Nowadays, acquiring agents/companies play a progressively important duty in international supply chain administration. However, several small businesses are still confused concerning buying representatives, especially when there is obscure as well as out-of-date details online that could deceive them. Therefore, I have actually put together the 6 acquiring agency concerns that purchasers most care about and also puzzled, and offer you with the most unbiased responses.
You can also read this related article if you are interested to learn more about what a sourcing agent can do for you.
What is a sourcing agent or sourcing company? What do they do?
A sourcing agent is an individual or company that stands for a customer to source products, buy items that are out of the customer’s reach. Sourcing agents/companies are commonly required in international trade.
In the standard feeling of the term, a sourcing agent is just to resource vendors for his customer. Without a doubt, the solutions given by sourcing representatives can consist of selecting the ideal vendor, price arrangement, following up manufacturing, quality control, product compliance & testing, shipping & logistics.etc.
It’s not said that sourcing agents/companies are due to provide the complete variety of solutions. The job scope relies on the agreement/consensus reached by both sides.
Sourcing agent VS sourcing company comparison
In the international market, individuals usually take these 2 words as one definition. For example, if you wish to locate a person sourcing for you, you can state– I require a “sourcing agent” or a “sourcing business “, no matter. But really, these are 2 different principles.
1) Sourcing representatives / agents
A sourcing agent can be an individual sourcing agent, who can be worked with as a full time agent for you. This individual sourcing representative generally has just one or more individuals, they usually work at a little workplace or office.
A few of them might have several years of experience working in a trading company or sourcing company These specific sourcing agents can be discovered on some freelancing platforms like Fiverr, Upwork, etc., and also a few of them might have additionally set up their own internet sites on Google.
2) Sourcing companies
A sourcing firm is a professional company that helps to connect buyers and suppliers, typically in different countries. Sourcing firms usually have a network of agents who are familiar with the local market and can help to find the best supplier for a given product. They also typically provide other services such as quality control, warehousing, and shipping. Sourcing firms are often located in commercial clusters, such as Yiwu, Guangzhou, and Shenzhen in China. The main advantage of using a sourcing firm is that they can offer a more efficient and coordinated service than sourcing agents. They can also provide access to a larger number of suppliers. However, the downside is that they may be more expensive than sourcing agents. Ultimately, the decision of whether to use a sourcing firm or agent depends on the buyer’s needs and preferences.
3. Who requires a sourcing agent / company?
1) Individuals that have no experience in importing
Sourcing agents are beneficial for individuals that have no experience in importing. The process of importing from overseas is complicated, and first-time importers may not be familiar with all the steps involved. Sourcing agents can help with tasks such as sourcing suppliers, following up on manufacturing, quality control, and shipping. Hiring a sourcing agent can save first-time importers a lot of time and effort. Experienced sourcing agents will be familiar with the process and can help to avoid any potential pitfalls. For individuals that are new to importing, working with a sourcing agent is highly recommended.
2) Individuals that have multiple item groups to manage
Selecting 2 trusted suppliers for 1 product might require you to get in touch with 10+ vendors. Intend you are searching for 10 products, then you require to speak to at the very least 100 distributors as well as confirm them. In this case, a sourcing agent/company can not just do the laborious task more successfully yet likewise combine all the goods you needed.
3) Large retailers and grocery stores
Is it stating that a big importer with abundant funds and also experiences does not need a sourcing agent? Certainly not! Large business likewise need them in order to handle their supply chains much better.
Take the chain grocery stores as an instance, they will certainly require to buy thousands of products classifications It is practically difficult for them to go to each manufacturing facility and acquisition every product on their own.
Retail giants such as Walmart and Target are all acquired their products by sourcing representatives or trading business.
4) Individuals who sell unique item groups
Besides daily requirements, there are some unique product categories such as building materials, chemistry, medicine and so on. Take the Chinese chemistry & medication industry as an example ， it is fairly tough to locate providers neither at the exhibition or online. So you need to entrust a sourcing agency or trading firm who is specialized in the industry to help with your business.
3 advantages of sourcing agents/companies
A reliable sourcing agent/company plays an essential role in international trade getting.
a. They can locate vendors that use an affordable price and also top quality. An excellent sourcing representative can aid you discover capable and also dependable makers. Because a good agent/company has built up a lot of certified factories’ sources currently that you might not discover online.
b. They can enhance sourcing performance. A regional sourcing agent/company can assist you get rid of obstacles of culture and languages. He understands specifically what you want, and also discuss with suppliers about the information of the items, as well as consequently supply the message to you in proficient English, which considerably reduces the communication price.
c. Lower your threat of importing from overseas. A great sourcing agent/company should be experienced in managing item production, quality control, compliance certifications, import as well as export process rules, and also international delivery.
