Today, more and more businesses are relying on sourcing agents and companies to help manage their international supply chains. However, many small businesses are still unclear about what these services entail, due in part to the outdated and misleading information available online. In order to better understand the role of sourcing agents, it is important to consider how they can impact your business operations.
Therefore, I will sort out your 8 most burning questions about sourcing agencies. Using my vast knowledge and a few other websites, research papers and checklists, I’m confident that you’ll get the answers you need.
What is a Sourcing Agent?
The role of a sourcing agent is to act on behalf of a buyer to source commodities and products that the buyer would not be able to obtain themselves. In many cases, sourcing agents or companies are essential for international trade.
There is a lot that goes into sourcing suppliers than just finding the right one. A good sourcing agent will also be able to negotiate prices, follow up on production, quality control, and testing, shipping, and more. It’s important to find a sourcing company that can provide all of these services in order to get the most out of your investment.
Sourcing agents or companies may not provide the full range of services that you need. The work scope depends on the agreement reached by both sides. Make sure you understand what is included in their services before you sign any contracts.
Difference between Sourcing Agent and Sourcing Company
When sourcing for products or services in the global market, it is common for people to use the terms “sourcing agent” and “sourcing company” interchangeably. However, these are two distinct concepts.
Sourcing Agent
A sourcing agent is an individual who works with a company to help them source products or services. An experienced sourcing agent can be a valuable asset to your company, helping you to find and source the best products and suppliers. They usually work from a small office or home office, and may have only one or two staff.
However, their years of experience in the industry can give you an edge in finding the right supplier for your needs. You can find individual sourcing agents on freelancing platforms. Some of them will have their own website.
Sourcing Company
A sourcing company is a company that specializes in finding and selecting suppliers for manufacturers and businesses. They are experts at sourcing the best suppliers for their clients, and have systems in place for quality inspecting, warehousing, and shipping. They can integrate supplier resources more efficiently and can serve many different buyers at the same time.
There are many benefits to working with a sourcing company. For one, they are generally located in industrial clusters which gives them access to a large pool of suppliers. This is especially beneficial if you’re looking to source products from China where most sourcing agents and companies are located in Yiwu, Guangzhou, and Shenzhen.
Another benefit of working with a sourcing company is that they act as a middleman between buyers and suppliers.
What Services do Sourcing Agents Provide?
Different sourcing service providers charge different rates depending on the scope of work you commission them for. Therefore, it is important to be clear about the nature and extent of the work you require, as well as any associated fees, before beginning a business relationship with a particular agent or company. This way, should any disagreements or misunderstandings arise later on, there will be a shared understanding of what was originally agreed upon.
Here is the service sourcing agents will provide usually.
Find Suppliers and Get Quotes for you
As a sourcing agent, it is their responsibility to verify and select suppliers that meet the requirements of their clients. They will need to negotiate with the supplier on behalf of the buyer to get the best price and confirm the details of production. This is a critical role in ensuring that you get what they need.
As a buyer, you may be wondering if your sourcing agent or company should give you information about the supplier. Some people think that the agent is cheating them or making money on the side by not sharing this information. Let me explain how this works.
Depending on the service model of the sourcing agent, they may or may not provide you with supplier information. This decision is usually based on what is best for the buyer and supplier relationship.
Individual sourcing agent
If you’re looking for an individual sourcing agent to help with your international projects, there are a few ways to go about it. You can find individuals on Fiverr or Upwork who typically work for an hourly or daily rate, or you can pay them a fixed commission for one project. This latter option is similar to hiring a sourcing assistant in another country.
The buyer pays the salary to the agent in order to get supplier information. Therefore, it is the responsibility of the agent to provide their boss (the buyer) with the supplier’s contact information. The buyers will then communicate with the suppliers directly to negotiate prices.
Sourcing company/agency
Sourcing companies and agencies typically do not give buyers direct access to supplier information. There are two primary reasons for this:
Firstly, sourcing companies maintain a directory of quality suppliers – including those that can’t be found on B2B websites. This is how they’re able to offer competitive pricing to buyers.
Secondly, disclosing supplier information would put the sourcing company at risk of losing that supplier to the buyer.
If you’re looking to purchase shoes or hats from an overseas factory, the sourcing company may be willing to take you on a tour to see the production process. However, this is typically only done for larger orders; if you’re only buying a small amount, they likely won’t bother showing you around.
After finding a reliable supplier, the next step is to arrange the production of the goods. A sourcing agent or company will help coordinate with the factory, monitoring the entire production process to ensure that the factory finishes on time and produces quality goods.
Major retail corporations such as Walmart typically obtain their merchandise from sourcing agents or trading companies.
Follow-up Production, Inspect Quality and Arrange Shipment
Sourcing agents or companies can help coordinate with the factory, monitoring the whole production process to ensure that goods are produced on time and of high quality. They can also provide a quality inspection service, working with a quality inspection company to check finished products and minimize the number of defects before shipment.
Also, they provide warehouse service in China. You can send products to their warehouse frequently and we will then ship all products at once, saving on shipping costs.
When it comes time to arrange to ship, these businesses have the expertise to get you the best prices and advise you on what documents and product certificates you’ll need for customs, such as CE, RoHS, FDA or COC. You can choose which services you need based on your individual circumstances. This can be a complex process, requiring knowledge of customs regulations and the correct paperwork.
Most sourcing agents will offer the services aforementioned and you can select one that best suits your needs.
Who Needs a Sourcing Agent or Sourcing Company?
People who lack expertise in importing
Starting an overseas import business can be daunting at first, with all the different aspects to consider such as sourcing suppliers, production follow-up, product testing and quality control, and shipping. However, if you don’t have any prior experience in importing, there are ways to get started. One option is to find a sourcing agent or company that can help you with the process from start to finish.
People who have extensive product portfolios to manage
When sourcing products, it is important to find reliable suppliers. This can be a tedious and time-consuming process, especially if you are looking for multiple products. A sourcing agent or company can help with this by consolidating all the goods you need in one place. This can save you a lot of time and effort in the long run.
Retailers, Distributors and Supermarkets
Sourcing agents play an important role in supply chain management, even for large companies with significant buying power. Supermarkets are a good example of this – they need to purchase thousands of different products, and it would be impractical for them to visit every factory and make individual purchases. Sourcing agents help streamline the process by acting as a middleman between the buyer and seller.
People who specialize in professional products
There may be some difficulty in sourcing suppliers for special product categories such as materials, new technology, electronic components and equipment, Auto & Moto parts, both at exhibitions and online. In the case of the electronic components, and equipment industry, it may be necessary to entrust a sourcing agency or trading company specializing in the industry to help with the business.
