To represent business and sell products in the international market, most of the firms rely on agents and distributors. Both agents and distributors play an important role in the markets and it is important to understand what they are and what their responsibilities are. These responsibilities vary depending upon county and industry.
The agent represents the supplier but cannot take ownership of the product. An agent can represent a number of goods and services. The individual is only representing a company in the market place. The salary is the commission based on the percentage of sales.
The distributor owns the goods by buying them and then cal resell to retailers or to the consumers. They earn by adding a margin to the product price. They are representing the company as well as themselves in the market. The margins are usually higher as the distributor has to spend more money on the storage space, etc.
Choosing an agent or distributor
While choosing an agent or distributor the one with whom u can connect the most will be given preference. The most important thing is trust and daily communication. Before choosing the suitable able, go through deep research and speak to a lot more people before narrowing your list. Also, check the financial stability of all the people under consideration. Meet them in their own market and analyze their way of working and dealing with different situations.
Is Exclusivity good?
Appointing a commercial agent’s distributors on an exclusive basis means they can sell your product within a defined territory and allows them to grow business in that area. Most of the agents and distributors need exclusivity as they invest money and energy for creating the market. The valuable exclusive arrangement depends upon the strong brand reputation. But while making an exclusive agreement the supplier must add a termination clause in case of non-performance.
Why appoint an agent or distributor?
- To take advantage of their geographical knowledge and trade connections that were established.
- To save cost by not establishing its own sales operation
- To test the market
Agents and Distributors in India
India Distribution & Agency is on the basis of proper law made by the government. There will be an agreement to be made seeking advice from some legal professionals. In India for deciding the distribution structure competition law-related issues such as exclusivity, territorial restrictions are considered important. As there are different distributor models available, which model to choose depends upon the level of control the supplier needs on distribution or sale. On the other hand, the agent only represents the supplier. The supplier is completely responsible for all the tasks done by the agent. The work done by the agent is decided by the contract with the supplier. The legal appointment of an agent is required only for a few products like pharmaceutics and medical devices, etc. Most of the agents and distributors work with companies that deal with a wide range of products. Large agents and distributors manage a lot more of products at different locations. But considering the size of India, more agents and distributors are required to cover different areas.
Agent or Distributor is very important for the growth of one’s business. They are the ones selling your product in the actual market and making them liked by the costumers. The growth of the business is in their hands as they are ones dealing with the actual consumers. So, choosing the best agent or distributor is one of the most important tasks. Follow all legalities while choosing them for your business \ and provide all the possible benefits to make your business flourish.