A brief overview for exporters on how to choose a foreign representative or distributor. This information is taken from "A Basic Guide to Exporting" provided by the U.S. Commercial Service to assist U.S. companies in exporting.
Last Published: 10/20/2016
Choosing a Foreign Representative or Distributor

Each company should tailor a checklist to its own needs. Key factors vary significantly according to the products and countries involved.

Size of Sales Force
• How many field salespeople does the representative or distributor have?
• What are the short- and long-range expansion plans, if any?
• Would the representative company need to expand to accommodate your account properly? Would it be willing to do so?

Sales Record
• Has the sales growth of the representative company been consistent? If not, why not?  Try to determine its sales volume for the past  5 years.
• What is the average sales volume per  outside salesperson?
• What are the sales objectives of the representative or the distributor for next year? How were they determined?

Territorial Analysis
• What sales territory does the representative company now cover?
• Is the sales territory consistent with the coverage you desire? If not, is the representative or distributor able and willing to expand  the territory?
• Does the representative company have any branch offices in the territory to be covered? If so, are they located where your sales prospects are greatest?
• Does it have any plans to open  additional offices?

Product Mix
  • How many product lines does the representative company handle?
  • Are these product lines compatible with yours?
  • Is there any conflict of interest?
  • Does it represent any other U.S. companies? If so, which ones (names and addresses)?
  • Would the representative company be willing  to alter its present product mix to  accommodate yours?
  • What is the minimum sales volume that the representative or distributor needs to justify handling your lines? Do its sales projections reflect that minimum figure? From what you know of the territory and the prospective representative or distributor, is the  projection realistic?

Facilities and Equipment
  • Does the representative company have adequate warehouse facilities?
  • What is the method of stock control?  
  • Does it use computers? Are they compatible with yours?
  • What communications facilities does it have (fax, modem, e-mail)?
  • If your product requires servicing, is the representative company equipped and qualified to perform that service? If not, is it willing to acquire the needed equipment and arrange for training? To what extent will you have to share the training cost? Are there alternative ways in the market to service the product?
  • If necessary and customary, is the representative or distributor willing to inventory repair parts and replacement items?
Marketing Policies
  • How is the sales staff compensated?
  • Does the representative company have special incentive or motivation programs?
  • Does it use product managers to coordinate sales efforts for specific product lines?
  • How does it monitor sales performance?
  • How does the representative or distributor train its sales staff?
  • Would it pay or share expenses for its  sales personnel to attend factory- sponsored seminars?
Customer Profile
  • What kinds of customers is the representative company currently contacting?
  • Are its interests compatible with your  product line?
  • What are the key accounts?
  • What percentage of the total gross receipts do those key accounts represent?

Principals Represented
  • How many principals is the representative or distributor currently representing?
  • Would you be its primary supplier?
  • If not, what percentage of the total business would you represent? How does this percentage compare with other suppliers?
  • Promotional Thrust
  • Can the representative company help you compile market research information to be used in making forecasts?
  • What media does it use, if any, to promote sales?
  • How much of the budget is allocated to advertising? How are those funds distributed among various principals?
  • Will you be expected to contribute funds for promotional purposes?
  • How will the amount be determined?
  • If the representative or distributor uses direct mail, how many prospects are on the  mailing list?
  • What type of brochure does it use to describe the companies and products that it represents?
  • If necessary, can it translate your  advertising copy?
  • Does the representative have a website to promote the product?
  • Can it provide product demonstrations and training