Last Updated: 11.08.2022
How to start as an export-import agent/broker
For people who are just starting their own export-import business for the first time, for them, starting as an export-import business commission agent or sometimes also called export consultant, or also sales agent would be a great starting point. However, there is a lot that a person should know and consider firsthand before starting his/her business as an export commission agent. Important is to have realistic expectations, the right mindset, and of course a action plan.
This article has been divided into 3 sections.
At first, we will look at key aspects of the nature of agency business and address common questions we are frequently asked. Also, we will look, what is the main difference between import export agents vs brokers and to whom it is actually suitable to become a commission agent.
In the second part of this article, we will explain commission agent commission fees and the commission fee rates. We will also give one realistic example to show how much money do export-import commission agents can expect to make from orders Also we will show you, how to estimate in a realistic way how long it would take to close your first orders and about what it mostly depends on.
In the third part, we will give you direct actionable steps to really start your business as an export-import business commission agent or agency.
Steps to start a business as export commission agent
- Familiarize yourself with necessary laws and rules
- Study international trade and relevant business disciplines
- Specialize – choose your sector and products
- Validate your product idea in real life
- Product and field research
- Select the best supplier & sign the commission agreement
- Establish a company, set up a website, and prepare for marketing & sales
- Start looking/searching for buyers for goods
- Analyze the buyers and buy offers (purchase requests)
- Present your buyer with a purchase request to your supplier
- Help to close the deal and ensure your commission
- Continue searching for new customers and new purchase requests
PS! For seriously interested people, we have developed a comprehensive and practical online course, with video lessons, rich supplementary and supporting materials, and one-on-one support. The course has been developed by active and working commission agents who all belong to the exportimportpractical team. The program has been developed as a logical journey to help you start a business either as an agent or an agency from scratch. The course is currently closed, but you can join the waiting list and be notified when the course opens again. Learn more about our agency business course and join the waiting list.
After you have joined our agency business course waitlist, then let’s go on with our article, and if you want to skip around, then below you can use the table of content to go to the topics directly.
1. Who is an import-export commission agent
The import-export business commission agent or sales agent or also export consultant is a person or a company (mostly a company), which is bringing customers and most importantly (orders) to the company it is representing as an agent. In most of cases, the agent is working for a supplier (manufacturer), with whom it has an agency and cooperation agreement signed. In some cases (not so common), agents are also working for a buyer as import agent or purchase agent – a company that is purchasing some specific products and the agent is sourcing these products for it, with the low price or other favorable conditions and getting commission from this.
So, In most cases, commission agents, sales agents, and export consultants are mediating orders to suppliers, against commission fees. Agents as basically independent marketers and sales persons. The field, product, and also area are almost always specified, as the agent can be effective when he/she is focused. Below is a simplified diagram showing agent’s position and its main role.
NB! There are also custom agents, and freight forwarding agents- these actors are not the topics of our current post!
Why starting an agent is a good start
Starting as an export-import commission agent or also called “broker” is an excellent start. It is great because it will let you learn and practice all the necessary business skills that you need in the future. And all this with very low investment and low risk. Operating as a commission agent for your supplier, allows you to see and actually be involved In international trade. You will get the big picture and see how the supply chains and logistics are working.
The import-export agent commission fee is the motivator that should keep you excited to do the work. The import/export agent commission fee can be sometimes looked as a salary.
The biggest risk as an export-import agent or broker is to work for free. This can often happen when an agent commission agreement is poorly made or hasn’t been made at all. It can also happen when the agent is not professional and does not have good relations and trust with the supplier.
You can learn more, about how to protect your commission fee in this article here.
Related article: Biggest risks in export-import business
Let it be also said, very often the manufacturers are not good at sales/marketing and communication (manufacturers are good at manufacturing). Thats why the opportunities for professional and ambitious agents can be very awarding.
Is it hard to start as a commission agent?
