What is a Product Sourcing Agent and Where to Find One?
Product sourcing is a crucial e-commerce store process. That’s why it’s essential to find inventory from reliable suppliers at a reasonable price. But for new retailers, inventory sourcing alone can become complicated.
For most parts of the supply chain, getting expert help can help secure items. Product sourcing agents play a pivotal role in the international supply chain. This article explores the value of working with a sourcing agent in a retailer’s bottom line.
Table of Contents
What is a Product Sourcing Agent?
A Product sourcing agent support e-commerce companies in sourcing raw materials or products ready for sale at competitive prices. They play a critical role in ensuring a company’s profit margins remain strong. A sourcing agent may represent an e-commerce company or choose to contract with multiple suppliers.
While working with domestic customers, product sourcing agents are critical in the international supply chain. Most of the time, these professionals are local to their country of origin. They have a strong business sense, speak the local language fluently, and are familiar with the biases and other factors that can affect business transactions.
Distributors vs. Product Sourcing Agents
The option of working with a sourcing agent has been around for several years. However, retailers are still confused about the difference between a sourcing agent and a distributor.
At its core, a distributor buys products wholesale and distributes them to individual distributors. Sourcing agents, on the other hand, communicate with suppliers and manufacturers to secure deals between them and retailers.
Product Range
Distributors offer a limited range of products. If they do not have access to wholesale deals for products, they cannot offer these items to distributors. Sourcing agents use their relationships to find exactly what the retailer needs. Depending on their skills and influence, they may even be able to find rare inventory.
Product Customization
Again, distributors have limitations in terms of the products they can offer. Again, they cannot offer customization for these products because they are already part of their inventory. Sourcing agents connect to suppliers and manufacturers. They are more likely to offer customized products that meet the retailer’s needs.
Cost
Working with a sourcing agent is the most cost-effective option for sourcing inventory. Because they work directly with the manufacturer, they can offer retailers factory pricing. Distributors can raise prices to profit from their wholesale purchases, which often happens.
Prototyping
Another advantage of working with a product sourcing agent is that retailers can prototype their products. They can assist in finding the best manufacturer and perform quality control and checks on the prototypes created.
Quality Control
Product sourcing agents can also provide quality control, especially if the retailer is located abroad. Sourcing agents can represent the priorities of e-commerce companies and ensure they get value for money.
Who Need a Sourcing Agent?
Most e-commerce companies can find value in working with a sourcing agent. However, these professionals offer the greatest benefits for operations that:
E-commerce companies with no import experience.
Importing from overseas can be complex and overwhelming. Transactions involve many moving parts and processes, and requirements vary by jurisdiction. In addition to finding suppliers, there are shipping and logistics requirements. A sourcing agent can smoothly help a retailer start an overseas ecommerce product sourcing business.
Retailers offering a wide range of products
The more products a retailer intends to offer in its e-commerce store, the more complex the sourcing process becomes. In most cases, communication with five to ten suppliers is required to secure the best pricing for the merchandise. Suppose a retailer is looking for ten items; they need to contact 100 suppliers. A product sourcing agent can lay the groundwork for the retailer.
Large retailers
Sourcing agents are relevant to all types of companies, regardless of size. It includes multinational companies that offer hundreds of products. Even supermarket giants like Target and Walmart use sourcing agents to help stock their shelves with products.
Retailers that sell specialty products
In addition to the number of items needed, sourcing agents can even source rare and hard-to-find items. These professionals usually have a place in the types of products they handle.
Why Get a Product Sourcing Agent?
There are many advantages to working with a product sourcing agent. Companies of any size can benefit from their help. They are an excellent investment, especially for e-commerce operations that want to stand out from the competition.
Competitive Pricing
An experienced sourcing agent has contacts in almost every industry. They can give their clients access to manufacturers and suppliers who offer products at competitive prices at a reliable rate. Because they have good relationships with these suppliers, the retailers have less risk of being cheated out of their investment.
Efficient Sourcing
Connecting with different suppliers for different products can be tedious and even more daunting if the retailer deals with international manufacturers. Local sourcing agents can help eCommerce stores overcome cultural and language barriers when sourcing products. They can negotiate and deliver information more effectively without being mistranslated.
Minimize Import Risks
For small e-commerce businesses, dealing with international suppliers can be a considerable risk. Many things can go wrong, mainly when they cannot oversee their products’ production. In addition, a lot can get lost in translation. Sourcing agents minimize this risk by acting as a liaison between international suppliers and retailers.
Product sourcing agents can do wonders for e-commerce stores. They can ease a company’s access to international imports and minimize the risk of dealing with overseas suppliers. There is room for a sourcing agent in every business – if you find the right person and have your company’s interests at heart.
Where Can I Find a Product Sourcing Agent?
Some of them may have years of experience working for a trading or China sourcing company. These individual sourcing agents can be found on several freelance platforms (e.g. Fiverr, Upwork, etc.), and some may also have their own websites on Google.
- Freelance
- Trade fair
- Referral
How to Choose a Product Sourcing Agent?
In order for you to find a good product sourcing agent, please consider the following factors.
Licensing
As with every company, you must work with a licensed product sourcing agent. A license shows that they have the legal authority to operate as a purchasing company. It also helps to monitor the buying agent and assess their legal priorities.
