What is the role of the export agent?
Let us begin by defining an export agent. An export agent is a firm (or individual) that undertakes most of the exporting activities on behalf of an exporter usually for a commission. A key feature of the traditional export agent is that they never really take ownership of the goods, which always remain under the control of the exporter. The agent thus will do most of the marketing of the principle (i.e. the export firm) and the firm’s products.
What exactly does the export agent do?
The agent may travel abroad, do research, prepare an export plan, advise the exporter on how to adapt their marketing mix, make contact with potential buyers, negotiate deals with the buyers, take care of all promotional activities, handle the logistics and documentation, and much more. All of these tasks, the export will do on the exporter’s behalf. The exporter normally pays the agent for the expenses they have incurred marketing the firm’s products and handling the export administration, and will generally earn a commission on any sales generated. In essence the export agent becomes the exporter’s export department. In some cases, the principle will want to keep tight control over the agent’s activities, while in other instances, the agent is given free reign. Some companies may employ an agent for very specific tasks such as undertaking marketing research or handling the export administration and logistics only.
Using an agent is a relatively easy and painless way for a local company to enter the export market, as they generally have to do very little – the agent does all (or at least some) of the export marketing on the firm’s behalf.
Things you need to look out for
When seeking an export agent to assist you, you need to bear the following in mind:
- Does the export agent have the skills and experience to do the job?
- Does the export agent have the technical knowledge to market your product(s), especially if you are selling a very technical product?
- Does the export agent have a good network of contacts that he/she can turn to for help?
- Does the export agent have a working knowledge of the foreign marketplace (for example, do they understand the culture and speak the language)?
- How many other companies does the export agent represent?
- Does the agent represent any competing or similar products?
- Does the agent represent any complementary products?
- Does the export agent have a suitable personality to successful market/sell your products abroad?
- Do you think that you can get on with the export agent on a personal level?
- Can the export agent provide you with any references from other companies they have helped, and if so, go ahead, check these references?
- Do you agree with how the export agent proposes to market your products?
- Is the export agent affordable (is he/she proposing reasonable expenses and commissions)?
- Is the export agent prepared to enter into a formal contract with you?
- Does the contract or agreement with the export agent impose any restrictions on you (a) in terms of exclusivity, (b) with respect to the period of the agreement, and (c) as far as non-performance or conflict issues are concerned (i.e. can you get out of the contract if you need to)?
The contract that you sign with your export agent may have dramatic implications for the success of your firm. If you plan to sign such a contract, we recommend that you consider certain issues. Click here to learn more about possible clauses in the agency contract.