A lot of people are asking us this question. It is understandable why this is asked. It is not possible to give a definite answer. The answer to this question is individual and subjective. You certainly can’t think that getting started as a commission agent is easy. However, we have observed that some people are comfortable with it and it is relatively easier for them to get started than those who are not comfortable with being an independent agent. Below, in this post, we describe who is suitable to act as an agent and to whom is it perfect.
But one thing is clear, it is much easier to start and become successful as an agent if you have a clear plan of action, instructions, and tools and you have also prepared yourself mentally. This article is meant to prepare you.
Investments required to become a commission agent
If to talk about the initial investments to get started as an agent or broker, then this is mainly just the work and time. Often to get started you just need to be active and willing to do the work. Off course, there are also some real financial costs involved, like: setting up a website, preparing marketing materials, business document templates, international callings, traveling, and accommodation.
But the main investment is work, and it means, you need to find regularly new potential customers and generate orders to your supplier. An export or import agent is like a matchmaker you will bring together well-fit suppliers and buyers. All this through very-targeted and well-prepared marketing and sales activities. About 70% of agents’ time is spent on sales/marketing and negotiations.
Of course, before you get started, you need to invest in yourself and acquire the needed knowledge. Not only business knowledge, but you must also do deep research about your industry and products. Agent must know and understand his products on a technical level. Learning and acquiring business-related skills, and knowledge and developing a deep understanding of your product and field takes time and work – and these are your main investments.
For the ones who do not give up and are doing the work, they can become very very successful agents and change their life.
The main roles of the commission agents
Agents’ main role is to do very well targeted and efficient sales and marketing for your manufacturers – this is the key role and main focus ( 70% of your time goes for this). This is the main activity the agents are doing.
This, if done properly will bring in new suitable Inquiries from new customers for your manufacturer.
After a suitable inquiry has come in, the manufacturer needs to prepare a commercial offer, acc to customer commercial and technical terms. In this stage, the agent should be the main communicator and negotiator between the manufacturer and the customer. The agent’s role here is to make sure and help to remove all the possible roadblocks together with the manufacturer. The goal is to reach a point, where your supplier and customer are ready to sign an order.
In our opinion, this stage is also most exciting as the real order is not far anymore. In this stage the communication and negotiation skills are priceless.
After the order has been closed, basically agent has finished his job and will receive the commission. But after the order has been closed, it is highly recommended to stay involved as a project coordinator, to support the manufacturer and customer. This will establish good relations and parties are interested to work with you again.
What is the difference between an export-import agent and a broker?
The export-import commission agent
Usually represents one company for what he/she works for. For example, an agent represents an Indian Factory and is looking for new overseas buyers and orders for them. In This case, the agent signs a commission agreement with the Indian supplier first, before he/she start work. The export-import agent is only working for one or few companies with whom he has very strong and stable relationships. Agent regularly finds new buyers and generates orders for them. Also, the agent usually has a right to represent that company in a certain level (specified in the agency agreement).
The export-import broker
The broker is a free agent who brings buyers and sellers together based on the deal. Brokers change companies often and always looking at new deals that he/she can proceed with. The broker usually doesn’t have a long-lasting working agreement with one side. Example broker finds one company that is looking to buy product X with price Y in quantity Z. Broker finds the supplier who is willing and ready to supply that XYZ. Now the broker will sign the commission agreement based on the deal with the seller or buyer or with both. After the deal is executed, ideally broker will get the fee and move forward, looking next deal. Also, the broker can establish long-term cooperation with one side and sign an ongoing agency agreement and become an export-import agent.
So, in conclusion, export-import brokers and agents are basically doing the same things. Both are generating orders for suppliers and bring suppliers and buyers together. Just their differences are in the strategies that they are following to achieve their goals. If you are just starting out, we would recommend presenting only one or few manufacturers and generating orders for them.
To become an agent – who is it suitable for?
Anyone can become a skilled commission agent who is active, proactive, determined, and a good communicator and works according to the systematic plan. Being determined and independently setting and prioritizing your activities is very important for a successful and efficient agent. As an agent, you are your own boss and therefore nobody tells you what to do and how or when.
