{"id":1518,"date":"2026-03-17T13:01:05","date_gmt":"2026-03-17T13:01:05","guid":{"rendered":"https:\/\/adrianwiniarz.com\/?p=1518"},"modified":"2026-03-17T13:01:05","modified_gmt":"2026-03-17T13:01:05","slug":"distributor-or-direct-sales-a-key-decision-in-export","status":"publish","type":"post","link":"https:\/\/adrianwiniarz.com\/en\/distributor-or-direct-sales-a-key-decision-in-export\/","title":{"rendered":"Distributor or direct sales? A key decision in export"},"content":{"rendered":"

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Today I want to discuss a very important issue \u2013 it affects most of us, but only a small number of exporters are able to properly design market entry.<\/strong><\/p>\n

Choosing a distribution channel is one of the most important decisions in the process of internationalizing a company. Too often, it is made based on opportunity: someone contacted us, we had a meeting at a trade fair, the presentation was attractive, and we found the \u201cperfect\u201d client. Rarely is it a carefully planned process.<\/p>\n

Opening a new market is a strategic decision. It can build your brand for years \u2013 or block its growth and freeze its potential.<\/p>\n

This topic is directly linked to previous considerations about market selection and analysis. Choosing the country is only the beginning. How we enter it \u2013 the entry model \u2013 is a key part of strategy.<\/p>\n

According to Michael Porter, strategy is about consciously deciding how and where to compete \u2013 and with what cost structure and advantage.<\/p>\n

As you know, I work based on my own export development program covering 10 key areas of the export ecosystem. Today\u2019s topic relates to the first area \u2013 strategy and market choice. Choosing a distribution channel is an integral part of it.<\/p>\n

To make the key points clearer, I divided this text into two parts:<\/strong><\/p>\n

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  1. \n

    How distribution channels are built and how they have evolved in recent years.<\/p>\n<\/li>\n

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    When to go through a distributor and when to sell directly.<\/p>\n<\/li>\n<\/ol>\n

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    PART I. Distribution Structure \u2013 How the Market Looks Today<\/strong><\/p>\n

    There is no universal distribution model that can be copied from market to market. Each country has its own, often very specific, sales structure. This depends on geography, population distribution, trade concentration, shopping culture, consumer maturity, and also legal and logistical conditions.<\/p>\n

    In practice, entering a highly networked market like Germany, where trade is concentrated, the number of players is limited, and relationships with purchasing headquarters are critical, will look very different. In such countries, without good operational organization, logistics capability, and sufficient scale, it is very hard to succeed.<\/p>\n

    In more distant, developing markets, such as Southeast Asia, where traditional distribution and smaller players still matter, local contacts and a partner are important.<\/p>\n

    Overall, distribution structure depends on many factors: capital concentration in trade, urbanization, logistics infrastructure, strength of local brands, consumer habits, and regulations. These elements determine whether a foreign brand can develop sales independently (including entering retail chains) or will need a local partner who knows the market, relationships, and trade practices.<\/p>\n

    Over the past 15 years, major market changes have affected this structure.<\/p>\n

    First<\/strong>, margins throughout the supply chain have been shrinking. Globalization, the growing power of large retail chains, and full price transparency put producers under pressure. Each distribution level expects its share of margin \u2013 distributor, wholesaler, retailer \u2013 and finally, the consumer price is tested by the market. The biggest challenge is for distributors, but brands are also affected in their ability to grow sales abroad.<\/p>\n

    Second<\/strong>, social media and easy access to information have changed the power balance. Consumers can instantly compare prices across countries on their phones. If a product costs twice as much in the Czech Republic as in Poland, it is immediately noticed. Price transparency means distribution errors are quickly exposed, and rebuilding trust is costly and slow.<\/p>\n

    Third<\/strong>, the growth of marketplaces and e-commerce has lowered entry barriers to many markets but increased competition. We now compete globally. Digital advertising costs rise, and the fight for customer attention often comes down to price.<\/p>\n

    The result: it is increasingly difficult to build a multi-level, classical distribution in Europe if the price structure was designed only for Poland. A local model may not survive the added layers in a foreign supply chain. This is the starting point for the key decision: distributor or direct sales?<\/p>\n

