Independent sales agents who work on a commission basis are the manufacturer’s representatives. A Japanese manufacturer’s representative’s main task is to promote and market the products that were regularly mass-produced from manufacturers to consumers in various places: local, municipal, state or country. A manufacturer’s representative does not receive salaries or wages but rather a percentage of the revenue from the goods he sells.
On the other hand, distributors are merchants or wholesalers who buy products from manufacturers and sell them from their warehouses to the market. They do not work on a commission basis. This means that the distributor’s role is to sell manufacturers’ inventories to companies and retailers.
Japanese manufacturer’s representative Vs. Distributors
While a Japanese manufacturer’s representative is a commissionable sales agent, distributors are not. This is the main difference between these two groups of people. Manufacturer representatives do not need to stock any inventory or merchandise. They identify products required in their locality or region using manufacturer directories, analyzing market behavior to determine product viability, and working with manufacturers to promote products in an area.
Distributors may perform similar functions, except that they are not manufacturers’ agents. They buy products from the manufacturer to resell at a profit and therefore do not receive commissions.
Ownership and territoriality
Japanese manufacturer’s representatives do not own the goods they sell. They are sales reps who are assigned exclusive territories. While in those territories, they have the exclusive rights to sell the companies’ product lines either to consumers or distributors. Rather, dealers own the goods they sell. They operate in a business-to-business domain as, in most cases, they do not sell directly to consumers. They buy from manufacturers and sell to other distributors and retailers who sell directly to the consuming public. Unlike manufacturer representatives, distributors are not assigned any exclusive territory. They can open their warehouses in any region of their choice.
The representatives and distributors of both manufacturers are the key players in buying and selling, a field that requires an interest in the art of sales, good negotiation skills, and the ability to identify the next hot item in their specific territories. For both groups, more money means more sales. Success in this regard requires that both groups possess diverse skills. A sales background is very important for both categories as it will greatly enhance the ability to deal with customers effectively. Good business skills, such as finance and administration, are equally necessary and will greatly strengthen manufacturers’ representatives and distributors’ ability to run their businesses successfully.
Distributors may deal with the products of different manufacturers. This means there is no restriction on the number of manufacturers dealers can deal with. On the contrary, the manufacturers limit representatives in negotiating the goods produced by other manufacturers that may be competitors of the organizations.
What differences are there between being a distributor, representative, and commercial agent?
Know the distinctiveness of each of these figures to choose the one that suits you best.
It is usually an intermediary between the external manufacturer and the national distributor. He only dedicates himself to putting them in contact and signing agreements on behalf of the manufacturer. He usually works on commission and is also the legal representative of the manufacturer in the country, with powers of attorney to close agreements on his behalf. It does not usually hold any property over the goods, but it does have the authority to defend the legal interests of the manufacturer.
The common thing is that you hold the physical property of the product that the manufacturer has sent you from another country and even take care of the technical service if required, although not always. For example, if the item is of industrial origin, it is often sent directly to the customer from the country of origin to save duplication of logistics costs.
He has one more salesman task. He accepts agreements on behalf of the company but without the responsibility or the ownership of the goods. And it does not usually have legal power or establish agreements outside the conditions the manufacturer allows. Offer the product, complete the order documents, negotiate only minor adjustments within authorized limits, and process the order.