Export Business Partners
Exporting can be done directly or indirectly. Direct exporting requires finding the foreign buyers, understanding local rules & regulation, labelling & packaging, shipping and providing after support if required. This requires a lot of resource commitment which is not possible for most of the companies.
So the obvious choice of exporting is indirectly through agents, importers and distributors. Selection of business partners, signing off the contract for role and responsibility will depend on the industry & type of product you are exporting, the margin & risk ability your company can undertake and the country of export.
The role and responsibility of agents, importers and distributors differ. The agent does not take title to goods but instead seek out buyers & promote your product and are paid a salary, commission & retainer depending on their marketing effort depending on your understanding of them. On the other hand, the importer & distributor take legal possession of goods (or title) and markup for their profit.
Importers solely import good for resale to wholesaler/distributor, other companies in the distribution chain. Selecting good and reputable importers will not just ensure payments but will help in increasing market share and will take your company a long way.
Looking for reliable and established importers
On the other hand, distributor buys the good and takes the title of ownership. He then distributes it to end consumer, retailers and other buyers in his network. The following should be considered for shortlisting good distributor and entering into contract:
- Does the representative have good knowledge and understanding of the local market and regulatory environments?
- For how many years has he been working and does he has good exposure to the market or not.
- Has he worked with any international reputed brand or is a new entrant.
- Does he have a good network of buyers and his own sales team to manage the selling process?
Points to be considered when signing a contract with distributor:
- Product & Territory – Product and territory in which distributor will operate. The product he will distribute and new product policy. Defective goods and after-sales support policy.
- Timeframe – What would be the timeframe of the contract with renewal rights. The duration of review of the performance.
- Pricing & Payments – What would be the pricing and promotional policy. Credit policy and method of payments.
- Performance Targets – What would be minimum order and sales target. The ordering and lead time for the product. What would be the minimum spare parts and after sales support process? How to handle marketing, advertisement, sales & promotional activities?
- Termination Clauses – Clear understanding of breach of the agreement, termination and arbitration clauses.
Strategy for shortlisting and finding good distributor can be a very effective way of exporting.
Looking for right distributor for your product