It is difficult to imagine our world without international trade. In any environment where consumers want something that cannot be produced locally, import and export traders or agents step in to help provide that product. Today, much of what we buy is available to us as the direct result of the work of import-export traders or agents.
When looking to become an import-export agent, it’s sold to many as a quick way to make money without having to do much work. Link up buyers and sellers, negotiate a deal, and get paid, this is how easy some think it is. The reality is somewhat different and I’m going to give you the whole picture in the ultimate guide to become an import-export agent.
Here is what we are going to cover:
- What Is an Import-Export Agent?
- What Is the Role of Import-Export Agent?
- Understanding types of agents
- What are the main 3 features of Import-Export Agent?
- The Benefits and Challenges of Being an Import-Export Agent
- How To Become An Import Export Agent
- 10 Crucial Steps To Become An Import Export Agent
What Is an Import/Export Agent?
An import-export agent is similar to a distributor in that he’s a middleman. However, an agent does not take title to the goods and provides fewer services than a distributor does. The agent’s role is to get orders and (usually) earn a commission for his services. The following figure illustrates the relationship between the agent, the supplier, and the buyer.
An Import-Export Agent;
- Is independently owned
- Does not take title to the products being purchased and sold
- Is actively involved in the negotiations for either the sale or purchase of the products
What Is the Role of Import-Export Agent?
The role of an import or export agent is to act as a middle person for the purchase or sale of products between both domestic and overseas companies. While this is a general description, the responsibilities vary depending on the field and the type of company for which the agent works. Duties may also be different depending on where the agent is in the supply chain.
For example, at an export management company (EMC), agents work with foreign distributors, overseas marketing and advertising, and organizing budgets and invoices. On the other hand, at an export trading company (ETC), agents are busier researching the market for specific projects, as well as delivering sales pitches regarding trade to foreign and domestic companies.
Import-export agents may also choose to be hired by a company, open their own company or work individually. While working individually will cut out the middleman, there is greater risk and much more responsibility involved.
Understanding types of agents
The import-export business has two main types of agents:
Traditional import-export agents:
An export agent works in the country where the product is produced. For example, you may identify a producer in the U.S. and work toward representing that producer (the seller) in foreign markets as the export agent.
Or you may work as an import agent based in the country where the product will be sold, in which case you represent the buyers. For example, you may know a company in the U.S. that’s looking to buy a certain kind of product overseas. You’d identify sellers of that product overseas and represent the buyer in foreign markets as the import agent.
A broker is an independent agent who brings buyers and sellers together. For the most part, brokers work for sellers, although some brokers do represent buyers. A broker differs from the traditional import-export agent in that she doesn’t usually represent a company. Instead, he’s traditionally hired to bring together one-of-a-kind or nonrecurring deals.
For example, a broker is contacted and advised that Company A in New York has an excess inventory of a soon-to-be-discontinued product. This is a one-time deal because as soon as the goods are purchased, they’ll no longer be available.
The broker identifies Singapore Electronics, a potential customer in Singapore, for these items. So the broker brings Company A and Singapore Electronics together for this one-time deal, and in return, the broker receives a commission from Company A.
What are the main 3 features of Import-Export Agent?
A bachelor’s degree is typically the standard for this career. Earning an MBA with a specialization may be the right choice for those interested in management positions. Specializations may be centered around particular products or areas of the world.
While in school, individuals should pay close attention to learning subjects such as trade policy, currency transactions, import-export law, and policies associated with trade deals.
Agents need to be highly organized to maintain correct information about products, different markets, various companies, and trading. Individuals should also be very research-savvy and be able to interact with both local and international markets and people in those markets.
The most important part of this job is to keep up with trade today as well as the products and materials associated with a particular business. Staying informed and being proactive are valuable assets.
Import or export agents also need to understand global economic trends and be able to recognize how certain announcements and news stories will affect certain trade opportunities. Along with recognizing trends, agents also need to understand the legal formalities, documentation, federal regulations, and local regulations associated with different companies and how they may influence current and prospects.
When delays, damages, and other issues arise, agents must also know how to quickly and effectively find solutions and report to the proper individuals to have these problems resolved on time.
While the Bureau of Labor Statistics does not provide information for this specific career, the similar position of purchasing agent has an annual median salary of $60,550. As with all careers, salary depends on the field in which an individual is working, as well as job responsibilities. Some companies may also have agents receive a portion of commission or retainers depending on their trade arrangements.