What services do sourcing agents offer mainly?
Sourcing service charge vary according to the job range you get from the representative. So ensure you have made it clear concerning the service range and also charges before you begin cooperation, in case some possible conflicts happen. That’s why I cover one chapter to introduce the solution of sourcing agent/company services.
Following are the main services most sourcing agent provide:
1) Sourcing item vendors
It is the fundamental solution of every sourcing agent to verify and select the vendor that fulfills the demands of their customers. And also they will discuss with the supplier on behalf of the customer to get the very best cost as well as verify the information of manufacturing.
Nevertheless, some purchasers might be knotted in whether the sourcing agent/company ought to provide the provider details to them. Some even think the agent is cheating them or making shady cash by not giving the provider info to them.
Let me describe to you below, whether the distributor details is provided to the buyer relies on the service model of the sourcing agent
Specific sourcing agent
Some private sourcing agents can be discovered on Fiverr or Upwork, that are typically paid a repaired income (by hour/day) or can be paid a taken care of compensation for one job. This mode of participation is just like finding yourself a sourcing aide in an international nation.
Essentially, the customer pays the wage to get the distributor information, so it is the responsibility for the representative to offer the provider’s calls to his boss– the purchaser and also the customers themselves will communicate with the distributors to work out the price.
Sourcing company/agency
If it is a sourcing firm/ company, they will certainly not offer the supplier information directly to the buyer. The following are both core reasons.
First of all, these quality suppliers are their gathered sources (consisting of those can’t be discovered on B2B websites), which is why you can obtain a competitive rate from the sourcing company.
Secondly, they charge their service fees by a certain percentage of the total worth of goods, that is to claim, this is their revenue model. (I will discuss the sourcing agent/company charge techniques further in question 5 later).
Although they are not telling the purchaser the factory call info, they want to take the purchaser to go to the factory and let the buyer have a specific understanding of the production ability of the manufacturing facility. Yet this normally occurs with bigger orders. If the buyers order tiny value like $1,000 shoes or $1,000 hats, they are less likely to take buyers to see the manufacturing facility overseas.
2) Follow-up production, evaluate the top quality and set up delivery
After discovering an ideal provider, it’s time to set up the production of products. Sourcing agents/companies will certainly aid coordinate with the factory, keeping track of the whole production process and also make certain the factory ends up the production promptly and the goods remain in great top quality.
They will certainly also provide a quality inspection service. They will cooperate with the quality inspection company to inspect the finished products and minimize the defective rate before shipment.
Then comes the last step– shipping arrangement, which requires a high level of expertise. Because apart from a bargain for the most competitive shipping prices, they will also need to inform you what documents and product certificates you should prepare for the custom.
These services are also available by most sourcing agents/companies. You can choose any part of their services based on your own situation.
3) Other services
In addition to the mainstream services mentioned above, some large professional sourcing companies also offer private label solutions, including but not limited to the following aspects:
- Customize the product
- Customize packaging/labels
- Free product photography for eCommerce
In a word, there are good as well as bad sourcing agents in this industry. This leads to the result that many buyers afraid to try the sourcing service. Therefore, it is important to find a reliable sourcing agent for long-term cooperation and a stable supply chain.
How does sourcing agent or sourcing company charge?
Do you know this is an interesting question-how does a sourcing agent charge? There is no specific charge standard as there are thousands of sourcing companies and individual sourcing agents around the world. The sourcing agent fees vary greatly according to the service scope, the cooperation methods, the product category, and the amount of the order.
Many purchasing agents/companies attract customers with low service fees even free service for trial order, but the buyer will finally find that the overall procurement cost (product cost + shipping cost + time cost) is not low at all. And the buyer may receive unsatisfying goods even the agent declaim they did the quality inspection.
To give a general idea about the sourcing service fees, I introduced 4 common charging methods of sourcing agents in the following.
1) Fixed salary for each project or a certain period
Many individual sourcing agents charge a fixed salary for each product or a certain period (week/month). They usually charge less than $50 for each product. Pretty cheap, right? And you can talk to your suppliers about your products and build a business relationship directly. The disadvantage is that these agents are usually not professional, and the suppliers they find are usually not the most cost-effective ones.