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    Three Basic FMCG Sales Models<\/strong><\/p>\n

    In mass FMCG export, there are three main sales models worth focusing on: distributor (intermediary), retail chains (direct B2B sales), and e-commerce. We will not cover more complex structures like subsidiaries, joint ventures, licenses, or mergers, which require different resources and approaches.<\/p>\n

    1. Distributor<\/strong><\/p>\n

    A distributor is the classic indirect sales model. We sell to a partner who handles most operational market aspects \u2013 sales risk, logistics, and often local marketing.<\/p>\n

    Working with a distributor, we give up part of the margin \u2013 they must earn, and so does the network they supply. The consumer price can be higher than in the origin country to cover all costs.<\/p>\n

    Operational risk lies with the distributor, giving us relative peace, but we lose some control over the brand and its presentation abroad.<\/p>\n

    With the right partner and efficient collaboration, a distributor can build the brand. This model is financially relatively safe but carries the risk of losing control over the brand and its market image.<\/p>\n

    Williamson, using transaction cost theory, showed that distributors reduce entry costs and limit institutional uncertainty, allowing a foreign company to enter a new market faster.<\/p>\n

    2. Retail Chains (Direct Sales)<\/strong><\/p>\n

    Many myths surround retail chains. Many entrepreneurs dream of entering them, but reality is harder: domestic sales volume is rarely replicated, listings are limited, and a foreign brand may be unknown to consumers.<\/p>\n

    Chains demand competitive terms \u2013 shelf fees, promotions, discounts \u2013 which reduce product profitability and require a clear pricing policy.<\/p>\n

    Risk is fully on the producer. The company must ensure supply continuity, marketing, and monitor sales. If a product sits on the shelf, it\u2019s our responsibility. The chain can replace us in weeks.<\/p>\n

    The upside: scale and market credibility. Entry into a chain often brings strong sales growth and brand recognition, but it requires organizational maturity, a clear sales plan, and a competent team to manage all aspects of cooperation.<\/p>\n

    3. E-commerce<\/strong><\/p>\n

    E-commerce is the most dynamic channel today. Marketplaces, social media, AI, and changing shopping habits \u2013 especially among young generations \u2013 make online sales very promising.<\/p>\n

    This channel can offer higher margins as no intermediaries are involved, but digital marketing, logistics, and customer service costs are high. Selling via marketplaces alone is expensive and requires strong operational skills.<\/p>\n

    All responsibility rests on the producer. Logistics, customer service, marketing, and sales management are handled internally.<\/p>\n

    This model offers flexibility and fast market response, but price competition is high, and consumer opinions immediately impact brand image. For brands with clear value and identity, e-commerce is a major opportunity for market entry and sales growth.<\/p>\n

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    PART II. Distributor or Direct Sales?<\/strong><\/p>\n

    The choice of distribution channel is not simple and depends on key criteria. Every market and company has constraints and opportunities that must be considered.<\/p>\n

    1. Market and Our Capabilities<\/strong>
    Distant, culturally or legally different markets with product registration requirements, local procedures, and limited consumer knowledge make a distributor the natural choice. They have local know-how, network relationships, and administrative knowledge.<\/p>\n

    Closer markets, like most EU countries, may allow direct sales to chains or e-commerce. Producers retain more control over brand and pricing.<\/p>\n

    2. Logistics<\/strong>
    Chains often require direct store deliveries, local marketing, and a warehouse in the target country. Without these resources, a distributor is necessary. They take on logistics and operational duties, reducing risk and allowing focus on production and brand development.<\/p>\n

    3. Margin Structure<\/strong>
    A margin must cover all distribution levels: producer \u2192 distributor \u2192 chain \u2192 consumer. If not, the model is unprofitable, and direct sales or e-commerce may be better.<\/p>\n

    4. Negotiation Power<\/strong>
    Small companies are rarely the first choice for large chains. Lack of experience, scale, and recognition limits negotiating power. This may require a local partner or targeting niche segments. E-commerce is often the best development option for small companies.<\/p>\n

    5. Team Competence<\/strong>
    Key questions:<\/p>\n