Initiative and the will to achieve the goals – is the basis of everything, all starts from there.
Who it is perfect for?
If you are currently or have recently been in one of the following positions:
– Sales or marketing manager/director
– Sales Engineer
– Commercial specialist
– Communication Specialist
– Project or supply chain manager.
– Or something that ties in with the previous ones.
Then you should have the necessary knowledge, including insider knowledge of the industry, customers, suppliers, etc. You have a good foundation to become a very successful agent.
If you seriously want to start as an export-import agent or your own agency, then watch the following video webinar. it is about The agency business and what you could expect from it, and what is actually possible as an agent. We also discuss there to which kind of people this type of business fits and what are the factors of success. it is available on youtube below:
PS! In the description of this webinar, there is also a link to our online export/import agency course.
The course is currently, closed BUT you can join the waiting list and get more educative information about the agency business here: Join the agency business course waiting list.
2. Import-export business agents’ commission fee
Import-export agent commission is a fee or salary that the person or company will get in exchange of the services provided. The export-import agent is either making new sales (order) and profit to the supplier or helps save costs. Most common is that agent is bringing new orders to the manufacturer.
So, the total amount of the import-export agent commission directly depends on the new sales orders generated to the supplier or costs saved for the buyer. So agent helps make more money or save costs, he gets paid only because of this.
There are lots of frauds and scams, where import export agents won’t get their agreed commission fee. What we can say about this is, that there are two main reasons why these kinds of problems appear.
- An export-import agent won’t make its agency commission agreement properly, uses very poorly made commission contracts. Also, often the contract is not well proven (not signed by legal presentators)
- Import-export agents fall into a comfort zone. They think, that after signing one commission contract and getting 1 order to their manufacturer they can sit back and enjoy a regular income without any work.
Unfortunately, working as an export-import agent requires regular work, it is not passive income. You need to always look for new and better buyers and generate orders for your supplier. Always need to think about how you can save your buyer’s costs if you are working at the buyer’s side.
The agent needs to generate new orders to its clients regularly, only then import export agent commission fee guaranteed. it is guaranteed because you are offering such a value to your customer, that it would be fullish for him to sweep you out.
Offering regular value to your customer is one of the best strategies to ensure import export commission fees. Follow this easy principle and you never lose your commission fee.
We have another article, where we discuss, how to protect import-export agent commission fees, a more detailed way.
How much is the Import-export agent commission rate?
What would be a normal export agent commission rate or fee? Or how to determine the agent commission-fee rate? These two are also common questions people have.
Normally import-export agent commission rate is a % of the total sales volume, order value, or transaction. Sometimes the commission rate depends on also the volume. Example If you are able to help sell a bigger volume, then you may get an even higher fee.
If to talk about buying, then usually the lower supply prices you can get for your buyer, then higher commission rate you can ask.
Generally, the import-export commission rate is in the range of 1-5%, of total transactions or orders executed. There are fields where the commission rate can be much higher, over 10%. The transaction needs to be finished, which means that the seller should have received the payment first, then it is your time to get the commission fee.
Example of an import-export agent commission fee
Let us look at the simplified but also realistic example from an import-export business, for a commission agent.
- The volume of the goods that you can help to sell for the supplier: 100 pieces per month
- Sales price, what your buyer agrees to pay per one piece: 400 USD
- The agreed commission rate is 5% of the total amount.
100 pieces x 400 USD per piece x 5% =2000 USD per month.
Based on our experience, generating orders in an amount of 100K USD per month is not very difficult for an experienced commission agent, who has been in a business for a while.
So, here 2000 USD is the import-export agent commission fee, this is how much a broker or agent could make in this particular case.
NB! We have also a case study, where we show step-by-step how we made 100,000 USD by importing from China as a commission agent. This shows you well, what is possible as an import-export agent.
Usually, the suppliers and buyers will tell you their commission rate levels. But this doesn’t mean, that you can’t negotiate better conditions. If you know very well, how much profit your supplier is making, then you can try to negotiate a higher commission rate.
