Exporting yourself or using a commercial agent or distributor

Published by:

Netherlands Enterprise Agency, RVO

2 min read

Do you want to sell products in another country? An intermediary such as a commercial agent or distributor can approach and handle the market for you. You can also sell your products yourself. Read more about the pros and cons of having it done or doing it yourself.

Entering a new market

Market approach is the search for new customers. From the Netherlands, you can enter foreign markets in 2 ways:

directly: you sell your products yourself.
indirectly: a distributor or commercial agent sells your products.

Direct market approach

You send your products and invoice directly to your customer. You have contact with your customers and do your own marketing.

You can also start a foreign branch to sell your products.

Advantages of having your own branch:

Customers trust you sooner, because they are doing business with a company in their own country.
Your local employees tell you about market developments.
You have your own staff and manage your own stock. As a result, you can help your customers better and faster.

Disadvantages of having your own branch:

It takes time and effort to start and run a business.
A foreign branch costs extra money.

Indirect market approach

Do you approach the market indirectly? You do so by using a distributor or a commercial agent.

Distributor

A distributor buys your goods and then sells them to customers. If you work with a distributor, you run less risk of a customer not paying the invoice. You also need to enter into only one contract. The distributor arranges the sale of the products abroad.

Commercial agent

A commercial agent finds customers for you. You pay the commercial agent a commission for this. You then sell your products to these customers yourself. You determine the selling price. When working with a commercial agent, you have direct contact with the users of your products. And you can follow market developments better.

Read more about distributors and commercial agents.

Advantages and disadvantages of (in)direct market approach

The direct and indirect market approach both have advantages and disadvantages.

Direct

Advantages

direct contact with customers
higher profits
no dependence on foreign partners

Disadvantages

greater financial risks
investing in time and personnel
small group of customers
not enough knowledge of foreign market and culture

Indirect

Advantages

no or little additional staff needed
the intermediary has knowledge of the market
usually larger group of customers
lower financial risks

Disadvantages

less profit
dependent on effort of intermediary
no direct contact with customers

Drawing up contracts

You draw up a distribution agreement with a distributor or an agency agreement with the commercial agent. Do you sell directly to a customer? If so, draw up an international sales contract.

Always record agreements on paper. The Union of Dutch Trade agents and importers, VHNI, and the International Chamber of Commerce (ICC) Netherlands have model contracts available.