Some experienced buyers prefer to hire an individual full-time sourcing agent for weeks or months, to do some simple sourcing work like finding suppliers, translating and communicating with the suppliers. If you want to import from China, you can hire a full-time China buying agent around $800 a month to work only for you.
2) No extra charge but gain from the price difference
Many individual sourcing agents or sourcing companies use this charge method. Usually in this situation, the sourcing agent can provide good suppliers with more competitive prices or better product quality, which is impossible for the buyer to find these suppliers through normal channels, like some B2B websites.
In turn, if the buyers could find their competitive prices on their own, they would never consider such sourcing agents.
3) Percentage service fee based on product value
Charging for a certain percentage of the whole order value is the most common method among sourcing agents or companies. Why ？ Because usually they provide other services like follow-up the production, quality control, shipping arrangement ， consolidation and so on. So, they will charge a certain percentage of the value of the goods as the service fee.
In China, the common service charge is around 5-10% of the total order value. Another point, the product categories and the size of the order also greatly affect this percentage. For example, if the order is for some products with high price competition and high demand like rolled steel, or the value of the order is over $50 0,000, the service charge maybe about 3% of the order value or maybe less.
Usually few sourcing companies willing to accept service fees less than 5 % for the daily consumer products. It does exist some sourcing companies may try to attract you with 3% or less service fees, but you’ll end up finding that products prices are much higher than most online suppliers( like Alibaba suppliers). Or you can be delivered with poor quality goods even you get the perfect sample at the beginning.
Takeaway: No matter what the charging method is, you should evaluate whether the agent can reduce the overall procurement cost, improve the sourcing efficiency and ensure the quality of goods and so on.
What tricks does bad sourcing agent play? Kickback, bribe, etc.
Now finally to the part that everyone CARES about. You may have heard a lot about the dark side of sourcing agent/company, such as accept kickback or bribe from the supplier, which make the buyers are afraid to use the sourcing agent. I will now reveal the common sourcing agent tricks in the following.
Kickback and bribe from suppliers
First of all, kickback or bribe happens to either individual sourcing agent or sourcing company. If the buyer and sourcing agent/company have agreed on product price and supplier information transparency at the beginning of cooperation, the agent still asks the supplier for a kickback, it becomes illegal/unethical acts.
For example, suppose now you get two equal prices from supplier A and supplier B, if the B supplier offer kickback to the sourcing agent, then the agent is likely to choose the B no matter if the product quality from B is good or not. If your sourcing agent accepts kickback, you may end up with the following situations:
The goods you received are not to meet your quality requirements, or product that is in non-compliance with the certification requirements in your market and thus illegal to import and sell.
If there is a dispute over product quality, your sourcing agent will not stand on your side or try to defend your interests for you, but more likely to excuse the supplier for various reasons.
Objectively speaking, kickback usually happens in large orders with tens of thousands of dollars. For small orders with thousands of dollars, most sourcing agents will not bother to get involved in kickback or the bribe.
The kickback phenomenon is much less now compared with 4-5 years ago, especially in the daily products industry. Because the buyers can find suppliers directly through many channels, such as B2B websites like Alibaba, Made in China, etc. They can make a comprehensive comparison on their own, and then weigh if the product price and service commission provided by the sourcing agent is reasonable.
So, a good sourcing agent/company plays an important role in your supply chain management. In addition to helping you to obtain competitive product prices, they also devote to take care of the follow-up processes, because the good service is the core competitiveness of their business model. As to some individual sourcing agents who might do a one-time business, I can’t guarantee the service quality.
Where to find sourcing agent for different types of business
You may ask me, where can I find a reliable purchasing agent? Don’t worry, I’ll show you three places to find a sourcing agent/company.
1) Google
Searching on Google is always the first thought for most people when encountering problems. In fact, Google does help in most cases, it gives useful information. If you want to find a sourcing agent in one country, such as China, you can just type in” China sourcing agent”, and there will be a list of Chinese sourcing companies in the search results.
When you are checking out one of the sourcing websites, pay attention to the content, the years of establishment, company photos, contact information, the team size, infrastructure, customer reviews and testimonials, blogs, etc. Only a professional team will invest enough money and energy to optimize its websites on Google.
2) Upwork/ Fiverr
Upwork and Fiverr are freelancing websites where you can find some individual sourcing agents. Some of them are doing it as a part-time job, they will help you find a supplier and provide you with a supplier’s report. You will then need to contact the supplier and dealing with follow-up processes by yourself.
