Last reviewed 8 September 2023

Choosing an effective representative in an export market is widely reputed to be among the most crucial factors in export success. But finding someone who is the right “fit” and then building an effective and productive relationship can be challenging.

When an exporter is considering who to represent their business in a market, it is helpful to go right back to basics and challenge every assumption. Do we need a representative at all? If we do, what do we need them to do? Is there a better way to achieve our goals?

Two factors need to weigh on this decision:

  1. No two markets are the same.

  2. The world of international trade is changing.

Consequently, arguments that rely on the rationality of “that’s how we do it in other markets” or even “that’s how we’ve always done it” really need to be challenged vigorously. The process of designing a distribution channel and of selecting the right person or organisation for the role may be an opportunity to break out of old habits and assumptions and steal a competitive advantage through innovation.

Digital trade and e-commerce

The prominence of digital trade and e-commerce is changing the way that many exporters work. It is now so much easier for a customer to find a supplier in another country and to place business with them directly. Some of the most successful exporting companies are well-prepared to take advantage of this and have set up their website with information not just in the customer’s language but also localised to reflect local conditions. Prices appear in the customer’s currency, delivery methods and times are already calculated, often making the buying process no different to buying from a local supplier.

The extent to which an exporter can rely on international e-commerce will of course vary. A lot depends on the product and the target customers. We all know there are some things we are comfortable buying online from a remote supplier. For other products we prefer a local contact who can answer our questions, perhaps demonstrate the product and offer local after-sales service.

It is good to start the thought process in purely theoretical terms. Focus especially on the expectations of the target customer. Do they expect to buy off the shelf or for rapid delivery, or are they prepared to wait? What information might they need before deciding to buy and can such support be provided online? What after-sales support, if any, might be needed and does that require a local presence? Are the potential buyers experienced international traders, who will be confident in handling customs procedures at import?

Many, perhaps most, exporters of products still choose to appoint a local representative. That typically takes the form of a distributor (who buys from the exporter, takes ownership and re-sells) or a commercial agent (who finds a customer and introduces them to the exporter, who contracts directly with the customer). But there are numerous alternatives. Following Brexit, many British exporters who previously supplied customers directly in EU countries are now choosing to use a fulfilment centre. The actual role of such a centre varies, but at a minimum will typically involve holding (but not owning) stock and arranging deliveries on the instruction of the exporter. This has the advantages of minimising delays on delivery times as well as reducing the costs of customs clearance, and goods are shipped internationally in bulk instead of as individual shipments.

A larger exporting company can feasibly be their own fulfilment centre. Setting up a facility in another country can be challenging and potentially expensive, but the operation can be more cost-effective and reduces margins to external bodies. The exporter can also have more control over the sales and delivery experience.

Increasing freight costs might also lead to an exporter considering partial completion of the product in market. That could be as simple as supplying finished products unpacked, in order for the packing to be completed locally, thereby minimising the physical volume of shipments and reducing costs.

In spite of the technological advances, many exporters consider that local representation still gives them an advantage. And it is true that underestimating the significance of national borders can be costly, even within the single market and customs union of the European Union. In many situations, customers are just happier buying from a supplier in their own country.

How to create a winning team

Whatever route to market the exporter plans to take, it is really helpful to brainstorm the process of describing the ideal representative. Think carefully about their role, and therefore the characteristics and strengths they will need. If the company is already exporting, think about representatives in other markets. What makes the best ones great? If there have been others where it didn’t work out, what went wrong? No two markets are exactly the same, but there are usually similarities.

It is often a mistake to rush the decision to appoint a representative. Take time to build an accurate impression of the market. What do customers expect? Who are the market leaders and what are they doing that makes them successful?

When an exporter finds a potential representative, it can be helpful to take the process a step at a time. For example, agree a limited contract for them to represent you at a trade show or event, or to lead a specific marketing campaign. You may be put under pressure to make the arrangement permanent, but don’t allow yourself to enter an agreement you’re not entirely happy about. A genuine representative will understand the need for caution. A Heads of Agreement (also known as a head of terms or letter of intent) is a document that commits to limited co-operation in advance of a fully binding contract and can give both parties time to get to know each other and work out the long-term direction.

Entering into an agreement

Many exporters have lived to regret entering into binding agreements with agents or distributors. Such choices are often justified on the grounds that the exporter had no plans for that particular market anyway, so there was nothing to lose. Getting out of an agreement that hasn’t worked out can be expensive, time consuming and, in some cases, can do long-term damage to the exporter’s reputation in that market.

Think very carefully about the details of the representative’s role and ensure that they are clearly written down and agreed. Don’t be tempted to just cut and paste a previous agreement or, worse still, borrow one from another company or something you found online. And, above all, don’t make the mistake of thinking that the absence of a written contract makes it easier for you to back out. In some circumstances, the absence of a written contract where there is clear evidence of a business relationship can lead to costly consequences. Always take appropriate legal advice before entering into a binding contract.