3 types of indirect sales trade channels below
Different types of representation abroad:
PROS
CONS
Different types of representation abroad:
- broker (independent person, puts together different parties for the signature of a contract/agreement => usually payment/commission per contract),
- agent (independent person, puts together different parties for trades => usually paid a commission per sale),
- representative (employee for one or many companies, puts together different parties for trade => usually paid a commission and a salary)
PROS
- Motivation to sell as paid by commissions only (not applicable to sales representatives)
- Usually already disposes of a large or important client portfolio and local market trends knowledge
- There can be no travel expenses or social taxes/charges/benefits to pay (not applicable to sales representatives)
- Low intermediate margins (most commissions are from 2% [commodities] to 16%) compared to direct sales through employees or a third party (importer, distributor...)
- May be exclusive on a set market/zone, in exchange of better benefits (higher commissions, certain travel expenses paid for...)
CONS
- May not be exclusive and work for many companies (how do you motivate the sales agent?)
- As an independent worker, may not be obliged to implement certain strategies or HQ decisions as there is no hierarchical relationship
- May not be obliged to hold certain results, obligations - furthermore, at which point is there a recognition of sale and payment of commission (on purchase order? on delivery? on payment of invoice?)
- The clients belong to the sales agent and not the company - in case of end of contract, there may be legal obligations to refrain from pursuing business with the agent's clients and/or keep on paying commissions even after contract has ended.
- Is responsible for the company's image abroad but is not an employee of the company