As this individual sourcing agent can pop up quickly, they can also disappear quickly. So you should be more careful with your individual agents when it comes to paying services fees issues.
3) Fairs
In addition to looking for sourcing agents online, you can also pay a visit to trade fairs. For example, if you want to import from China and get a China import agent, you can visit Canton fair, Hong Kong fair, and the Yiwu international fair, etc.
But looking for a sourcing company at a fair is more suitable for large importers, who are more likely to spend millions of dollars in purchasing every year and need to import hundreds or thousands of different types of products.
If you are just a small or medium-sized importer budget only tens of thousands of dollars in purchases per year, the suppliers on fairs may not accept your order, or they may arrange an unprofessional sourcing agent for you.
Practical tips to find reliable sourcing agent or sourcing company
Tip 1: Choose Chinese sourcing agent VS sourcing agent based in other countries （ USA, UK, India, etc. ）.
As China is the largest consumer goods exporting country, Chinese sourcing agents account for a majority of the world’s agents. So I will divide sourcing agents into two types, China sourcing agents, and non-Chinese sourcing agents. What’re the differences between them? Which one to choose? Let’s see the pros and cons of them separately.
The pros and cons of Non-Chinese sourcing agents.
How do the sourcing agents based in other countries operate? Generally, they are natives of a certain country and help buyers in their own country purchase from other Asian or Southeast Asian countries, such as China, Vietnam, India, Malaysia, etc.
They usually have their own offices in both the purchasing country and their own country. The team usually has several people, they mainly service for some large buyers.
If you are in the USA, choose a local sourcing agent and you don’t have to worry about language and culture barriers between you and the sourcing agent, the communication efficiency is improved.
If you purchase a large order, you can consider finding a sourcing agent in your own country. However, they are not very friendly to some small businesses, because their service commissions or their own profit is high.
The pros and cons of China sourcing agents
Compared with Non-Chinese sourcing agents, obviously service commission or profit of China sourcing agents is much lower. Besides, they have more professional sourcing teams and richer Chinese supplier resources than non-Chinese sourcing agents.
However, they might be unable to communicate with you as smooth as your native agents due to language differences. In addition, the Chinese sourcing industry mixed with good and bad agents, which makes it hard to distinguish the good ones.
Tip 2: Choose the sourcing agents specialized in a certain item.
If you want to import a lot of different types of daily consumer products, choose a sourcing company that has already sourced a lot of daily consumer goods for previous buyers.
If you specialize in importing certain industrial products, then find the sourcing agent specialized in this industry like building materials, medical products. Because these sourcing agents must have accumulated a lot of good suppliers in this industry and can give you sound purchasing and production advice.
Tip 3: Choose the sourcing agent located close to the industry cluster.
Each country has its own industrial clusters, which are groups of similar and related firms in a defined geographic area.
For example, if you want to purchase daily commodities from China, the sourcing agent of Yiwu is a good choice. And for clothes, the sourcing agent in Guangzhou will have more advantages.
Locating close to the industry cluster is convenient to contact with factories and reduce intermediate costs, like freight cost, quality supervision fees and so on. For example, If you want to purchase electronic products, the sourcing agents in Yiwu will not have better price advantage than the sourcing agent in Shenzhen.
If you want to source products from China, here is a table of industrial clusters for some industry categories in China for your reference.
Tip 4: Ask the sourcing agent/company if he can provide happy clients’ referrals.
A good sourcing agent that provides value would have a lot of happy customers, and they will be happy and proud to provide you the happy customer contacts. So you can check out what the sourcing agent most good at-are they good at finding the best price or inspecting the product? Can they provide a good service?
Tip 5: Choose the sourcing agent with longer sourcing experience.
Sourcing experience is a vital factor you should take into consideration. An individual agent who works as an agent for 10 years can be much more resourceful and more reliable than a sourcing company that only established only several months.
The number of years he has been in business is proof of his track record. This means he has continuously provided his clients with a good quality business. Other than being knowledgeable in choosing suppliers he should also be extremely capable in the areas of quality control, logistics and audit.
For instance, our company is a reliable sourcing agent company that has been in business for more than 4 years and has 50+ employees on board, along with numerous long-term partners.
Now it’s your turn.
Do you have any other questions about sourcing agent/company? If you think this article helpful, share it with your friends and share your ideas in the comments section. If you want to find a China sourcing agent, you can contact us, we are one of the leading China sourcing agencies.
