Agent vs Distributor
Agents and distributors are two of the important ways to let your products or services reach out to a large section of the population. If you are an importer, you cannot obviously take the products to the intended customers on your own and have to rely on the expertise of either the agents acting as representatives of your company or the distributors who buy out the products to sell the products among the masses. Despite there being similarities between an agent and distributor, there are many differences that will be highlighted in this article.
Agents become representatives of the company and do not buy the products to sell them. They are not involved financially with the company. However, they charge a commission on sales and their payment has to be made by the company though this payment is made after sales and receipt of money. Agents are familiar with the big fish in the market and can easily sell the products made by a company. They are not directly involved with the end consumer and thus do not provide any after sale service or help in maintenance. Agents arrange the sales of products as they are known to buyers and wholesalers and they perform the role of a mediator between the company and the real buyers. Agents do not take physical possession of the goods but still ensure the goods are sold to the satisfaction of the company.
Distributors are big parties that buy out the products from the company and then add their margin of profit to the price quoted by the company before selling the products to the retailers. As they buy out products, they need a large place to store goods after taking physical possession from the company. Distributors, as they put their own money on stake are always on the lookout of products that are cheapest or have high margins of profits for them.
It is better to look for distributors that are handling a smaller range of products than signing an agreement with more influential distributors, as they rarely have the time to pay attention or make special efforts for higher sales of your products.
What is the difference between Agent and Distributor?
• A distributor becomes a customer of the company while an agent is only a representative of the company.
• A distributor takes physical possession of the products while an agent does not require storage of products.
• Distributor puts his money at stake and thus adds a margin of profit to the products before selling to retailers while an agent gets a commission from the company and is not dependent upon the price of the products.
• Distributor has a network of retailers in the market whereas agent has a presence and impact among the big buyers of the market.
• While an exporter has to sell through an agent, he sells to the distributor. This is a very important difference legally.
• Agent does not provide any after sale service whereas distributor has to look after sale service.