Sales representative or own company? The best market entry strategies for Germany

If you want to enter the German market, you have various options. One of the most important decisions is whether you want to start with a Sales representative work or a own company found a company. Both strategies have advantages and disadvantages - and there are also other alternatives.

1. sales representative: Enter the market quickly & cost-effectively

A Sales representative (according to § 84 HGB) is a self-employed person or a company that sells your products in Germany - often on a commission basis.

Advantages of a commercial agent

• Low financial risk - No fixed costs, as the sales representative is only paid if successful.
• Fast market entry - The agent already has a customer network.
• Little bureaucracy - No own company, no German bookkeeping required.
• Simple termination - No long-term commitment if the market does not work.

Disadvantages of a commercial agent

– Less control over distribution - The representative works for several companies.
– Brand development difficult - Your company tends to remain "in the background".
– Dependence - You lose customers if the agent changes or performs poorly.
– Commercial agent compensation - If the contract ends, the representative can demand a compensation payment (Section 89b HGB).

Ideal for:

• Companies that want to get started quickly
• Companies with a limited budget for market entry
• Products that sell well through existing networks

2. own company in Germany: building a long-term market presence

Setting up your own company in Germany gives you full control over sales, but involves higher costs and more bureaucracy.

Advantages of having your own company

• Full control over distribution & brand - Your company decides on price, strategy & customer contact.
• Direct access to customers - No middleman, better customer loyalty.
• Long-term stability - Your company is not dependent on sales representatives.
• More options for scaling - Own employees, partnerships, local presence.

Disadvantages of having your own company

- Higher costs & bureaucracy - Business registration, tax liability, bookkeeping.
– Foundation takes longer - Depending on the legal form, it can take weeks to months.
– Market entry risk - Without an existing network, sales can be difficult at first.

Possible legal forms for foreign companies in Germany:

• Ltd. - Minimum capital: € 25,000 (secure & recognized, but more expensive).
• UG (Mini-GmbH) - Minimum capital: from €1 (lower costs, but less trust).
• Branch office - If your main company is registered in another country.
• Business registration as a sole trader - Simple, but full adhesion.

Ideal for:

• Company with a long-term strategy
• Brands that want to develop the German market themselves
• Companies that require a physical location/warehouse in Germany

3. further alternatives: Hybrid market entry strategies

If you more flexible there are intermediate solutions between commercial agent & own company:

Distribution partner (importer / wholesaler)

• A wholesaler buys your products and sells them on.
• Advantage: No direct distribution necessary.
• Disadvantage: Low profit margins, less control over the market.

Sales via online marketplaces (Amazon, eBay, Zalando, Otto)

• Particularly suitable for e-commerce.
• Advantage: No company formation necessary, only VAT registration.
• Disadvantage: High competition, platform fees.

Joint venture with a German partner

• Partnership with an existing German company.
• Advantage: Use of the existing network & infrastructure.
• Disadvantage: Lengthy negotiations, dependence on the partner.

Ideal for:

• Companies with innovative products that need local partners
• Manufacturers who do not want to set up their own sales organization