Foreign Market Intelligence
What are my market distribution options; how do I determine which is best for me?
Your main options are to set up a distribution network abroad or sell directly to end users from the U.S. When establishing a distribution network, you could sell through agents or distributors in each market; hire your own overseas sales staff; or establish overseas sales or branch offices. The right channel largely depends on how much of the marketing you want to do yourself; how much control you want over the process; and what's customary in each market.
Most exporting is done through local agents or distributors -- for two good reasons. It's the norm in most markets, and it's more effective. As market "insiders," they speak the language, understand how business is done, and know who the customers are and how to reach them. The end-users generally prefer to deal with them, rather than buy direct from foreign suppliers. Overseas agents typically act as your representative in the market. They develop and send you sales orders, arrange payment in dollars, prepare all required import documents, and clear the goods through customs. They normally work on a commission basis and don't take title to the goods. Overseas distributors generally purchase your goods and resell them at a markup. Many are equipped to stock, install and service the goods. In large, developed markets, agents and distributors often specialize by industry. In smaller, less developed markets, they're more likely to carry many different lines. See the lesson titled Methods and Channels under the Export Tutorials section of this website.