Marketing

Distribution Channels

There is no rule or regulation which would limit foreign suppliers in their choice of distribution channels. It is usually the nature of the product that hints to one way of distribution or another. The second aspect to consider is the degree of involvement.

A large proportion of consumer goods, textiles, furniture and foodstuff are sold through big wholesale and retail enterprises. They have their sourcing departments buying around the globe with representations in many countries. Thus, courting them is an option in many home-countries. In addition, there are trading houses or independent sales agents, who manage the complete line of distribution, i.e. they buy the product from the producer, find customers for it and sell it to the end-user. Trading companies and sales agents are usually specialised in particular goods and have a good overview of potential customers.

Many industrial goods are sold indirectly, meaning an intermediate is involved to catalyse or manage the sale. The role of this intermediate can be taken by an independent sales agent, which usually requires very little involvement and risk for the producer, as the sales agent buys the product and resells it to the final customer. An independent distributor does the same job, but makes his living not from the margin but on a commission basis, which indicates some additional risk of a non-performing counterpart for the producer. A sole distributor, who only distributes one company?s products, will usually demand higher commissions.

To work systematically the German market, a Representative Office might be a viable option: The representative acts on behalf of his mother company. Being based in Germany, she or he can look deeper into the German market and can establish longstanding relationships with customers.

Support is available from the Federation of German Wholesale and Foreign Trade.

To get in touch with sales agents specialised in particular products, there is a database available from the National Federation of German Commercial Agencies and Distribution.