Distributors or Direct Sales? Choosing a Route to Market for Export

18 August 2026

The decision that shapes everything downstream

Once you've chosen a market, the next question determines your cost base, your margin, your customer relationships, and how much you actually learn: do you sell direct, or through a partner?

Most Swiss SMEs answer this by accident. A distributor approaches them at a trade fair, seems credible and enthusiastic, and asks for exclusivity. It feels like progress — someone wants to sell your product — and a contract gets signed. Two years later the market has produced modest volume, you have no direct contact with any end customer, no independent view of demand, and an exclusivity clause preventing you from doing anything about it.

The decision deserves to be made deliberately, per market, with a clear view of what each route actually buys you.

Three routes, not two

The choice is usually framed as distributor versus direct. There are really three, and conflating the first two causes expensive confusion — including legal confusion.

A distributor buys from you and resells. They take title to the goods, carry inventory, set their own resale price, take credit risk on their customers, and earn a trading margin. Your customer is the distributor. You typically do not know who the end users are.

An agent (or commercial representative) sells on your behalf. They don't take title. They introduce and negotiate, you invoice the end customer directly, and they earn commission. Your customer is the end user, and you retain the relationship and the data.

Direct sales means your own people — employed or remote — selling to end customers without an intermediary.

The distributor/agent distinction has legal weight in the EU. The Commercial Agents Directive gives self-employed commercial agents substantial protections, including, in most circumstances, a right to an indemnity or compensation payment when the principal terminates the relationship. Distributors generally do not enjoy the same statutory protection, though national law varies and some jurisdictions extend analogous rights. This is genuinely worth understanding before you sign anything: the two arrangements have different termination economics, and choosing the label loosely can create liabilities nobody priced in. Take local legal advice on the contract itself — this is one of the few areas where doing so is unambiguously worth the fee.

What a distributor actually gives you — and costs you

What you get: immediate market presence without fixed cost. A distributor brings existing customer relationships, local language and commercial norms, warehousing and logistics, local credit risk, and often installation and after-sales service. For a physical product needing local stock or service, this can be decisive. They also absorb the cost of market coverage — you pay only through margin, and only on sales that happen.

What it costs: more than the margin line suggests.

The obvious cost is the trading margin, which in industrial goods is frequently substantial. The less obvious costs matter more:

You lose the customer relationship. You don't know who buys, why they buy, why they stop, or what they'd pay for next. In a new market — where learning is the actual objective — this is a serious loss.
You lose demand visibility. Distributor orders reflect their stocking decisions, not end-market demand. A quiet quarter might mean weak demand or a distributor managing working capital, and you can't tell which.
Your share of their attention is small. A distributor carrying forty lines will push whichever moves fastest and earns most. Your product competes for shelf space and salesperson attention against products you don't control.
Switching is slow and painful. Once a distributor holds the relationships, replacing them means starting the market over, often with a contractual notice period and sometimes a compensation claim.

The pattern worth naming: distributors are excellent at serving demand and generally poor at creating it. If your product needs explaining, positioning against an incumbent, or actively finding buyers who don't yet know the category exists, a distributor will usually not do that work. They'll sell it to people who ask.

When each route wins

A distributor makes sense when:

The product needs local stock, installation, or fast service response.
Customers expect local invoicing, local credit terms, and local-language support.
The market has established buying channels your product must be present in.
Order values are moderate and volumes high, so direct coverage can't pay for itself.
The market is regulated in ways requiring a local entity or local certification.
Geographic or cultural distance makes direct relationships impractical.

Direct sales makes sense when:

Order values are high and volumes low — a small number of large deals justifies direct effort.
The sale is technical and consultative, requiring your engineering knowledge.
Your product is differentiated enough that demand must be created, not just served.
You need direct customer feedback for product development.
Margins can't absorb a distributor layer.
Modern outbound and remote selling make the market reachable without local presence.

An agent makes sense when: you want local relationships and market knowledge, but need to keep the customer relationship, the data, and pricing control. This is the most underused option among Swiss SMEs and frequently the best fit for a first market — particularly a well-connected individual with deep sector relationships, working on commission.

