Here below, three variants that are most used by Italian exporters are analyzed: the agent/representative, the distributor, the importer.
This is one of the forms most commonly used by those wishing to enter the United States market without too many constraints, and represents the cheapest solution in terms of initial investment. The choice of representative is a strategy with certain specific characteristics, chief among which are:
- High mobility of natural persons
- Advances paid to the representative on commission or into the expense account, with no guarantee of success
- Volatility in certain sectors
Generally, the representative requires a fixed monthly compensation and a commission for successful orders. The fixed monthly compensation may vary, but is generally around US$ 1,500 – US$ 3,000 depending on the product and the market potential. This figure is understood as an expense account for travel, marketing, advertising, etc., which items will, in this case, be borne by the representative. The commissions on sales range from 15% to 30%, again depending on the product and its potential.
There are essentially two best methods for making contact with agents/representatives on a professional level:
- At trade fairs
- In the local Merchandise Marts (specialized in the sector of fashion and apparel, and accessories)
The distributor has a sales network to promote the product and distribute the merchandise in his/her territory.
In this case, if we wish to sell in United States territory through a distributor, we ought to have a partner to deal with inventory management (depending on the product). At times, it may be the distributor him/herself, but there are cases in which different figures are involved. The distributor often requires a contribution or a sharing of the expenses incurred to promote the product in his/her territory.
In the process of seeking a distributor, the company must be highly motivated and armed with patience, since the overwhelming majority of distributors are swamped daily by enterprises wishing to export their products to and distribute them in the United States. Therefore, as in the case of the agent/representative, the search should start through industrial districts and trade fairs, which are privileged vehicles for contacting any distributors interested in our goods. The search for potential distributors from Italy is quite complex, but at the same time not impossible, in fact requiring a great deal of time when seeking to schedule an appointment with the potential distributor who may be of interest to the Italian company.
Moreover, having a single distributor for all of United States territory is not recommended. Since the United States is not a homogeneous market, it has clear and different modes of purchase and “taste” depending on the geographic area.
The importer is the person who purchases the goods, manages their inventory, and resells them. This is one of the most popular ways to export to the United States.
As with distributors, more than one importer must be found to cover the entire United States area. Although the importer is an effective solution, it is one that requires, in comparison with the distributor, longer times and higher costs to initiate collaboration, since the importer must invest more in the exporting company. The start of collaboration thus involves more complexity than the distribution or agent/representative channels. A specific factor in choosing the importer relates to the margin the importer will apply to the sale price of the imported good. In fact, although the exported merchandise may begin competitively priced, the costs for shipment, customs duties, and the margin applied by the importer might take products out of the market, or bring them to a higher price than the competition.
When choosing an importer, the following aspects must be considered:
- Location and coverage of the territory
- Years of operation on the territory in question
- Applied or applicable margins
- Other imported products (similar or complementary)
- Types of clientele
All five of these five factors, some with greater and some with lesser weight, contribute towards establishing whether the producer’s choice will be in keeping with the strategy and policy for entering the United States market. As with distributors, the search from Italy is quite complex, so it is again a matter of attending trade fairs, in addition to seeking importers of complementary products who might be interested in adding a range as an alternative to their offerings.
The golden rules for business relationships with the United States
Because the market is so unique and complex, here are some fundamental rules for successful commercial negotiations with the United States:
- Always be punctual
- Do not confuse informal with personal
- Be confident
- Be prepared
- Be direct
- Exceed your clients’ expectations
- Seek the assistance of professionals with proven experience and seriousness when looking for the right commercial partner
The United States customs system
Immediately after September 11, 2001, U.S. Customs and Border Protection underwent considerable changes, starting with being moved administratively from the Department of Commerce and Labor to the Department of Homeland Security.
Parties authorized to import merchandise to the United States
The procedures for the clearance of merchandise to be imported to the United States must necessarily be carried out by one of the following parties:
- the owner/exporter of the merchandise;
- the purchaser/importer of the merchandise;
- an agent or customs broker expressly authorized by the owner or purchaser of the merchandise, by power of attorney.
Specifically, Customs Brokers are people or companies expressly licensed by the Customs Service to:
- draw up and collect the documentation necessary to allow the entry of merchandise;
- see to the payment of customs duties;
- handle the release of any merchandise held at customs;
- represent their clients in relations with customs authorities.
If the procedures to clear the merchandise are not carried out by an American broker, the competent Customs Office generally requires putting up a bond to cover the payment of any additional or increased taxes as a result of the entry of the merchandise.
In the event of opting to rely on a Customs Broker, it is advisable to make sure that the Broker belongs to the Automated Broker Interface, an electronic system that permits the exchange of documents and information with customs authorities. It is important for companies to hold onto all documentation of importing operations.
The importing of certain categories of merchandise is prohibited within the United States; other categories require additional documentation.
These are the categories of prohibited merchandise:
- Certain works of art originating from South American countries;
- Articles that infringe international copyright laws;
- Firearms not approved by the Bureau of Alcohol, Tobacco and Firearms;
- Species of endangered animals;
- Products derived from protected animal species;
- Narcotics and dangerous drugs (certain types of steroids);
- Merchandise from countries subject to United States trade embargo.
Many types of merchandise are subject to specific checks, including:
Fruits, vegetables and foods: milk and milk products, certain types of fruits and nuts, cattle and butchered meat, cured meats, poultry, plants, and seeds are subject to supervision, in terms both of product requirements and of labeling, by the Food and Drug Administration (Center for Food Safety and Applied Nutrition, U.S. Food and Drug Administration, 5100 Paint Branch Parkway, College Park, MD 20740-3835) and by the Department of Agriculture (Foreign Agricultural Service, Washington, D.C. 20250; http://www.fas.usda.gov/).
To import wine, beer, and hard liquor into the United States, a special license must be obtained from the Bureau of Alcohol, Tobacco and Firearms of the Department of Treasury (Washington DC 20226, tel. 202.927.8110). Special labeling is required for distribution for consumption (warning on risks during pregnancy and for drivers) and the country of origin must be well specified; at times, this merchandise is accompanied by a certificate of origin to prevent circumvention of the embargo against certain countries.
MEDICINES AND DRUGS
These require FDA authorization and, in some cases, other certifications. All incoming medicines and drugs are checked to verify their country of origin and their authorizations from the federal government.