Becoming an importer, commercial agent, or broker
Are you planning to import products? Depending on your situation, you will be an importer, a commercial agent, or a broker. For example, will you be buying and selling products yourself? Or will you simply be liaising with customers? Read more about the 3 roles, their features and differences.
What does an importer do?
An importer buys products from a foreign supplier. You may import for your own use. For example, because you manufacture goods and need certain raw materials or half-fabricates from abroad. You can also import products to sell them on. Then as well as being an importer you are a distributor. A distributor is also known as a reseller or dealer.
What does a commercial agent do?
A commercial agent does not buy products themselves, but makes contact with potential customers in their own country on behalf of foreign suppliers. A supplier is also known as a principal. Suppliers deliver the products to the customer, not to the commercial agent. Suppliers also send invoices to the customer. The foreign supplier’s domestic customer is the importer.
Importer vs. commercial agent: the differences
These are the main differences between the importer (acting as reseller/distributor) and the agent.
Importer (reseller/distributor)
- usually buys stock
- needs more capital to start
- can offer fast delivery
- buys at their own cost and risk
- sets their own profit margin
- decides the price of the product
- advertises when selling to customers
- often offers maintenance or repair service as an option.
Commercial agent
- does not need large starting capital
- looks for and makes contact with clients for a supplier (principal)
- receives a commission on sales they have negotiated.
- usually does not offer maintenance and repair services
- may sometimes receive compensation if the partnership with the supplier ends (also known as goodwill compensation or customer compensation)
What does a broker do?
A broker has a similar role as a commercial agent. The main difference is that the broker sends an invoice to the customer in their own name and has a contract with the customer themselves. The customer does not know who the supplier is.
Record all agreements
Record agreements with foreign suppliers in an agreement. Which agreement you use depends on your role:
Document agreements
No matter which role you choose or agree on with a foreign supplier, make sure you document your agreements in writing. An oral agreement is legally valid, but harder to prove in case of a conflict.
The type of contract you use depends on your role:
- A broker uses a commission agreement.
There are model contracts available at the International Chamber of Commerce (ICC), the International Trade Centre (ITC), and the VNHI (the Dutch sector organisation for importers and agents).
Are you in doubt about your contract? Have your agreement checked by a lawyer who specialises in international contracts.