Communicate effectively
Communication is known to be the key to building strong relationships. The right buying agent has an effective communication structure between suppliers and customers. Keep in mind that ineffective communication can lead to several problems later on.
Specialization
You should find a product sourcing agent who knows your industry and is familiar with sourcing the types of goods you need.
Experience
A good product sourcing agent is experienced. You should work with a sourcing agent who has been in business for many years and has a proven track record. Case studies, reviews and testimonials are an effective way to evaluate the product sourcing agent experience.
Transparency
A good product sourcing agent will always keep you updated on the progress of the process. A bad buying agent will keep you away from the details and aim to manipulate the process to gain influence. The right buying agent should work with you to achieve the best results for your company.
How to Vet a Product Sourcing Agent
While it can be difficult for entrepreneurs to verify that a product sourcing agent is transparent about their role in a transaction, the following steps can help you find a sourcing agent who can be a valuable partner. Vetting a product sourcing agent in China or any other country/region requires asking the right questions and getting recommendations from companies that have undergone the same process.
Spending time in advance dealing with several potential sourcing agents can save you considerable cost and hassle later and lead you to the right supplier. Finding your manufacturing partner is a critical step in the product development process, so devote as much enthusiasm and attention to research, design, and prototyping as you do.
Some of the questions you should ask potential product sourcing agent partners include:
Who will pay the sourcing agent, when and how?
You should be the only person paying for procurement services. Only when you pay your suppliers should your purchasing agent receive your payment directly. If funds are flowing in or out of a different source earlier, they are no longer your agent – they are working for someone else.
Does the purchasing agent perform quality control checks, or is it outsourced to a third party?
After finding the right supplier, using quality checks to ensure that the selected factory is producing your product correctly is the second most important thing a sourcing agent does. If they outsource this step to a third party, it increases costs, potential errors, and is another source of hidden fees and kickbacks.
Can the product sourcing agent provide at least two references from companies similar to yours?
There is nothing better than sitting down on the phone with someone who has already done what you want to do and grilling your potential agent about the procurement services they provide. Be frank and straightforward and ask pointed questions. Talk to references in the same or similar industries that produce the same type of product you are designing. If they are not satisfied with the sourcing agent, move on to the next one.
What systems and processes does the product sourcing agent have in place to manage the manufacturer?
You don’t want a sourcing agent who writes things down on an envelope and constantly misses the mark. Global sourcing takes work. There are a lot of moving parts and the unexpected is the only thing you can expect. You need someone with years of experience and suitable systems in place to represent your interest in suppliers effectively. If they spend more time trying to flatter or please you than talking about the project management process, they don’t have the needed capabilities.
What assurances will the product sourcing agent provide if the supplier falls behind schedule, takes advantage of you, or produces an inferior product?
Remember, your purchasing agent represents you, and they are paid to take responsibility for finding the right suppliers, ensuring product quality, and ensuring you are charged competitive prices. If they are not willing to guarantee performance in some tangible way, then they are not the right partner for you.
The Risks of Working with a Product Sourcing Agent
Ecommerce Product sourcing agents aren’t always as altruistic as they seem. On the one hand, product sourcing agents can provide access to a network of high-quality, vetted factories and have the potential to save entrepreneurs time and money. They can help you navigate the process and act as your in-country representative, dealing with local customs, regulations and language.
Problems arise because they may also get paid by the supplier. The way of the business model is supposed to work is that the agent receives a commission based on the fees you pay to the factory. But manufacturing is a very competitive industry, and factories looking for customers will often try to convince agents to send jobs their way.
According to reliable sources, 90% of product sourcing agents receive hidden commissions from factories. Not only do you end up paying that commission at a higher cost, you also reduce agent loyalty.
“As a result, they often tend to defend the factory when problems arise,” writes one expert. “Some agents are invaluable. Others are completely incompetent, or worse, outright liars. Some don’t even disclose that they are intermediaries, leading you to believe that you are dealing directly with the factory.”
Product sourcing agents often use unwitting entrepreneurs to manipulate prices to the factory’s advantage, and because they receive a percentage of the commission, they can themselves. They skip factory audits and may not have your best interests in mind when conducting price negotiations.
Another way for product sourcing agents to make money is to find low-cost and often low-quality manufacturers, charge you what quality suppliers charge, and then split the difference with the factory.
For example, most bids on a project from a good supplier may yield a competitive price of $10 per part. An unethical product sourcing agent may find a supplier who cuts corners and can do the job for as little as $7 per part. The agent charges you $10 and splits the difference of $3 with the factory. With over thousands of parts, that $3 can add up and you, the entrepreneur, have no idea of the non-value-added costs you are paying.
Supplyia Product Sourcing Agent
At Supplyia, we believe our clients deserve the best. In addition to our proven technology-based solutions, we can help you connect with a reputable and reliable supplier.
Supplyia as a product sourcing company, not even only handle product sourcing services but also assist with international inspection, transport and 3PL. We can provide customized solutions according to the different needs of customers imported from China.
We can’t guarantee that we’ll be able to complete all kinds of tasks, but at least we’ll give everything we can to try. Sourcing from China is not a easy task, but we will along with you side to stay safe. Get a custom quote from us today and get to work.
