies can start exporting directly without using a “middleman”. They can simply travel to the market, having carried out some research, and try to book the orders. However, after a short time there is a realisation that a local man on the ground in the form of an agent or distributor can bring results more quickly and this is a continuous point of contact for you and your customers.

Follow the blog to get more info as we continue the discussion.