How to secure the right international distributor
An international distributor is your local ‘middle man’. You should be able to rely on them whole-heartedly to buy, distribute and warehouse your products. With their help, you’ll be able to access and grow in global markets while avoiding logistics problems and risk. In fact, the right distributor can be a game-changer when it comes to exporting somewhere new.
Membership bodies and major banks can be a great source of information
Don’t rely on contacts or friends of friends, even for advice, when looking for an international distributor. Instead, conduct research through professional organisations including trade associations in your sector, chambers of commerce, and membership bodies. Major banks also have trade teams that may be able to help. Trade fairs and exhibitions in your target country/territory may also provide strong leads.
Check their geographical coverage and financial security
As you weigh up potential distributors, remember you’re looking for someone who has proven experience in your target market. Check that they have the geographical coverage you need, are well-established, and that your product line fits with the other lines they sell. Look at how their sales teams work and how they’re incentivised. It’s also crucial to check their financial security.
Successful exporters think beyond mere market entry and initial quick sales. Seek distributors with the right fit in terms of business strategy and investment to create solid foundations that will underpin your business’ development abroad.
Getting legal advice
Find a lawyer who has experience in your chosen country/territory
Once you’ve decided on a potential distributor, you’ll need to draw up a contract. Its terms can be hugely influential on your success, so make sure you get expert legal advice. It’s wise to use a lawyer with international trade-related experience and expert knowledge of the law in the country/territory you’re dealing with.
Negotiating a contract
Don’t let any important details slip through the net
When negotiating the contract with your distributor, details are key. You’ll need to pay attention to:
- Parties and the terms of the relationships
- Description and pricing of your goods, plus how much money you’ll receive from sales
- Commission and payment terms, including currency and exchange rates
- Geographic area where your goods will be sold
- Ownership, intellectual property rights, and confidentiality agreements about your products
- Jurisdiction – which country/territory’s rules will apply
- After-sales care and who’s responsible
- Marketing – you need to spell out who will pay for products and activities
- Exclusivity and notice period with clear provisions for ending the agreement before that date
Checking exclusivity terms
Non-exclusivity means you can sell to other agents in future
You may want to make your first contract with your distributor non-exclusive so you can also sell to other agents and widen your options. Remember to check exclusivity terms on your distributor’s part too – you don’t want them employing a third party to sell your goods without your agreement.
Finally, you’re ready to start working with your new distributor. Keep in touch regularly and give them time to prove themselves. A good distributor should be able to provide far more than just market entry. With the right person and the right contract, you can start to build a relationship that will yield great growth opportunities for both of you.
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