Whenever there’s a need to start a new business, there’s a question of locating the primary sources needed for it. Either you try finding those by yourself or you hire a sourcing agent. But the question that remains is that; what is a sourcing agent?

What Is Sourcing Agent?

A sourcing agent is the one that locates the product suppliers for your agent. They speak the language of the suppliers that you want to buy from, thus giving you the edge of finding affordable products.

Since China is the biggest producer of the goods as cheaply priced goods can be attained from its market, you can hire a sourcing agent from China to help you in locating suppliers for your business needs.

What Does A Sourcing Agent Do?

As highlighted earlier, sources agents help you locate the products or the supplier you need for the products from your chosen market. If you've planned to buy any product, you need to narrate your requirements to the sourcing agent.

The agent will search the market of your desired location for manufacturers that can cater to your needs. When they locate such a manufacturer or manufacturers, they will contact you so that you may choose any one that fits your requirements.

After the selection is made, the sourcing agent will help you negotiate in terms of the primary elements of the supply. It can be working hours, quality, pricing, etc. The sourcing agent can also assist in ensuring the safe delivery of the prepared product by all standards.

Their primary services can include:

· Communicating and negotiating with suppliers

· Overseeing the production

· Updating you with the proceedings

· Arranging storage and shipping options in and from your preferred location

· Helping perform quality inspections

It is to remember that you don’t need to tell pay them for quality inspections if they’re working on commission. The sourcing agent will lose its commission if the product quality fails.

3 Types Of Sourcing Agents

Here are the different types of sourcing agents that exist in the market:

Single Sourcing Agents Who Work Independently

These types of sourcing agents work completely on their own. One cannot find any history of their performance in advance. Moreover, they usually have a small network too. You are most likely to be dependent entirely on them when you hire those for your sourcing needs.

Another drawback is that without knowledge of how they work, you cannot expect complete quality. Moreover, they can simply disappear in comparison to other big sourcing companies working in the market. There is a great chance of scamming.

Sourcing Agencies

You can call these as the agency that has multiple sourcing agents for themselves. These agencies keep several sourcing agents, each with their expertise at their disposal.

Depending on the client's demands they can opt for a sourcing agent that works in sourcing consumer electronics, beauty products, furniture, etc.

They have a stronger network and are experienced in finding the products you need to find for your business. However, they charge more for their services in comparison to independent sourcing agents.

Full Service Sourcing & Logistics Companies

These are the most expensive yet versatile types of sourcing agents. They provide a huge network of sourcing services, finding your suppliers from different markets.

In addition, they are also responsible for quality inspections, logistics, shipping, etc.

You can expect a competitive in-house communication as well as choose to hand over them the responsibility for the entire process. This can include finding the product, having it manufactured, and delivering it to Amazon Warehouse on time.

However, you're strongly dependent on them.

Why Should You Use A Sourcing Agency?

There are several reasons that you can be needing a sourcing agency. Since Amazon sellers need products from different places, a sourcing agent can help you get familiar with your targeted market.

Time

The primary reason for hiring a sourcing agent is that you need to get things done on time. A sourcing agent helps you get started with the suppliers right away.

You don't need to go through the hassle of finding one or negotiating them with specifications on your own. The sourcing agent does that for you.

Briefings

Language does not become a barrier for you. When the time comes for negotiation, the sourcing agent helps in briefing the specifications for the product to your chosen supplier.

They also ensure that every important element regarding specifications is included in the brief.

Negotiations

Another most important element that sourcing agents help you with is negotiation. They help you negotiate in terms of the specifications, making sure to maintain quality at the minimal pricing.

Here, a sourcing agent is the most needed since they are aware of the market, and know the common practices more fluently.

Verifying Certificates

Inspecting certificates and licenses from your chosen supplier is highly important, and that is what sourcing agents also help with. They inspect the language in which the licenses are issued, making sure that the supplier is working legally.

In doing so, the sourcing agents help you avoid scammers that may come up with fake names or agency licenses. Thus, with the help of a sourcing agent, the risk of getting scammed by manufacturers is reduced significantly.

Experience & Network

You get to access to a wider pool of network when you hire a sourcing company. They have worked with several manufacturers that may be the best fit for the goods you’re needing. In such a way, they can help find a perfect supplier for your needs using their market experience.

What Makes A Good Sourcing Agent?

Keeping the above reasons to hire a sourcing agent in mind, here are some competitive elements that make a good sourcing agent:

Business License

The first thing for a good sourcing agent is their license. Like every business, you need to find a sourcing agent that is licensed. It means they have the legal jurisdiction to work as a sourcing company.

It also helps you in keeping a solid track of the agent as well by assessing their legal precedence. In case anything happens, you can use the license number to track them.

Experience & Specialization

Having an experienced licensed agent is also important. The more experienced they are, the faster and more secure the processes can proceed.

Moreover, finding a sourcing agent that specializes in your domain is also important.

