Import Distributors play a vital role in the import business by taking possession
of goods for further delivery or sale into a country. Suppliers or exporters benefit
from Import Distributors because multiple wholesalers, retailers or end consumers
can be reached through a single distributor. Companies in the home country benefit
because they do not need to search abroad for a particular product. They can order
through the Import Distributors.
Types of Import Distributors
The two types of Import Distributors are based on how goods are distributed or moved
through the channel:
Full Service Distributor - A Full Service Import Distributor imports different products
from different suppliers, takes possession of the goods, and warehouses them. The
Import Distributor makes a profit by selling the items to a wholesaler or the end
consumer at higher price.
Drop Ship Distributor - The Drop Ship Import Distributor does not warehouse the goods.
He or she imports different products from different suppliers. After taking possession
of the goods, they are delivered directly to the wholesaler or end consumer without
having to warehouse them.
The Import Distributors Agreement
As someone starting out in the Import Distributors business, you will need to approach
exporters from other countries who want to select you as the distributor for their
products in your country. You will want to clearly get an agreement on the following
operational areas with the exporter:
Geographically coverage - Is it for your whole country or a region within your country.
Territory exclusivity - Are you the only distributor in your territory or do you
have to share your geographical coverage with one or more distributors?
is granted either by geography or by customer type. You may be the only distributor
selling in this geography or you may be the only distributor selling to drug stores
while someone else could be selling to food stores.
Product coverage - Are you responsible for only one product, multiple products or
the exporter’s entire product line.
Minimum performance standards - What is the exporter’s expectations of you from a
Pricing, payment terms and conditions - What is the agreed upon price and for what
volume? How does the exporter want to be paid and by when?
Product or category exclusivity - Will the exporter allow you to distribute other
non-competitive products? Will you be allowed to carry competitive products?
Title transfer details - Precisely when does the ownership transfer to you? If something
happens to the goods during transit, what costs are you responsible for? What costs
are the exporter responsible for?
Contract period - How long will you be granted distributor status? Is there a review
period prior to contract renewal? Under what conditions will you or the exporter
be able to terminate the contract?
To become a successful Import Distributor for your exporter, you will need to clearly
document each other’s your expectations. Having a clear and detailed set of rules
to run your operations will ensure a long and prosperous working relationship.