What is a Manufacturer's Sales Representative?
A Manufacturer’s Representative, also called manufacturer’s agent, manufacturer’s rep, sales representative, or sales rep – or more commonly, just “rep” – is a self-employed salesperson who contracts direct selling and marketing services to one or more related, but normally non-competitive, companies in a particular industry.
Role of Manufacturer's Sales Reps
The job of a rep is basically to “represent” the manufacturer’s,
distributor’s, or importer’s line of products to prospective buyers,
who could be retailers, wholesalers, distributors, or service
businesses, depending upon the industry and/or product line. As part of
that service, they call on and present the client’s products in a
positive light (as a way to solve the buyer’s needs), answer questions,
offer materials and information, and ask for orders and re-orders in
person, or by phone, fax, or email. Increasingly, web sites are a way
to service wholesale buyers.
Sales reps sometimes just represent one company, where they might be paid a base plus commission. More often, however, independent reps serve multiple companies who share an interest in marketing to a category of buyers that the rep calls upon regularly. Reps are usually given a specific (and often exclusive) territory, so customers are not confused by multiple competing sales representatives, and to honor the hard work done by a good rep.
In the gift industry, you will find that most rep clients will be manufacturers, but sometimes distributors or importers. Your customers – the businesses you sell to – will be retailers who purchase gift lines for resale to the public. The type of products you sell, and the categories of retailers you sell to, will depend on many factors, and we will discuss those issues as we travel together through this book.
As a gift sales rep, you will spend much time traveling to, and visiting with, prospective buyers and current customers. During those visits, you will show samples and/or catalogs that describe the products, pricing, payment terms, and merchandising suggestions. Often as a sales rep, you have the opportunity to share trade information and help solve specific sales problems for the customers. Sales reps exist that target virtually every size of gift retailer from small mom-and-pop stores to large “big box” retailers, including chains. All these reps want to show and sell the newest, most attractive or innovative products on the market (plus, of course, profitable standbys). As a rep, you save buyers significant time and expense by showing several lines during your visits, and always, they want to know “what is new”! (You WILL hear this question a lot!)
On the other side of the equation, sales reps probably qualify as the lowest cost option for manufacturers interesting in expanding sales regionally or nationally. Independent reps operate as a contract sales person, or in the case of rep “groups”, as a contract sales force, working on a strictly commission basis, minimizing overhead for a producer. Whereas an in-house sales force could cost a potential manufacturer $75,000 to $100,000 per person, with travel expenses – regardless of sales volume – an independent rep only gets a check when they produce sales for the manufacturer. Since reps can be found in virtually every geographic area in the US, opportunities for a low cost national roll-out are endless, for those manufacturers who choose to grow in this fashion.
Although selling is your first and main responsibility as a sales rep, associated tasks include processing and tracking orders, keeping running records of your income and expenses (for the IRS, and for your own protection from unscrupulous clients), scheduling travel, and making appointments. Sales reps often attend trade shows on behalf of clients, to showcase new products and open new accounts. Often you will find yourself as a consultant, making new product recommendations, or product revisions, based on customer feedback. Unfortunately, not every manufacturer uses good business practices. Since you will work with many companies, you often will see what works… and what does not. You will learn tactful ways to suggest companies change procedures or policies that are costing them business.
Sales reps differ from wholesalers or distributors who purchase and take actual possession of products at below wholesale costs, and in larger volume. Reps actually are a representative of the manufacturer or other producer, so are not as clearly a separate “middleman”. We do not pay for product and then resell the product at a higher price. We work purely on a commission on the wholesale invoice value billed to the customer.
As a sales rep, your purpose is to introduce, educate and take orders for product lines and receive a commission as compensation, rather than making your money on the price differential between buying and selling prices.
Sometimes you will also hear the term “inside” versus “outside” sales rep. This merely means that the rep works for wages (which might be base plus commission) for the producer company ONLY, or they are “outside” reps, working outside the payroll of the company, but still representing the company as an independent. Sometimes the terms are also used to differentiate between reps that answer the phone for “inbound” customer sales calls, and reps that travel on the road to make sales calls on site. In the latter case, both the inside and outside salespeople, would be employees of the company, exclusively selling that one line.
(For more information on opportunities and information on this industry, visit the Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2006-07 Edition, “Sales Representatives, Wholesale and Manufacturing”, on the Internet at http://www.bls.gov/oco/ocos119.htm)
Blogs About Sales Reps
- SELLING WHOLESALE TO GIFT SHOPS | Tips to Selling Wholesale to Gift Shops
Tips to Selling Wholesale to Gift Shops
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