Since they will be working your selected product domain, you can expect timely services, high quality, and benefitting negotiations.

Testimonials

Previous projects, partnerships, and recommendations are important elements too. Similar to finding any contractor, you can also search for a sourcing company based on their recommendations. This will allow you to find the ones that are functioning superbly in terms of client collaboration.

Language

A sourcing agent works as a medium of combination between you and your supplier. Therefore, you must find the ones that are fluent in the language of your chosen market.

Location & Flexibility

You would want to have your sourcing company be located in the location of your preference. It would help you save traveling costs.

Moreover, in such a manner, the sourcing company will be able to keep you updated since they won't need to arrange heft traveling programs.

Supplier Network

The point of connecting with a sourcing agent is to gain access to a higher pool of market networks. The sourcing agent you're hiring should have an effective communication network.

They should be accessible at all times and should help you find several suppliers from your preferred location.

Transparency

Transparency is also important especially when you're hiring a sourcing agent. You don't want to have miscommunication in any aspect of the business. Whether it is the costs, production or any element.

Any sourcing agent must be of utmost transparency with their clients. If you face someone that avoids communication now and then, it's definitely not a reliable source.

Who Are Bad Sourcing Agents?

You should avoid bad sourcing agents or Red Flags while finding ones for your business.

The Sourcing Agent Is Paid By The Factory

If a sourcing agent contacts you with a reference from a factory, say no immediately. Since the factory is paying them for finding buyers, it is most likely that they will direct you towards the company that is paying them.

The catch here?

The supplier that is paying them may be producing inferior quality products. The sourcing agent will guide you to buy from them, ultimately taking their commission from both ends, and you'll end up with poor products.

The Sourcing Agent Offers Quality Inspections But Work On Commission

If the sourcing agent is working on commission and asks you to let them do quality inspections, it's a red flag. Consider the scenario, the sourcing agents only get the commission when the final product is delivered to the buyer.

So if there's a defect in the product, the buyer won't accept it, and the sourcing agent won't get their commission.

So why would a sourcing agent find defects in the products to lose their commission?

That is why it is recommended to avoid such sourcing companies.

Don't Have A Business License

A license is important. As highlighted earlier that every company needs a license to operate in the domain. That is why it is important to hire a sourcing agent that is licensed for the services they are offering.

Take Long Time To Find A Supplier

You don't need to hire a sourcing agent that takes a lot of time to find a supplier. That is important since your business has needs and everything should be carried out swiftly. The entire business is stagnant if the sourcing agent doesn't find a supplier for you.

Moreover, if the sourcing agent is skilled and experienced, they will be able to locate suppliers for you instantly. Since they have a wide network and been working in the domain for years, it should not take time for them to locate suppliers. If it takes, then it's a red flag.

Poor Language Skills

As highlighted earlier, a sourcing agent is a communication medium between you and the supplier. The primary motive of hiring a sourcing agent is to avoid miscommunication and have swift communication. That is why if your sourcing agent has poor communication skills, it is better to go look for someone else.

Moreover, you need to find someone present in your desired location. If they are, then it's a good indicator that they will be fluent in the language of your desired location.

How Much Does A Sourcing Agent Cost?

With all the business costs, you need to strategize for the costs of your sourcing agent too. Here’s what you can expect to include:

Commission

Most of the sourcing agents work on commission. This commission isn't fixed for everyone and depends on the quantity and the frequency of the order. However, it usually lies in 2-10% (Bliss sourcing 6% mostly). The commission fee will be higher for smaller orders.

For example, if you're hiring an order of $1000, you'll have to pay 10% ($100) for the commission. However, if you're ordering for $50,000, you'll have to pay $5000 (10%) for the commission or even less.

The commission is agreed upon as soon as the primary elements of the proceedings are completed. These include finding a supplier, relaying them your specifications, negotiating pricing and quality, etc.

One element to keep in mind while finding a sourcing agent is that they will work more if you pay more. They will find suppliers where they will get more commission. Hence, it's better to negotiate beforehand.

Hourly Rate

Some of the sourcing companies often work on hourly rates. This type of model allows you to pay the sourcing agent based on the hours they've worked, irrespective of the deal with the supplier.

However, there come two major drawbacks in this model. One, the sourcing agent may take more time depending upon the search they need to make for finding a supplier. Second, they can charge for extra hours even though if they are not needed.

This is the primary reason why finding an hourly rate sourcing agent isn't beneficial. You will not have any means to assess how long does it take for the agent to deal with their work. Using this, you can end up paying more for what its worth.

Flat Fee

This is a simple way of negotiating the cost; the fee is decided at the beginning of the project. When the fee is decided, the sourcing company will do their research to find suitable suppliers for your needs.

The catch? They get paid even if you don't choose any supplier provided by them. This means that there's a chance that the sourcing agent won't put maximum effort into finding a reliable supplier for you since they know that they will get paid either way.

