Agents or Distributors – Which is Best for Your Brand?
Agents v Distributors
With many agents and distributors active in the market, it’s easy to see why so many brands find it hard to decide the best route. To understand what makes these two groups different, let’s first understand what makes them the same, as both can provide local and trade connections. Whilst local knowledge is key in getting under the skin of your target market, trade connections provide the life-giving oxygen of trade distribution and sales.
Both agents and distributors also allow you to test market your products so that you can refine your price, proposition and product. Using a relevant expert in your chosen market should avoid expensive mistakes and wasted time, money and lost sales. However, there are fundamental differences.
The agent essentially offers you a service where they introduce you to a prospective customer and then charge you if you make a successful sale. Most agents will go further than this and actually conclude the sale negotiation on your behalf. Here are 10 important Must-Knows to help in your decision-making.
Must Know #1
Rarely will agents take title to the goods however, so the deal will be between you and the retail customer, so you pay the agent out of your commission.
You’ll still need to organise the supply chain from your factory to the end customer. Whilst the agent can advise on this and even help with stock ordering, ultimately it’s your responsibility.
You hold responsibility for any import taxes or tariffs, so be mindful to allow for this in your forecasting, actuals and cash flow management.
With an agent you retain a far higher control over your pricing, which retailers or outlets you are sold in and can influence the shape of any commercial deals.
Importantly, you can also restrict your sales to specific territories or retail/foodservice channels.
You retain the direct relationship with the customer, although agents may offer an account management service.
You keep a very close hand on all the marketing of the product as you’re controlling and funding the marketing support.
Whilst they may offer advice, an agent’s focus will be on sales maximisation, rather than brand building, as an objective.
Embrace the agent positively and they can become almost part of your team, with the benefit that you learn a great deal from their market insights and operations.
An agent should be a leaner and more economic solution than a distributor, as effectively you are undertaking more of the value chain.
Summary Pros and Cons of An Agent
Pros – The deal is always between you and the consumer and you can retain a relationship with the consumer. You can influence the shape of any commercial deals and have a higher control over pricing. The marketing support of your products is controlled by you. Embrace the agent – they can become part of your team and you can learn from their market insight and operation.
Cons – an agents main focus is on sales maximization rather than brand building. You retain responsibility for import taxes and tariffs so be mindful of this in your forecasting and cashflow.
Why not check out a related article, where we discuss the Pros and Cons of A Distributor? Determine which is the right choice for you by reading Which is Best for You, Agents or Distributors? Any questions on agents and distributors in the meantime? Why not call us on 01803 203387 or email us at [email protected]