But remember, you always must give something in return. If you ask higher commission rate, then you should offer better prices or bigger volumes to your supplier.
How long it can take to close the first order?
First of all, there is no exact answer to this question. However, based on our experience, we can give an estimated time frame and, perhaps more importantly, explain how to forecast/predict your incoming orders.
Roughly 3 months
Based on our experience, we can assume, that if the agent is active and works for 1-3 months in a row, during which he makes enough offers to genuine incoming inquiries, then the first order(s) could come during that time.
*But it is estimated and depends on many factors.
Of course, it depends on the field and also on whether the offers have been made for actual upcoming purchase requests or for still in the planning stage request.
How do forecast your future orders?
It is possible to roughly estimate statistically how many orders could come in the near future and in what amounts.
If you have made 30 offers (for real purchase requests) within a few months, and these offers are mostly all competitive and the customer has taken them into account. Then it can be roughly estimated that 20 % of these offers could be realized as orders. Mean about 6 orders could realize as orders.
It is also possible to estimate the approximate amount of orders that could arrive in the near future (based on offers and feedback). Based on our experience, when offers are made for real purchase requests, where the customer plans to award the order within 3 months from the date of the offer. You can then expect to close orders of approximately 15% of the totally made offers.
*But this percentage varies greatly from one region to another
So, for example, if you’ve made offers in a total amount of 1 million USD in a couple of months, then you can roughly expect 150,000 USD to come in as a real order.
Many of you may now think that bidding for 1 million in a few months is a big job. In reality, however, this is rather a modest volume. For example, in the field of metal and machinery, it is quite common to make offers worth 5 million USD every month (by one person), while the average amount of the offers itself could be in a several hundred thousand USD to even millions.
Make new offers regularly
It is important to keep the “pipeline full”, because some of the offers will fall out unintentionally. Making offers on a regular basis ensures regularly realized orders and commissions in the future.
3. Steps to getting started as an export-import agent
1. Familiarize yourself with necessary laws and rules
Every country has specific laws and rules related to exporting and importing. If you want to start as an export-import agent, you need to have at least an overview of all the laws and rules regarding export and import in your country. You need to have an overview, so later on, if you need to know something specific, then you know from where you need to dig deeper.
At least you should know what products are being restricted for importing and exporting in your country. Also, you need to know how the export and import procedures are being processed in your country. Export-import commission agents should have the resources and tools ready where they can quickly and operatively check the customs duties and taxes, and rules.
If you are just starting out, it is smart to have a professional customs broker who will advise you and tell you all about the taxation and import/export procedures and regulations.
2. Study international trade and relevant business disciplines
If you want to start an international business, then, first of all, you need to know what your country is exporting and importing. You need to know the trends and prices in worldwide. If you don’t know what are the exporting and importing sectors in your country, then you don’t know what to export or import.
If you choose the wrong sectors, then, later on, you just won’t be able to find buyers for your suppliers.
You can get details about your country’s trade data from the International Trade Centre.
It is recommended you learn the international logistics and know the rates, so you can later take it into account if you calculate the prices. You should know what is the cost to send sea containers from your country to Europe example. It is useful to select one freight forwarder as your partner, he/she will help you in the future to organize the logistics.
You need to be familiar with the Incoterms. Incoterms are the standard terms that are widely used by all exporters and importers. Incoterms regulate all regarding sea transport, road transport, Insurance coverage, export and import procedures. The most widely used Incoterms are FOB, CIF, and EXW.
Learn about international payments and instruments, like LC- letter of credit, DC- documentary credit, and TT- direct bank transfers. Figure out, how much these costs, how fast they are, and how safe they are for both, exporters and importers.
Study what are the best ways nowadays to reach the buyers and suppliers. What are the best channels and how to use them? These are the most crucial resources for you in the future
We suggest you also learn about the import and export procedures and documentation, as those are the things every export-import agent needs to know as well.
3. Specialize – choose your sector and products
There are tremendous amounts of different products being exported and imported in every country. Nobody knows well all the sectors. You need to niche down and select the right sectors and products for you.
