There are several ways to sell your products abroad.
The most obvious method is to sell directly to local entities, other businesses or customers. This requires sending your own salespeople to the market to do the legwork themselves.
You cut out the middlemen (or women). Whatever revenues you bring in from sales in that market are all yours.
You also have total autonomy over how your sales staff comport themselves and conduct business.
This can be a successful approach in markets similar to Canada, like the U.S. and U.K., where the language is the same and cultures and business practices are relatively similar.
Language barriers and differences in cultural and business practices can make this method tough in some markets.
In an unfamiliar market, where the methods of business are far different from Canada, you are on your own.
Handling customs and legal and regulatory obstacles on your own can be a taxing process in some markets, as can providing aftersales service
Distributors buy your products from you and sell them to businesses or customers.
Distributors can represent you in all aspects of sales and services.
They can connect you to the right end-users in unfamiliar markets quickly.
By maintaining an inventory of your products, distributors can shorten delivery time to local buyers.
They can take care of customs clearance and credit checks.
They can take care of after-sales service
You have no control over the marketing or sales strategies a distributor uses.
Your distributor may handle competing products.
Distributors handle most of the sales process, so you won’t have as much knowledge of the market and your customers than if you sell directly.
An agent doesn’t purchase your goods, but instead sells them to customers on your behalf. Once a sale has been made, payment is left up to you.
Agents have intimate knowledge of a market and connect your products with the right buyers quickly.
Agents tend to have smaller product ranges than distributors, which means your products will be a bigger priority.
They can usually deal with installation and after-sales service.
Agent commission cuts into your bottom line.
Agencies tend to have fewer resources than distributors.
Agents don’t normally deal with marketing or distribution, so you’ll need to pay for these aspects.
Full-service firms that handle market research, transportation and advertising. Some will buy your products and others will act as agents on commission.
A trading house can remove a lot of the legwork necessary to sell your goods, allowing you to spend money, resources, time, and manpower elsewhere.
Trading houses can reduce risks for entering a foreign market, bringing experience in that market to bear.
Canadian trading houses operate under Canadian law.
Losing ownership of goods or profits to commission.
Sources: BC Trading House, EDC – Introduction to Exporting, EDC – 6 Ways to Break Into Markets to Win New Customers
The U.S.-based International Trade Administration also has some helpful tips on tapping into sales channels internationally, which are applicable to Canadian exporters:
Foreign Direct Investment
Beyond selling through intermediaries, investing in the market through subsidiaries or partnerships can be effective.
Foreign direct investment offers a litany of benefits for Canadian companies:
More information on local parternships and buying operations can be found in sections 5.1, 5.1.1 and 5.1.2.