The hybrid most exporters end up with

Committed exporters rarely stay purely one or the other. Common patterns:

Direct for key accounts, distributor for the long tail. You handle the twenty companies representing most of the value; a partner covers the fragmented remainder. Define the split explicitly in the contract as a named account list, or it will become a dispute.
Direct first, partner later. Sell direct until you understand who buys and why, then appoint a partner with an accurate brief and real negotiating leverage. This is the sequence most likely to produce a good outcome, and the one most often skipped because it's slower at the start.
Distributor for the country, direct for a specific segment where your technical involvement is essential.
Partner for logistics, direct for demand generation. You run outreach and create the pipeline; the partner handles fulfilment, stock and service. This suits products needing local presence but active demand creation — increasingly common, and it addresses the "distributors don't hunt" problem directly.

Finding and qualifying a partner

Here's the point most exporters miss: finding a good distributor is the same problem as finding a good customer.

The distributors who approach you at trade fairs are the ones looking for products, which is not the same as the ones who would sell yours best. The strongest partner is usually already busy, already successful, already serving your target customers with complementary products — and has no reason to contact you. You have to find and approach them, using the same systematic process you'd use for buyers: define the profile, build the list, verify the contacts, reach out with something specific.

Define what you want first: which customer segments they already serve, complementary but non-competing lines, technical capability to support your product, geographic coverage, and financial stability.

Then build a list from industry associations, trade fair exhibitor lists, and — most usefully — by asking your target end customers who they currently buy similar products from. That last method is the highest-signal and the least used.

Qualify hard before signing. The questions that separate serious partners from optimistic ones:

Which of your target customers do they already sell to, by name?
What complementary lines do they carry, and what share of revenue is each?
How many salespeople, and how many will actually be trained on your product?
What do they think the realistic first-year volume is, and on what reasoning?
What do they need from you — training, marketing support, stock terms, exclusivity?
Can you speak to two of their existing suppliers?

That last one is the single most informative question, and a good partner will not hesitate.

Contract terms that prevent regret

Without giving legal advice — take proper counsel on the actual document — four commercial provisions cause most of the disputes:

Exclusivity should be earned, not granted. The most common expensive mistake is granting exclusivity to an unproven partner because they asked. If you grant it, tie it to performance: minimum volumes, reviewed annually, with exclusivity converting to non-exclusive automatically if targets are missed.

Set realistic minimum purchase volumes with a defined consequence. Without them there's no mechanism to act on underperformance.

Agree a term and a clear exit. Fixed initial term, defined notice period, explicit termination triggers. Understand the termination economics under local law before signing — this is where the agent/distributor distinction bites hardest.

Retain data rights. Require reporting on end customers, volumes and applications. Some distributors resist strongly, which is itself informative. Without this you're blind in your own market, and you cannot re-enter directly if the relationship ends.

Also define who owns leads that come to you directly, how pricing and any advertised price positioning work, and what happens to remaining stock on termination.

Making the decision

For most Swiss SMEs entering a first or second European market, the sequence that produces the best outcomes is:

Validate demand directly. Run systematic outreach to end customers, have real conversations, win a few deals yourself. This costs less than most teams assume and generates the market knowledge every later decision depends on.
Use what you learn to write the partner brief. Now you know which segments respond, what objections arise, what price the market bears, and which regions matter.
Approach partners from a position of evidence. A distributor negotiating with an exporter who already has customers and data is a very different conversation from one with an exporter who has a brochure and hope.
Structure the agreement with performance conditions and data rights.
Keep a direct channel open — for key accounts, for feedback, and so that a failed partnership isn't the end of your presence in that market.

The distributor question is not really "which route is better." It's whether you understand the market well enough to choose. If you don't yet, the fastest and cheapest way to find out is to talk to end customers yourself — which is also, conveniently, the thing that makes you an attractive partner later. Our guide on defining an ideal customer profile for export covers building that target definition, and finding B2B buyers in Germany works through the channels for the largest DACH market.