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Australian Market Representation

Engaging Trusted Market Representation

Finding and engaging the right local market representative who provides the required levels of support and customer service is a crucial element to succeeding in a new market.  It requires an investment in building knowledge, connections and relationships. 

Types of Representation

In-market representation may include pre-sales representation to assist in market scoping, marketing and pre-sales activities or engaging an agent or distributor.   Partner identification, engagement, contract, due diligence and developing a positive working relationship are important steps that contribute to successful market entry and growth.

Agent

In Australia, a local agent acts as the representative of the supplier. Agents are usually remunerated on sales-value based commission or success fees and sometimes a combined retainer or, more rarely, a salary. Commissions for agents typically vary from 5 – 15%.

Distributor

A distributor buys the goods from the supplier and resells the goods locally. Distributors undertake inventory management/warehousing, marketing, order processing, delivery, customer credit, invoicing and debt collection and after-sales care services. Given the additional responsibilities and risk, the remuneration is typically higher than an agent representation, can vary significantly across market sectors and can range from 15 – 40%; they are typically agreed at the higher end if the Distributor also has Resellers.  Distributors generally carry a wider range of complementary or competing products and offer client servicing and after-sales service.

Finding an Agent or Distributor in Australia

Visiting the market, networking and developing relationships and undertaking research and due diligence are critical for identifying and engaging with prospective local partners.  Reviewing trade publications and attending events, exhibitions and trade shows are effective ways to understand and connect with potential partners and distributors as well as to gain an understanding of the market for specific products.

In addition to engaging and developing a relationship, visiting facilities and developing a deep understanding of a potential partner's capability and expertise is required. It is also necessary to do some background checks or undertake due diligence on a potential business partner.

Contract and Pricing

The relationship between a company and its Australian agent or distributor should be set out contractually.  It is important to fully clarify the activities, responsibilities and trading terms of agents and distributors as they may vary on a case-by-case basis. Issues such as territory, exclusivity, performance, duration and termination terms are important considerations.

The pricing of goods and services supplied under contract between an agent/distributor and an overseas supplier should be set on "arms-length" principles and comply with transfer pricing laws in relation to goods and services.  Transfer pricing and anti-siphoning laws are, typically, more relevant when setting pricing between a parent and its subsidiary, but they do have some context when it comes to Distributor and Partnership commercial arrangements.

 

Beachhead pre-landing services supports the identification and engagement of an Australian representative. Contact us for more information.

 

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Beachhead supports every stage of your Australasian Market Entry