Broker vs Distributor vs Sales Rep: What Is the Difference?

Who sells your product, who buys it, and who gets the commission

A brand getting ready for the US meets many partners that look alike: sales reps, brokers, distributors, importers and agencies. In Korea, people often call all of them "our local partner." In the US, each one does a different job and gets paid a different way.

Sign without knowing the difference, and you may pay a margin you did not plan for, give away a channel, or find that nobody is selling. So before you look for a US partner, decide what job you want that partner to do.

Here, "broker" means a food or consumer goods sales broker, not a stock or customs broker.

Broker vs distributor vs sales rep at a glance

The main difference between a broker and a distributor is title, meaning legal ownership of the goods. The US Census Bureau defines a distributor as a wholesaler that "buys and owns (takes title to) products," and says agents and brokers "do not take possession of, or title to, any goods."

Role	Takes title to the goods?	How it is paid	What it does	Use it when
Sales rep (manufacturers' rep)	No	Commission on its sales	Wins orders; you invoice and ship	You can ship and bill but need buyers
Broker (food and CPG)	No	Commission, sometimes plus a retainer	Pitches a chain's buyers	You target grocery or mass retail chains
Distributor	Yes	The margin between its buy and sell price	Buys, stores and delivers to its retail accounts	You want many stores through one customer
Importer of Record	Usually the owner or buyer; a licensed customs broker can be IOR when designated	Not a sales role	Makes the US customs entry and answers for duties	Every shipment into the US
Agency	No	Retainer, project fee, commission or a mix	Marketing, outreach and marketplace work	You need work done, not goods bought

One company can play more than one role. Read what the contract makes the partner do, not what the partner calls itself.

1. A sales rep (manufacturers' representative) sells on your behalf

A sales rep, also called a manufacturers' representative, meets US buyers for you and brings in orders but usually does not buy the product. The sale is between you and the retailer: you invoice, collect payment, ship and handle import compliance, as Montana's export guidance describes.

Commission depends on the product, customer type, territory and workload, and the best-known numbers are old. In a survey of 402 members of MANA, a US association of manufacturers' agents (data from 1999, 2002 and 2005), average commission was 6% on sales to OEMs, 7% to distributors and 11% to end users, within 5% to 14%. MANA says no newer data exists.

Before you hire a rep, ask:

Which territory, retailers and channels does the rep cover, and does it know those buyers?
Is commission paid on new accounts only, or also on sales the rep had no part in?
How long is commission paid after the contract ends?
Is the deal exclusive?

Be careful with an exclusive sales rep contract. A rep with the whole US who reaches only a few buyers blocks every other opportunity.

2. What is a food broker? A broker connects you to a chain's buyer

A food broker is a sales intermediary that connects your brand with buyers at grocery and mass retail chains, usually for a commission. It often focuses on one retailer, category or channel and handles the pitch through to the listing.

As Farm Credit Canada puts it, brokers "don't buy your product" and "you ship and bill retailers directly." Published rates differ:

Conventional grocery: 3% to 5% of sales (Farm Credit Canada; Eightx, 2026)
Natural and specialty: 5% to 7% for emerging brands (Eightx, 2026), or 8% to 12% of net invoice (Lailara, 2026)

Get the rate and its base, gross or net, in writing. The names broker, sales rep and agent overlap in the US. So the broker vs distributor question is not about the name. Ask: does this company buy our product, or sell for us and take a commission?

3. What does a distributor do? It buys your product and resells it

A distributor buys your product at a wholesale price and resells it to the retailers it already serves. You skip selling to every retailer and gain its accounts, but at a lower price. For example, with a $20 MSRP, a 40% retail margin and a 25% distributor margin:

$20 MSRP - retail margin $8 = $12, the retailer's buy price
$12 - distributor margin $3 = $9, your price to the distributor

Each distributor you add is one more layer, and one more margin.

Industry sources put distributor margin at 15% to 25% of your wholesale price (Opener, 2025), or 20% to 25% for shelf-stable food and 25% to 35% for refrigerated or frozen (Farm Credit Canada). The 10-K of UNFI, a major US food distributor, shows a lower figure: gross profit of 13.5% of net sales in the year to August 1, 2026, up from 13.3%. It averages UNFI's whole business, not one brand's margin. See what's left of $24.99 on each channel.

A distributor does not sell your product automatically

Not every distributor sells actively: some have a sales team, others mainly take orders and move goods. Before you sign, ask:

Which retailers does it sell to today? This matters most.
How does it pitch new products to buyers?
Is there a minimum purchase, and does it really buy the stock?
Who pays for marketing, returns and markdowns?
Does the deal cover online sales and Amazon?

Take extra care if a distributor asks for exclusive distribution.

Who pays slotting fees and deductions in US retail?

In most cases the brand pays to get onto retail shelves, not the broker or the distributor. Opener (2025) says slotting fees "come directly out of your pocket."