The Benefits and Challenges of Being an Import-Export Agent
Some of the benefits of the agent option are the reduced start-up costs and the limited working capital you need. The initial investment and costs of doing business as an agent are significantly lower than those that come along with operating as a distributor.
On the downside, when you’re doing business as an agent, you run the risk that the parties will bypass your firm and deal directly with each other on any future transactions.
To minimize the risk of being eliminated from future transactions, remember that an agent is not someone who makes a call and brings people together just to earn a commission. The key is to develop a sound relationship with your connection and continually work toward increasing sales and improving the relationship.
Representing clients and getting commissions
The rate of commission when working as an agent depends on the nature and type of product, the nature of the market you’re selling to, and the level of competition.
If you bring a buyer from one country together with a seller from another country, can you earn a commission from both parties? The answer is no. Why? Because as an agent, you’re representing someone. If you represent the seller, you have an obligation to sell that company’s products at the highest possible price.
On the other hand, if you’re representing the buyer, you have an obligation to secure the products for the buyer at the lowest possible price. Obviously, drawing a commission from both parties would create an ethical dilemma.
Think of an import-export agent like a real estate agent: The buyer has an agent, and the seller has an agent, but the same agent doesn’t represent both the buyer and the seller.
If you choose to set up your business working as an agent, decide who you’re going to represent, and then work at nurturing that relationship. The greater the effort you make in developing that relationship and representing the company, the more likely that company will be to maintain the relationship.
How To Become An Import Export Agent
- Find A Product You Want To Represent
- Build a Range of Products
- Make Sure Your Product Knowledge is 100%
- Do Your Competitor Research
- Make Sure You’re Aware of Any Safety Regulations
- Establish What Territory You Want To Represent (Local, National or International)
- Understand Circumvention Clauses
- Make Sure You Get Samples
- Make Sure You Have Promotional Material
- Know What Commission Rate You Want Going Into Negotiations
Before we get into our top 10 tips, let me give you a little heads up about the reality of your new import-export business.
Become An Import Export Agent The Right Way
Firstly, becoming a successful import-export agent is what we need to be focused on, and for this to become a reality, like anything in life, it’s going to take some hard work, time, and dedication. As we all know, any new career or skill that we want to learn is always going to take effort and some form of dedication. Nothing worth pursuing comes easy or for free. It’s unfortunately not as simple as working from home for a few hours each evening.
Product knowledge is paramount, hard work and understanding international trade are all key parts of making a success of becoming an import-export agent. Honing your negotiation skills, understanding international payment methods and understanding of international contract law are very wise.
Two Types of Import Agent
The good news is, there are always companies looking for import-export agents. Below is the import-export agent job description for the two types of roles you can opt for. You’ll have to decide which one is appropriate for you with the products that you decide to represent.
A commission agent introduces a buyer to a seller and receives a commission for sealing the deal and continues to receive a commission for any future sales from that same deal. As a commission agent, you’ll be dealing with buyers who want the product but likely don’t have much knowledge of international trade, which incoterm to purchase under, the best method of payment nor custom clearance procedures.
This is where your knowledge becomes invaluable and you’ll be able to hold their hand through to whole import-export process and this is where you earn your import-export agent commission with confidence, professionalism, and the best possible terms for you.
As a stockist agent, you will actually buy the goods or products yourself, keep and store those goods, find buyers yourself and sell them to anyone you want. You could sell regionally, nationally, or internationally. To become a stockist agent you must have an in-depth understanding of international trade and the entire import-export process from start to finish.
10 Crucial Steps To Become An Import Export Agent
So, here are my top 10 tips to becoming a successful import-export agent:
Step 1: Search For A Product You Want To Represent
Establishing what you want to sell, finding a supplier, manufacturer, or source of products is obviously where you need to start to become a broker for them.
One effective method of sourcing is by contacting the embassy of the country you wish to source from. For example, if you are sourcing products in China, contact the commercial section of the Chinese Embassy in your country and ask for a list of Chinese manufacturers and suppliers of the product you want to represent. This is an effective way to source products internationally.
Another effective way to source products is to contact overseas trade fairs and ask for a list of companies exhibiting at the trade fair. For example, if you were looking to become an agent for children’s clothing, try Googling “children’s clothing trade fairs in China”. You’ll be able to put together a list of dates, locations, and contacts. If possible, visit the trade fairs that you can and get talking to people, and start to build a network.