Mixed Payment Structure

Another payment method that you can adopt in this matter is the mixed payment method. This model comprises of the perks from the previous models. The buyer, which is you, will pay a flat rate fee until a certain amount.

When the order exceeds the threshold value, you can charge a commission on it. The use of the mixed payment method allows you to test the quality of the product that is offered by the supplier. You can ask for a small amount, pay a little, and get the products made to see how good the supplier is.

Moreover, you can also use this method to see how well the sourcing agent is collaborating and communicating with you and the supplier.

How To Find The Best Sourcing Agent For Your Business

You can follow the following seven steps for finding a viable sourcing agent for your business:

Step 1: Define What You Need

The first and most important of all the actions is to find out what you need. This is important since you cannot dive into the market without any knowledge or strategizing about what you need.

This is also necessary since you will only be able to find a viably sourcing agent when you’ll know what you need. This assessment will give insights on the product market to focus on, the location to concentrate, the target segment to connect with, etc.

All these elements are necessary to be defined since your sourcing agent can only be recruited when you're able to relay these insights.

Step 2: Set Your Budget

Setting your budget is another important element that you need to assess before you go diving into the market for a sourcing agent. As highlighted earlier that there are several types of sourcing companies that are working in the market.

Each company and firm have its perks, cons, and costs. You need to make sure that when you strategize your budget, you keep aside some amount for adverse circumstances. Moreover, ensure that you get the services first before handing over the entire payment.

But before you hire one, you need to ensure that efficient negotiation is done regarding the specification that has been discussed with the agents

Step 3: Choose A Type Of Sourcing Company

When you go deep in the market, you can come across several firms that will be offering sourcing services in your preferred domain. However, it's hard to find someone that can fit all your requirements. But it's not impossible.

You can easily put yourself and your resources to use to know what kind of sourcing agents are available in the market. Moreover, keep a close eye on assessing their workability since a small ignorance can result in poor choice, which would affect the overall proceedings.

Step 4: Research & Compare

As aforementioned, you need to put your resources to use to find yourself a reliable sourcing company. While doing this, you can simply adopt the methods of comparing multiple brands or services providers.

As we tend to have preferences for brands and evaluate them based on their performances, you can do the same for sourcing agents. Select your domain of the product you want, and constructing your requirements.

This will allow you to relay the information to different sourcing agents. You can then pick their details for comparison and choose the one that is offering services the most according to your needs.

Having a comparison will allow you to know what kind of sourcing agents are working in the market. It will also help in saving yourself from scammers since you’ll be comparing them with real sourcing companies. The difference in the services will show.

Step 5: Get Different Offers & Ask For Business Licenses

During the selection process, you can get different offers from the chosen sourcing companies too. This will allow you to know what offer works the best for you, and what can you do to negotiate the price with the sourcing agents.

In addition, you can also choose to check for licenses of the chosen sourcing companies. One of the primary advantages of asking for licenses is that any scamming company will mitigate their communication, and you can also find out about them from their license number.

It will help save your time and resources needed for the assessment phase and will enable quick selection.

Step 6: Negotiate Payments

When you've compiled up a list of the most suitable candidates as sourcing agents, its’ time that you negotiate in terms of money. This is another important element since you need to assess and select what kind of payment method will the sourcing agent agrees to.

Moreover, you also need to assess the overall payment strategy, keeping in the mind the overall budget you've set for your needs. Price negotiation will not take time, and you can get clear answers from the sourcing agents too. Moreover, you can also negotiate in terms of increasing or decreasing the commission in case you re-order.

Step 7: Write Down Everything That Was Agreed On

Last but not the least, you need to have everything in the contract. This is another crucial element because this will allow you to get everything streamlined. When you get everything in a written contract, the sourcing agents won't be able to back out from the elements that have been written in the contract.

In such a way you can secure your end from any adverse circumstance such as payment issues, the difference in the quality, etc.

Choosing these methods will allow you to select a competent sourcing agent for yourself. You can put your maximum effort to select the best choice, and ensure that every necessary step is taken for the selection phase.

One of best Sourcing Agent in China

Here are the top sourcing company website that I suggest you a reliable souring company:

Bliss Sourcing

One of the leading sites to refer to is blisssorucing.com. The company has an extensive network of sourcing companies especially from China, which helps them to arrange suppliers for their clients.

In addition, the company has been working quite proficiently in their domain and has ever since delivered unprecedented China sourcing consultancy.

Moreover, the firm is also offering Amazon FBA prep services that can secure your product all according to international standards. This helps to minimize the overall quality check costs and results in the accurate production of the goods in the first place.

Conclusion

For starting a business and finding a sourcing partner, you need to ensure that the one you're hiring is competent. This will allow you to get your proceedings sorted efficiently. Your sourcing partner is a viable asset for your business.

Therefore, you must put a similar effort into the selection of a sourcing agent as much as you're putting in product selection.