With the world becoming more connected and fast, supply chain management has become the competitive edge for many businesses.
However, managing supply chain agility is not an easy task for small businesses and entrepreneurs. Finding reliable suppliers to maintain your supply chain agility is probably the biggest challenge for small businesses relying on international manufacturers.
China is the biggest hub of third-party manufacturers for international businesses. Many firms and small businesses import from China and sell the products in their home country. However, it is also difficult for entrepreneurs to manage all the aspects of backward integration and forward integration of a supply chain. Therefore, having solid boots in the country of suppliers is necessary.
Hiring a product sourcing agent in China is becoming important to manage the backward integration of supply chains for international businesses in Europe and America. However, most entrepreneurs are unclear about the role of a sourcing agent and how they can leverage them to the maximum.
We have answered the most-asked questions of the entrepreneurs to make a complete guide on sourcing agents and finding the right ones for your business.
What Is A Sourcing Agent?
A sourcing agent is a third party that helps entrepreneurs and small businesses procure supplies from the designated country. In international companies, China is the most desirable country for sourcing suppliers, and most businesses in the US rely on China suppliers.
A sourcing agent can be an independent person or a company providing sourcing services to international businesses. The international entrepreneurs can hire a sourcing agent to overcome the communication barrier with the prospective suppliers as well as find the fairly-priced suppliers from the biggest market of manufacturers, China.
What Does Sourcing Agent do?
A sourcing agent assists a business or entrepreneur in every process, starting from finding price-efficient products to product logistics. Most typically, a sourcing agent’s job is only to locate reliable suppliers with low-priced quality products.
However, in many cases, the sourcing agent manages the complete backward integrated supply chain. They find products and suppliers, communicate with suppliers as a company’s representative, follow up the production and quality control process, product testing, shipping, and logistics.
Most typically, the process performed by sourcing agents is as follow:
- Once you hire an agent, the process starts with sourcing products in China according to your specified demands.
- The next step is taking the price quotes and lead time from the suppliers you’re interested in.
- Afterward, you can choose the manufacturers or suppliers that fit your requirements.
- As a next step, you can contact the manufacturer by yourself or take the services of the sourcing agent for negotiations and communication.
- Finally, the contract is signed after consensus, and the product starts. The sourcing agent will look after the production, quality control, product testing, and shipping of the product to the home country of the business owner.
Who Needs A Sourcing Agent?
If you are confused if your business needs a sourcing agent or not, here is the answer.
Diversified Product Portfolio
Managing the business entrepreneurs who have launched a diversified product portfolio in numerous categories is not an easy task. You have to find multiple suppliers for each product category, communicate with them, do negotiations, etc. Therefore, a good sourcing agent is a good idea.
Such businesses are common on Amazon and also doing dropshipping business. Therefore, Amazon FBA sourcing can be made easy by having a sourcing agent in China. Most commonly, sourcing agents, Alibaba and Aliexpress, can be a good fit for your Amazon store.
Special Product Categories
Many times a business is dealing in special product categories other than daily-use necessities. For instance, you have a firm in the USA for building materials or chemicals. Let us tell you finding the Chinese suppliers for these categories is not at all easy. You won’t find them at trade fairs, exhibitions, etc.
Such entrepreneurs can only leverage the price-competitiveness by finding a reliable sourcing company in China to look after your business matters.
No Prior Experience In Importing
Are you an entrepreneur just going to take your first step in importing business?
Many budding entrepreneurs are venturing into the business model of dropshipping. For inexperienced entrepreneurs, a sourcing agent dropshipping is a blessing in disguise. A sourcing agent or company will help you import from China.
Improve Supply Chain Agility
It is a general belief that big stores or large retailers never have a problem in product procurement. However, supply chain agility is the most important concern for large retailers because one bad supplier can affect the effectiveness of a supply chain. Therefore, having sourcing agents in China can help large retailers to manage their supply chain and improve speed. Walmart to H&M, all large companies rely on the sourcing companies and agents.
How To Find A Good Sourcing Agent?
Your sourcing agent can become your competitive edge as well as negatively affect your supply chain. Therefore, finding a good sourcing agent and bypassing bad ones is very important.
But how to know if a sourcing agent is good or bad?
Here are some factors that can help you compare and decide which sourcing agent to go with.
Registered License
A sourcing agent with a registered license in China is the most important factor when finding a sourcing agent. Why?
A licensed agent has the legal authority to carry business. Therefore, you can track the agent without fear of him vanishing after making the payment.
China-Based Sourcing Agent
Language is one of the biggest barriers between international entrepreneurs and suppliers. A sourcing company based in China or surroundings will give you the edge of flexibility and effective communication.
Customer Reviews
A sourcing company or agent with a good amount of positive testimonials and customer reviews indicates their professionalism. Therefore, make sure to check testimonials when researching a sourcing agent.
Specialization
A good sourcing agent for your business is one that is specialized in your niche or market. Let’s say you’re setting up an Amazon store and need Amazon FBA sourcing. A sourcing agency specializing in dropshipping will be a good fit because it will be well-aware of rules and policies.
Suppliers Network
The biggest objective of working with sourcing companies and agents is to leverage their supplier network. You can virtually access their network and find the best one for you. Therefore, a sourcing company with a supplier network of reliable manufacturers makes the company more attractive for a business.
What Are Sourcing Agent Fees?
Sourcing agent fees can vary from a fixed rate to a commission-based structure. However, most commonly, a fixed rate is better. You can find different sourcing agents having one of the following fee structures:
Fixed Flat Rate
The price of sourcing products in China is pre-decided, and you will pay a fixed rate to the sourcing company.
Commission
A commission-based fee structure is agreed upon between the sourcing company and the business owner. Typically it is between 2 to 10 percent of the quantity ordered. Different factors like order frequency and quantity ordered determine the absolute value of commission percentage.
Hourly
It is not a much preferable structure because the sourcing agency will get paid for the number of hours they work. It is irrespective of the fact if you’ve chosen a supplier or not. Therefore, you might end up paying a lot for less work.
How Can GlobalTQM Help You?
GlobalTQM is not only a sourcing agent. We are a team of experts having their competencies in different categories and areas. Working with GlobalTQM will give you the benefit of having your right hand in China to manage everything from sourcing to order management.
Check our 30 days sourcing service and order management service to get started. We are just an email away.
To know more about us, listen to our podcasts at:
➣ Apple Podcast | https://go.globaltqm.com/Apple-GTQM-Podcast
➣ Google Podcast | https://go.globaltqm.com/Google-GTQM-Podcast
➣ Spotify Podcast | https://go.globaltqm.com/Spotify-GTQM-Podcast