You need to select one sector and then you need to find one supplier (factory) whom you are going to represent. It’s very important that you start operating in the sector that you know well and you feel that you are able to find buyers for your client whom you are going to represent.
It is not easy to specialize and decide on your products and fields. For a lot of people, this stage causes a lot of questions. Based on our experience, there are 2 effective ways to go for specialization. One is based on your current or previous job and the second ( more theoretical) is based on your interest or education. Both of them are viable paths and in our agency business course, we are showing step by step, how to use both possible paths and what procedures should be done in either way.
4. Validate your product idea in real life
Specialization is only half the battle. Next, you need to validate if there are buyers for your chosen product and if you could realistically find customers and orders for this product. It is very important to understand that what seems like the perfect and hot product to you may not be the same in the eyes of the potential customers (market).
There is no other way to validate than to actually try to find customers for the product on the market and communicate with potential customers.
As a result of this phase, your product either turns out to be promising, or it becomes clear that you should go back to the specialization phase. In our agency business course, we cover this process and validation thoroughly, in detail, and systematically.
5. Product and field research
Once the product idea has been validated, it is important to conduct a thorough market and sector study. You need to know as much as possible about your product and field and at a technical level.
You also need to know who are the players in the field, what are the prices, who are the customers and how to reach them. Researching the market and the environment will also make it easier for you to find good suppliers.
6. Select the best supplier & sign the commission agreement
For selecting a supplier, It’s better when this supplier is familiar to you or you have a previous relationship with them. Or at least we recommend creating agency cooperation with your home country manufacturer. We recommend signing an agent commission agreement with the supplier, preferably with the direct manufacturer.
To select a manufacturer, it is wise to have criteria written down and contact many suppliers and test them to find the best and most suitable one for you. To validate the supplier, use our supplier/buyer validation checklist.
The commission contract has set the terms for the potential new buyers, orders, products and your fee. You need to make sure all the details about the product(s) and the selling conditions, include payment terms. You need to agree on at least the following terms of your contract:
- Sales or purchase price of the product(s) that will be sold or bought.
- Commission % of the sales or purchase price.
- The length of the commission contract period (for example 1 year contract).
- Supplier details (who will pay the commission to you)
- Commission agent details
- Terms about when and how the commission fee will be paid out to the agent
- Agents and suppliers’ responsibilities.
Also, the contract should be well proved. We suggest adding a copy of the ID or passports of the signees to the contract. If possible sign the contract with the notary.
Remember, the commission agreement/contract is the only legal tool that will protect your fee. It’s worth investing time and money in drafting a solid contract, and also should use the help of lawyers. There is a lot of different free form available on the internet, but it is very risky to use them.
NB! In our agency business course, we will give professional, ready-to-use agency and commission agreement forms, NDA forms, sales/purchase contract forms, and other relevant templates + we will explain and analyze the contract for you.
7. Establish a company, set up a website, and prepare for marketing & sales
After you have specialized, products are determined and a commission agreement has been signed with the supplier, then it is time to prepare for real business and marketing. If you haven’t established a limited liability company yet until now, then we strongly recommend doing it in this stage, before you start real approaching.
After a company is set, then you may need specific licenses or permissions. Usually, the export-import agent won’t need an export/import license. However, some countries may require to have import-export agent licenses, which you should apply for.
You should approach your country’s trade-related institutions to make sure all that licenses and permissions are required. Apply for the licenses, and permission, open a business bank account and meet all the formalities you are ready to go.
After your company has been set up, then you should prepare for marketing and sales. This means you should prepare marketing materials, like brochures, presentations, and visit cards. Most of the materials you should get from your supplier. It is your supplier’s obligation to support you with these materials. Preparing also means creating a marketing plan and setting goals. Also, set up an online system to support your work.
About setting up a website and company, check out and follow our step-by-step instructions about it here.
