There are 4 main ways to sell your product or service overseas:
- selling through agents and distributors
- selling direct
- contractual methods such as licensing or franchising
- setting up an overseas operation
To find out the best route for your business, be prepared to research and get advice on what’s already happening in your target market. You’ll need to determine, for example, where customers are currently buying from and whether it’s the norm to have local representation, such as a distributor. It’s also important to take steps to protect your intellectual property, regardless of which way you choose to export.
Some routes to market will need higher levels of initial investment and more ongoing management, and may not be suitable if you’re new to exporting. But if you are in a position to invest more effort and resource then you’re likely to see some rewards. It might be a good idea to test more than one method of selling on a smaller scale before settling on a route.
Using local agents or distributors in other countries
Local representation can be a quick and effective way to enter a new overseas market. An agent or a distributor will understand the business culture and should have existing contacts to open the doors to new export orders.
An agent negotiates sales on your behalf so your product or service is delivered directly to the customer. The agent is simply identifying and ‘warming’ up the customer in return for an agreed commission. Using an agent can be a cost-effective choice as the right one will:
- know the market
- communicate regularly with you
- help to overcome language issues
- already be working with potential customers
Distributors buy products from you and then sell to their customers. You invoice the distributor who holds the stock, adds a markup and sells to the end customer. A good distributor will:
- understand your overseas market and legal issues
- bear the currency risk
- provide warehousing
- provide local after-sales support
Finding and working with agents and distributors
Agents and distributors will usually ask for an exclusive arrangement with you in a given market, so it’s a good idea to have a trial period with them in a small geographic area. In a very large country, such as the USA, China or India, be aware that one agent is unlikely to have the capacity to cover more than a part of the country. Always be specific in making any agreements – for example identify which countries are covered rather than referring to regions such as the Middle East.
Relationships with agents and distributors can be difficult to get out of in some countries. It pays to take time to choose a suitable one. Get listings and recommendations from:
- other companies operating in the same sector
- contacts at trade fairs and exhibitions
- UK trade associations as well as overseas ones
- the Department for International Trade’s trade adviser network