Slotting fee: a payment to a retailer to put a new product on its shelves (US GAO, 2000). Opener puts it at $5,000 to $25,000 per SKU per region in conventional grocery (2025) and $0 to $25,000 at distributors (2026). GAO found "little hard evidence" on amounts; we found no current official data.
Trade spend (promotion money): 15% to 25% of wholesale revenue in conventional grocery and 10% to 15% in natural and specialty (Opener, 2025).
Distributor launch fees: the supplier policies of KeHE, a natural food distributor, effective November 1, 2025, bill a set-up fee and an introductory allowance per SKU per distribution center.

With a distributor, many of these costs arrive as deductions from its payments to you. Ask for the full fee and deduction schedule before the first order. Also check the retailer's vendor requirements, such as product liability insurance.

4. The Importer of Record is a legal role, not a sales partner

The Importer of Record (IOR) makes the US customs entry and answers for the duties, a legal role separate from selling. Under CBP Customs Directive 3530-002A, the IOR is "the owner or purchaser of the goods, or when designated by the owner, purchaser, or consignee, a licensed Customs broker." So:

A licensed customs broker can be the IOR when you designate it.
A distributor that buys your goods is a purchaser and can also be the IOR. The roles still differ.
A sales rep or broker usually does not take title, so it is usually not the IOR, though the directive counts "a buying or selling agent" as an owner or purchaser.

A customs broker does not take the risk off the importer. Under 19 CFR 141.1, "payment to a broker covering duties does not relieve the importer of liability if the duties are not paid by the broker." Decide who your IOR is before you choose sales partners. See Importer of Record and US customs.

5. An agency does the work you contract it to do

An agency does whatever its contract says: market research, buyer outreach, sales support, Amazon and Shopify management, influencer marketing, trade shows or on-site work. Running your marketing or contacting buyers does not make an agency a distributor. Ask an agency for concrete cases of its work, not a promise to "support your US entry."

Which partner does your brand need?

The right partner depends on what your brand is missing:

Meetings with buyers: a sales rep or a broker.
Someone to buy stock and supply retail accounts: a distributor.
A clear owner of import responsibility: an IOR setup and a licensed customs broker.
Research, marketing, sales and local work together: an agency.

You can combine them: an importer and a 3PL bring in and hold the stock while a sales rep pitches buyers, or one distributor reaches many retailers. You do not need every partner. You need the roles that fit how you will sell in the US.

What to limit in an exclusive contract

Limit an exclusive deal to what the partner can really cover. "Most brokers carry exclusivity clauses by geographic territory or channel," Opener notes. Split "exclusive for the US" into:

Territory: the whole US, or certain states?
Channel: mass retail, large chains or grocery?
Account: only certain retailers?
Product: the whole brand, or certain SKUs?
Online: Amazon and your Shopify store too?

Then attach a minimum purchase or a sales target. Exclusive rights with no duty to sell cost you every other opportunity.

Also set the notice period (Oklahoma State University's broker checklist uses 30 days as an example) and how long commission runs after termination. This post does not cover state laws on rep contracts; have a US lawyer review these clauses.

Ask who is responsible for what, not what the partner is called

Instead of asking what a partner is called, answer seven questions:

Who buys the product?
Who owns the stock?
Who sells to buyers?
Who earns a commission?
Who pays for marketing?
Who is responsible for import and compliance?
Who gets which exclusive rights?

Once these seven are clear, so is your US distribution structure.

Wrap-up

Brands entering the US often ask us for a good distributor. When we hear more, some need a sales rep to reach buyers, some need US stock and logistics first, and some need a partner for marketing and sales.

LinkONE works with brands entering the US to set up retail and distributor sales, starting with who imports, who holds the stock, who sells and who buys.

In the end, the first step in finding a US partner is to define roles and responsibilities, not to collect company names.

Frequently Asked Questions

What is the difference between a broker and a distributor?

A distributor buys your goods and resells them, so it takes title and earns a margin, while a broker sells for you on commission and never owns the goods. The US Census Bureau uses this same title test. With a broker, you ship and bill the retailer yourself.

What is a distributor vs. wholesaler?

A distributor is one kind of wholesaler: in US Census terms, a wholesaler is the broad class, and a distributor is a wholesaler that buys and owns goods before reselling them. The Census Bureau calls distributors "merchant wholesalers" and counts agents and brokers as "non-merchant wholesalers" that never take title. In daily use, many people treat the two words as the same.

How are manufacturers' representatives usually paid?

Manufacturers' reps are usually paid a commission on the sales they bring in. In MANA's member surveys from 1999 to 2005, the average was 6% on sales to OEMs, 7% on sales to distributors and 11% on sales to end users. MANA says no newer survey data exists.

How much do food brokers charge?

Food brokers in conventional grocery charge about 3% to 5% of sales, according to Eightx (2026) and Farm Credit Canada. For natural and specialty stores, sources differ: 5% to 7% for emerging brands (Eightx, 2026) or 8% to 12% of net invoice (Lailara, 2026). Some brokers also charge a monthly retainer.

Can a customs broker be the Importer of Record?

Yes, a licensed customs broker can be the Importer of Record when the owner, purchaser or consignee designates it, under CBP Customs Directive 3530-002A. The importer still carries the risk on duties. Under 19 CFR 141.1, paying a broker does not relieve the importer if the broker does not pay the duties.

Sources

Fees and rules in this post are as of October 2026.

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