Customer discovery interviews, and how many are enough
B2B customer discovery interviews: the sample size the research converges on, why your segments change that number, and the questions that get honest answers.
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BDGL / Insights / Partnerships
The commercial difference is margin and stock. The difference that decides whether you can replace the partner in three years is registration, and it has almost nothing to do with which word the contract uses.
The two words get used as if they were interchangeable, and in a sales conversation they usually are. Somebody wants to sell your product in a market you are not in, and whether the contract calls them a reseller or a distributor feels like a drafting detail. In the Gulf it is not a drafting detail. It is the single decision that determines whether you can replace that partner in three years, and most of the consequences are set by registration rather than by the noun on the front page.
The useful way to think about it is not reseller versus distributor at all. It is unregistered commercial arrangement versus registered commercial agency, because that is the line the law draws, in a place with little to do with what either side calls itself.
A reseller buys from you and sells on, usually without exclusivity, usually without holding much stock, and usually without committing to a volume. They are a route to a few customers they already have. Margin is thinner because they carry less risk, and you can have many of them in one market without anybody being surprised.
A distributor takes a larger commitment. They hold stock, carry the working capital, and often take on warranty, spare parts and first line support. In exchange they expect exclusivity over a territory and a margin that pays for the inventory risk. You get reach and a local balance sheet absorbing your stock; they get protection from you appointing somebody else next door.
The UAE regime is the clearest illustration of why the label is not the point. Federal Law 3 of 2022 governs commercial agencies, and as Pinsent Masons sets out in its guide to appointing a UAE distributor, it applies only to registered arrangements and is strongly protective of the registered agent once it does.
A registered agent gets the exclusive right to sell the goods in at least one emirate. It is entitled to commission on sales in its territory including sales it had nothing to do with. The agency can survive the expiry of a fixed term unless the contract was drafted carefully to stop that, it can pass to heirs if the agent is an individual, and the agent can block imports of the goods even when the party importing is you. Termination gets materially harder and may trigger compensation. Disputes go first to the Commercial Agencies Committee, although under the 2022 law the parties can now agree to arbitration instead.
Eligibility is narrow. A registered agency has to be held by a UAE national, a company wholly owned by a UAE national, a UAE public joint stock company at least 51 per cent owned by UAE nationals, or a private company owned by such a PJSC. A foreign principal can act as its own distributor only with prior Cabinet approval, and only where it has no current agent in the UAE and never had a registered one. The agreement itself has to be notarised, translated and governed by UAE law.
Dates matter on older contracts. The amended law took effect on 15 June 2023. For contracts predating it and less than ten years old, it applied from June 2025. For older ones, Federal Law 18 of 1981 governs until ten years after commencement.
An unregistered distributorship sits outside all of this and is enforced as ordinary contract under the Civil Transactions Law and the Commercial Transactions Law, which give the local party much less protection. Many foreign principals structure deliberately to stay there. That is a legitimate choice, not a trick, but it is a choice that has to be made at drafting rather than discovered at termination.
The Saudi position is not the UAE position with different names, and the difference runs the opposite way from what people expect. Clyde and Co's review of the Saudi agency and distribution regime describes a framework resting on the Commercial Agencies Law issued under Royal Decree No. 11 of 20/02/1382H, its implementing regulations under Ministerial Decree No. 1897 of 24/05/1401H, and the Civil Transactions Law issued under Royal Decree No. M/191 of 29/11/1444H. A new Commercial Agencies Law has been under discussion for some time.
Eligibility is similarly restricted: only Saudi nationals and wholly Saudi owned companies can act. Registration is a dual exercise, with the distributor registered and the agreement recorded in the Commercial Agencies Register held by the Ministry of Commerce, generally within three months of the agreement taking effect.
Two differences matter. Non registration does not necessarily invalidate the arrangement in Saudi Arabia the way it excludes it from the statute in the UAE, though it leaves the distributor in a weaker evidentiary position. And, surprisingly to anyone reasoning from the UAE, Saudi law has no dedicated statutory termination framework and no statutory compensation regime. Termination runs on the contract and general Civil Transactions Law principles, including good faith and the prohibition on abuse of rights, with termination for convenience generally enforceable. Damages still follow on proven breach, and a court may weigh how long the relationship ran and what the distributor invested.
The trap is on the way out. Contractual termination and cancellation of the registration do not necessarily happen together. Cancellation can require Ministry procedures and the cooperation of the distributor you are replacing, and maintenance, spare parts and quality obligations may continue until a replacement is appointed. Set against our note on finding a distributor in Saudi Arabia, this is the part that decides whether those checks were worth doing.
Underneath the legal structure sits a simpler question, and it is the one most principals answer too late: at the end of this, whose customer is it?
Under a distribution model the end customer belongs to the distributor in every way that matters operationally. You see sell in, meaning what you shipped to them, and you may never see sell out, meaning what reached customers. That gap is where forecasting goes wrong and where a territory looks healthy for two years after demand has turned.
Under a reseller model you keep more of the relationship and give up reach and local working capital. The mistake is assuming you can have distributor economics with reseller control, which is the arrangement everybody wants and nobody signs.
One practical lever is worth more than most contract clauses here, and it is unglamorous. If reordering runs through your system rather than through a spreadsheet and a WhatsApp thread, you see sell out, you see which lines move, and you keep a direct read on demand even where the customer is legally the partner's. Our colleagues at rivl.dev have written up what that looks like when it is scoped properly, in a note on building an ordering portal around the reorder rather than the first purchase, and the distinction they draw is the right one for this decision too.
Reseller arrangements suit products needing little local service, where you can support customers remotely, want several partners in one market, and expect to be in the territory yourself within a few years. Distribution suits products with real logistics, installation, spare parts or regulatory handling, where nobody will buy without someone local standing behind it.
If you need a distributor, exclusivity is not something you concede reluctantly, it is what you are buying. Partners who carry stock for a brand that may appoint a competitor next quarter price that risk in, and you pay for it in margin either way. Sourcing those partners is covered in six routes to channel partners in the Gulf.
None of this is legal advice and it should not be the basis of a signature. Both sources are law firm commentary, reliable as orientation and written for people who will then take local counsel. Two things need checking rather than assuming: Saudi Arabia has a new law under discussion, so the position may move, and the treatment of older UAE contracts turns on dates that are easy to get wrong by a year.
What does not need a lawyer is the commercial decision. Work out whose customer it is at the end, whether you are buying reach or keeping control, and whether you can live with a partner you would struggle to replace. The paperwork then has something to express. Signed the other way round, it decides for you, and in the Gulf it decides in favour of whoever is registered.
Tell us three things: what local service your product genuinely needs, whether you expect to be in the market yourself within five years, and whether exclusivity has already been promised verbally. We will tell you which model you are actually in and what to fix before anything gets registered.
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