Piggyback: Business collaboration agreement

1. PIGGYBACK: business collaboration agreement
www.daqsgroup.com

2. www.daqsgroup.com
PIGGYBACK: business collaboration agreement
PIGGYBACKING is a form of business collaboration agreement where a company (the rider) willing to move into a new market uses another company’s (the carrier’s) distribution network already established there in exchange for a commission. Main features:
1)Both companies share the same distribution channel.
2)They agree the deal in witting.
3)It is frequently used to sell supplementary products within hard-to-access markets.
4)They are usually formed by exclusive distribution agreements
5)Carrier’seconomic compensation comes from the discount the rider makes on the domestic price list, since transactions are local for him.

3. www.daqsgroup.com
PIGGYBACK: business collaboration agreement
Pro’s:
1)Low cost access to a distribution network already working and well established.
2)Take advantage of an existing commercial network.
3)Can take advantage of the carrier’s corporate image and trade mark, its expertise and knowledge.
4)Save time regarding the knowledge of the market evolution. Con’s:
1)The main disadvantage is related to the partial loss, total loss in some cases, of control over the productmarketing abroad.
2)Rider does not fully develop the international activity since a part of it is transferred. ¨It is quite common the use of the piggyback agreement in the marketing of products in markets that are difficult to access¨. Darilyn Aquino