Evaluating the use of intermediaries

Before you jump on a plane and start knocking on doors, think about using an intermediary. The right one can save you an enormous amount of time and money. There are several types: agents, representatives, trading houses and distributors.

Agents and representatives

Agents and representatives aren't exactly the same. An agent secures orders from foreign customers in exchange for a commission. A representative specializes in sales within a specific geographic area.

Both types of intermediaries may be authorized and commissioned to enter into contractual sales agreements with foreign customers on your behalf. This is usually less costly than setting up your own direct sales operation. Such an arrangement also gives you control over the price of your product or service - an important advantage.

Tip

Do your due diligence on a potential agent or representative to make sure they will serve your interests. For example, to ensure that they aren't pushing for an exclusive relationship just to keep your product or service out of the market. Consider negotiating a trial period.

Good foreign agents or representatives can research markets, advise on financing and transportation options, clear goods through customs, provide access to potential customers, make collections and supply information on local business practices, laws and cultural traditions.

Trading houses

Trading houses are domestic intermediaries that market your goods or services abroad. A full-service trading house handles a great many aspects of exporting, such as market research, transportation, appointing distributors or agents, exhibiting at trade fairs and preparing advertising and documentation.

Some trading houses act as "principals" or "export merchants," buying products outright from Canadian suppliers, while others act as "agents," selling on commission.

If you prefer not to sell directly to foreign customers or worry about finding a foreign intermediary, you might consider using a trading house.

Tip

Treat foreign agents or distributors as true partners and equals to domestic distribution channels.

Foreign distributors

Unlike agents, distributors actually purchase your product or service and resell it to local customers. Often, they set the selling price, provide buyer financing and look after warranty and service needs.

A bonus is that the distributor can usually provide after-sales service in the foreign market. On the other hand, using a foreign distributor may reduce your profit margins and result in a loss of control over your product and/or price.