If you can’t attend the trade fairs, contact the organizer and ask for a contact list of all exhibitors which they are usually more than willing to give you. Then you have a pretty comprehensive list of manufacturers you can contact and add to your network.
I have personally used the methods over the years and they have thankfully brought me some great results.
Step 2: A Range of Products
Develop a range of products from either your chosen supplier or consider finding a range of products that fit well together, from multiple suppliers. The big advantage to this strategy is when you are in front of a potential client, pitching your main product, it can convince them to buy from you if you can back it up with a range as they may see more opportunity to sell the range, therefore earn more profit.
The other advantage is, should your potential client not be interested in your main product, you may find that they are interested in another in your range. By having a range of products, you’re increasing your chances of a sale and expanding your sales network.
Step 3: Product Knowledge
Do you have sufficient knowledge of your product? You’re not necessarily expected to know every single detail about your products and be able to answer every question but you do need to have a good understanding of the product, how it’s manufactured, cost of production, wholesale price, retail price, profit margins, etc.
You must be able to pitch your product with confidence and a depth of knowledge. If you then don’t know an answer to a specific question, you can always reply “I’m not 100% sure of the answer, so I’d like to check that and come back to you.” You can then make sure to get the correct answer and answer the question in a follow-up email the next day, maintaining contact and dialogue.
However, this only works if you’re unsure of the odd question or two. You won’t be able to give this answer for all the questions, or you’ll look completely unqualified and make your products look weak.
Establish what product education and knowledge you’re going to receive. Training videos, webinars, video calls, etc. are all great ways to get yourself up to speed.
Step 4: Never give up to Research
Know your market – this is so important. Do not forget your knowledge is your most important capital for your global business.
- Who else is importing and wholesaling your product(s)?
- What’s the wholesale price of your competitors?
- Who’s retailing your product(s)?
- What is your product(s) retail price?
- What can you do to make your pitch better or different from your competitors?
- How can you make your service better that your competitors?
With this basic information, as yourself, “Can I compete as a stockist or commission agent on price and delivery?”.
Run your numbers, do the numbers add up, and is there a profit margin that you can work with?
Find your niche, find something that you can specialize in, become the leader, the expert, in that area and build a solid foundation from here.
Step 5: Safety Regulations
This is an important step that many overlook and can be very costly if not considered. Do your products comply with health and safety regulations in the country that you’re selling?
Imagine finding your products, pitching to clients, negotiating a deal, and importing your products to find out they’re not compatible with health and safety regulations, can’t be sold, and are held up at customs. This will likely add substantial cost and untold stress and there’s a decent chance that your profits will be wiped out or worse, you’ll make a loss on the deal.
Do not neglect this step, it’s not worth it.
Step 6: Mark Your Territory
Establish what territory you want to represent, perhaps become a national import agent US or maybe global. It depends on what your goals are, what capital you have, and to a large extent, how big your network is.
If you’re starting, have limited capital, and a small network just works within your region. As you grow in all aspects you could start to look at a national network. Take it a step at a time but you may be surprised how fast your network grows.
Step 7: Circumvention Clause
Make sure a circumvention clause is included in your contract, which is a legal means of stopping the buyer or seller from excluding you from future sales as the commission agent.
Step 8: Samples
You’ll likely need samples to promote and demo in your pitches and meetings. It’s much harder to sell if you don’t have a working version of your products to demo. So, establish if your supplier will provide samples to you free of charge, or at what cost.
Step 9: Promotion Material
What promotional material, if any, does your supplier have? Product images can be emailed to you so you can add them to your website and advertise on Facebook or any other social media. Be sure these images are clear, professional, and represent the product and your brand well.
Videos are an effective way to show your product if professionally-produced so find out if there are any available to you.
Product brochures are good to leave with potential clients after a meeting, with a breakdown of costs, prices, and profit margins.
Step 10: Your Commission
Lastly and perhaps most importantly, what rate of commission will you negotiate? Your commission obviously has to make it worthwhile to you so it’s important that you know all your costs and what your bottom line is. This is where knowing how to export is so important as if you get this part wrong, it can obliterate your profit margin.
Congratulations! You have officially learned the steps of how to become an import-export agent. Now start booming and make the world your business!
Also, if you would like to learn more about international trade, here is a link to our international trade and business guide. You can also watch videos on my YouTube channel.
Now I would like to hear your thoughts:
What’s your first takeaway lesson from this article?
Or maybe you have a question about the topic.
Either way, leave a comment below right now.