Exporting to the United States – A Team Canada Inc Publication

3.6 Selling through intermediaries

The most common intermediaries are distributors, trading houses and representatives (these last are also called agents, manufacturers' agents or manufacturers' representatives). One advantage of using an intermediary is that you get an immediate presence in the United States market without setting up your own sales operation. Disadvantages include, but aren't limited to, a greater separation from your customer base and less control over the marketing of your product.

Distributors

A distributor will buy your product, import it into the U.S. and sell it on to its end users. Depending on your product, they may also offer after-sales and warranty service. The drawback is that your profit margins may be lower; you'll also have less immediate control over your product. You may also not know who your customers are, which can affect your manufacturing decisions and marketing approaches. Moreover, if you stop using the distributor, you'll probably have to rebuild your customer base.

Representatives

These agents work on commission and usually specialize in related kinds of products. Unlike distributors, they do not at any point own the products they represent. They often have particular territories and sell to a particular set of customers. A representative will contract with a U.S. customer on your behalf and monitor the progress of the deal until its completion.

Trading houses

If you want to be an exporter without actually doing the work of exporting, a trading house may be the answer. These are Canadian-or U.S-based firms that will handle the entire process of exporting your product to the U.S., from initial market research onward. However, you won't develop your own exporting expertise and you'll have very little control over the way your product is represented and sold.

A lesser-known intermediary is the Canadian Commercial Corporation (CCC). CCC's International Prime Contractor Service offers an alternative for exporters facing the challenge of competing against better-known suppliers for a sale.

CCC can act as prime contractor on the sale, putting the full weight of the Government of Canada on the exporter's sales team and providing a government-backed Guarantee of Contract Performance to the buyer. This can enhance an exporter's credibility with a customer and bring about more advantageous terms for the sale.