8. Start looking/searching for buyers for goods
After you have made your homework, selected the right sectors and finally found one supplier with whom you have a commission agreement signed, and you have prepared for sales and marketing, then you are ready to get started. For looking at and approaching the buyers there are offline and online methods available. It is useful to use both of them.
Online resources are great to establish the first contact and offline methods are great to validate the contact and establish strong relationships.
Online ways to find customers
- International trading platforms, like Alibaba, Indiamart, Europages.
- Social media ( groups and networks)
- expert portals like “Clarity”
- Google and social media paid advertisements
- Using the services of sourcing agents.
Offline ways to find customers
- Traditional business trips and meetings
- Visiting trade fares and expos
- using your personal network and relations
Offline methods are more for quality and online are better for quantity, but the reliability is not so good.
We have an in-depth article about how to find buyers here.
In our agency business course, we will show many more methods to find customers and we will teach how to negotiate and influence people.
9. Analyze the buyers and buy offers (purchase requests)
After you as an export-import agent have found the possible buyers for your clients, who also asked for purchase requests (RFQ) then you need to analyze these purchase requests. You are the first instance between your supplier and customer.
You need to make sure, are all the details clear and all the data and information available for your supplier. If something is missing, you should ask the buyer. You need to make sure at least the followings:
- Is the details of the products clear
- Is the delivery time and order volume realistic for your supplier
- Are the payment terms clear
- Are the delivery and packing terms clear
- Is the product quality requirements and warranty clear
- When the customer plans to place the order.
You as an export-import agent need to take into account also the reliability of the buyer and the potential length of the cooperation. Sometimes it is reasonable to use third-party help to verify the reliability of the buyer. You can find the local inspection service providers who can do the background check of the potential buyer for you.
Also, you should finally ask the LOI ( Letter of intent). in this document, the buyer confirms that he is able and willing to buy the product(s) with offered conditions. A confirmed LOI by the buyer gives to you and your supplier a certainty, that you are not wasting your time
10. Present your buyer with a purchase request to your supplier
After the RFQ package is all together ( technical + commercial) , and all the details have been made clear by you from the customer, then it is time to send it to your supplier, so he can also analyze and if all the details are available, then the supplier can prepare a commercial offer to your customer.
In the offer price, the agent commission fee should be included in the total price and in the offer, you as a representative agent should be mentioned in the offer.
11. Help to close the deal and ensure your commission
After the offer has been sent to the customer, you will get the information, or was your offer competitive or not? If your offer was totally off, then the customer will tell it fastly.
If the offer was competitive, then there will be lots of back and forth discussions between supplier and customer, and you as an agent can remain as a “filter” and communication. The agent’s goal in this stage is to negotiate and help to eliminate the obstacles the buyer may have and same time keep good relations with both, supplier and customer.
In the end, the order will be either given or not. If the order is awarded, then you can get your commission fee after the order is signed with the supplier and payment is received.
12. Continue searching for new customers and new purchase requests
After you concluded one successful deal, then its time to find new ones. You can always find new buyers for your suppliers and bring new orders. Finally, you can grow your business to an export-import agency and have many agents working on your behalf of you. Also, you can venture into direct exporting or importing business.
It is always necessary to keep sourcing and finding business opportunities. Also, the more experience and connections you have, the more business opportunities you will get. For example, your customer starts to refer you to other companies.
After a while, your start to have regular commission income and you can start to think about scaling and hiring your first employees (agents).
Conclusion
Previously we presented and explained to you the primary steps for export-import agents. The steps were simplified and condensed as with the blog post, it is simply not possible to give all the important information in depth. But we did our best and tried to pass you the basics.
If you are seriously interested to start your own agency business or just as a solo export import commission agent, then we suggest considering our in-depth online agency business course which will take you through all the necessary steps to get started and gives you the needed tools, systems, tactics, and even document templates. You can learn more: our agency business course
If you want to learn how to start your own export-import business, then we have online courses and programs and supportive services, which will give you the best guide to starting an international business from scratch. We have also tools and resources which help you to start and grow and expand your business and get more customers and raise profitability.
We advise you to take courses and use the resources ad tools listed below:
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