How to Choose Sales Channel?Distributor or Sales Agent 2017-12-29T14:05:30+00:00

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How to Choose Sales Channel?Distributor or Sales Agent

    It’s essential and very important that an enterprise choose which sales channel to reply on to win their  business.

    The very common channels are distributor and sales agent.

    Lots of international enterprises depend on them to do business on foreign markets, but few do know the difference between them.

    Here are key differences between agent and distributor:

    1.Ownership of Products

    Agents do not take ownership of goods while distributors own the products.

    Agents represent the supplier to sell products in the foreign market. Distributors need to purchase the products and resell them to local wholesales, retailers or end users.

    2.Revenue Model

    Agents are paid by the supplier with a commission on sales value. The commission is settled after negotiation between supplier and agent.

    However distributors make their own profit by adding the price supplier providing to them.

    3.Product Range & Responsibility

    Distributors usually sell multiple products, while agents have smaller product range.

    Generally distributors provide support and after-sale services, but agents don’t, they aren’t supposed to take care of  after-sale services.

    Also, there are a lot of advantages and disadvantages of working with agents or distributors.

    For Distribution Sales Channels

    Pros

    1.Distributors have a lot of established contacts, which suppliers or exporters can use to grow their business.

    2.They have the local sales network and salesforce advantage to quickly expand your business.

    3.They are usually the market and product specialist, who have invaluable insight which your company is trying to pursue.

    4.Being in the market for a long time, a large umber of distributors do establish a good reputation in a certain market, which the customers will truly trust and buy from.

    5.Distributors hold inventory, they shorten the product to market lead times and better serve the customers with finished goods, consumables, spare parts and or other commodity-based components

    Cons

    1.As a distributor, they often have exorbitant markups, which will price your products out of the market.

    2.Distributor will not share their market especially their customers information with you, also they really shouldn’t have to.

    3.Sometimes distributors are just want to use your products to enrich their products portfolio and demonstrate how many companies have chosen them as a sales channel.

    For Sales Agents

    Pros

    1.Working with sales agents, you don’t have to markup the quotes to customers which will probably price your products out of the market.

    2.It is you who quote the customers directly. You control the pricing system and your market.

    3.Sales agents are more willing to tell you customers’ information and market information than distributors.

    Cons

    1.Comparing to distributors, sale agents are often smaller and have more limited sales reach, established network.

    2.A lot of agents specialize on specific products offerings, it takes times to find suitable and professional sales agents.

    3.Choosing a relaible sales agent is more than just know their names and experience. Do they truly understand your products and your market? Do they represent any other products from any other company?

    It is common for some sales agent firms to have short life spans, and it is not what you want to work with a sales agent who’s here today and disappear tomorrow.

    Given all the above listed pros and cons of both, take a deep analysis of the market, the industry.
    Then use the right strategy to expand your business.

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