Deciding Whether to Become a Distributor or an Agent

By John J. Capela

After you’ve decided to get into the import/export business, you have to decide how you want to set up your business. You have two options:

  • Be a distributor (an intermediary who purchases and takes title to the goods). For example, you purchase sweaters from a manufacturer in Japan and import them into the U.S. If you’re a distributor, you take title to the sweaters, store them, and then look for customers, eventually selling them to Macy’s, Bloomingdale’s, Nordstrom, and so on.

  • Be an agent (a firm that brings two parties together but doesn’t take title to the goods). For example, you know the sweater manufacturer in Japan, and you know that Macy’s, Bloomingdale’s, and Nordstrom are interested in buying the sweaters. You can bring the sweater manufacturer and the U.S. department stores together, without ever taking title to the goods.

In both cases, you’re involved in setting up an import/export business. The choice that’s right for you depends on how much money you have to invest and the amount that you hope to earn. A distributor has higher risks and greater expenses than an agent has, but a distributor also has more control over the process.