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Should You Use a Sourcing Agent? Pros and Cons

sourcing-agent-pros-and-cons

In an age where an e-commerce giant like Alibaba exists, sourcing the right products has never been easier. Whether you’re looking for leather goods or LED lighting products, Alibaba has it all. You’re just a click away from contacting a supplier and having the product arrive at your front door. You might think that hiring a sourcing agent is unnecessary when you can find a supplier by yourself. After all, Alibaba works with thousands of suppliers ready to give you the products/services you want.

But is a sourcing agent worth considering? What are the pros and cons of hiring one for your business?

In this article, we’ll be addressing those questions to help you determine whether or not using a sourcing agent is a good move.

What is a sourcing agent?

First off, we must understand what a sourcing agent is. A sourcing agent (also known as a buying agent or import agent) is a person or entity that assists you with obtaining products from different locations. Their job is to find a trustworthy supplier that will give you the exact product you need.

A sourcing agent specializes in all aspects of the procurement process. From quality control inspections to contract negotiations, a sourcing agent is your right-hand partner. As a seller, you want to obtain high-quality products at low prices. But to achieve that, you have to contact dozens (if not hundreds) of suppliers to ensure their product quality and pricing match your expectations.

The factory you choose will play a significant role in how successful your e-commerce business will be. Thus, you must partner with a reputable manufacturer right from the start. You can’t afford to switch suppliers as it’s a resource-draining move.

Enter a sourcing agent. Their experience and expertise allow you to narrow down your choices and ensure you partner with a supplier that can elevate your business. You save time and money by outsourcing the product procurement to a qualified professional. The fewer risks you encounter, the better it’ll be for your online business.

Pros of using a sourcing agent

The main benefit of hiring a sourcing agent is that you get to focus on building other aspects of your e-commerce business. While working with a sourcing agent requires some of your time, you don’t feel tied up searching the interwebs looking for a good supplier.

There are a whole host of benefits to using a sourcing agent, and these are:

1. Use their vast network to your advantage

Sourcing agents thrive on connections. They focus on establishing relationships with some of the best suppliers and factories out there. Because of this, you can feel confident knowing that the supplier your sourcing agent refers is verified and trustworthy.

Their connections aren’t just limited to websites like Alibaba. Chances are, sourcing agents can connect you with factories outside of China, helping you gain a competitive advantage. You get access to products that are of higher quality than you typically would with China manufacturers.

2. Get the best deals possible

Negotiating with suppliers is a skill, and sourcing agents have mastered the art of negotiations. If you have zero experience with negotiations, you may find it challenging to secure the best prices. A sourcing agent who has a solid understanding of the e-commerce culture knows how to communicate effectively with suppliers to land a great deal.

Suppliers are eager to sell products just like you are. With the help of a sourcing agent, you can present the supplier with a market opportunity that’s too good to pass up. The power balance between you and the manufacturer is maintained, and you get to form a strategic partnership that benefits both parties.

3. Identify legitimate suppliers from fake ones

As the world of e-commerce grows, so does the list of fake suppliers. If you don’t know how to identify trustworthy manufacturers, you may end up on the wrong side of the deal. An experienced sourcing agent can tell whether a supplier is legitimate or not, thus reducing the risks on your end.

If it’s your first time embarking on a product procurement process, it helps to hire a sourcing agent for your needs. They will conduct due diligence on every manufacturer they choose to confirm their legitimacy. When you source with confidence, you put your business in the best position to succeed.

4. Bridge the language gap

While sourcing products from a foreign country seems exciting, it does come with its unique challenges. The biggest of which is the language gap between you and the supplier. Effective negotiations are crucial to successful product sourcing, but if you and the supplier have difficulty understanding each other, then negotiations might fall.

A top sourcing agent can help bridge the language gap and make it easier for you to land the right deal. It’s not just about knowing what to say; it’s about how you deliver the message. A sourcing agent understands the culture where the supplier comes from, helping to articulate your words that they can understand.

Suppliers want to forge long-term relationships with their clients, and a sourcing agent can make that happen through effective communication.

5. Get access to samples from different factories

Since sourcing agents work with different manufacturers, they can provide bundled samples to you all in one sitting. Having access to multiple products from various manufacturers is a game-changer for an e-commerce business. You get to evaluate the quality of the products simultaneously and decide on which supplier you want most.

Not only that, but you get to save on air freight costs when you work with a sourcing agent. Typically when requesting product samples, you’ll have to shoulder the shipping costs of the products. The costs add up when you request a sample from different manufacturers, so keep that in mind.

Cons of using a sourcing agent

Not everything is daisies and dandelions when working with a sourcing agent. There are a couple of downsides that you need to be aware of, and these are:

1. No control of the relationship between you and the supplier

Because the sourcing agent handles everything with the supplier, they have more control over the relationship than you. The agent gets to decide on lead times, quality control, price negotiations, and more. Sure, that may come in handy at first, but you want to establish your relationship with the manufacturer as your business grows.

Having no direct communication with the supplier means you’ll have to speak with your sourcing agent first. If there’s an issue with the product, you can’t raise your concerns exactly how you want to. As a result, the product may not turn out as you expect.

2. Risk of secret commissions

Finding a reputable sourcing agent is just as challenging as finding the right supplier. If you happen to hire the wrong agent, you run the risk of paying marked-up prices for your products. There are instances where the sourcing agent will make a deal with the supplier in exchange for a secret commission. That way, they benefit from both you and the manufacturer.

That’s why it’s a good idea to do your due diligence when it comes to the pricing of the products. Don’t take the prices given to you by the sourcing agent as fair as you want to confirm this with your research.

3. Over-relying on your sourcing agent

It’s easy to feel comfortable when you have a sourcing agent handling the entire procurement process. But this can prove detrimental to your business, especially when they become unavailable. Your point of contact is suddenly down, and it’ll take a while for you to reach out to your supplier.

The lack of communication between you and the manufacturer can create problems that are hard to solve. As a result, your e-commerce operations will be severely affected. At worst, the product may arrive in a different specification than you would have liked.

4. Switch suppliers without you knowing

Sadly, the lack of professionalism with sourcing agents still exists. They know they have the upper hand when it comes to negotiations, and sometimes they’ll use this for their interest. For example, if they find a supplier with a higher commission fee, they may end up switching suppliers without you knowing.

When this happens, the product quality gets compromised, and the relationship with the previous supplier is damaged. While the chances of this happening are slim, the possibility is still there. That’s why you must work with a trustworthy sourcing agent to prevent under-the-table deals from happening.

Conclusion

Sourcing the right products for your e-commerce business is a resource-intensive task. To help expedite the process, you can opt to hire a sourcing agent. The right agent will work with you to find a reputable supplier and deliver products based on your needs and expectations.

Make sure you weigh the pros and cons of using a sourcing agent to determine whether or not you should hire one to source products.

If you’re an online seller and would like help breaking down the financial health of your company and getting your bookkeeping done right, we can help. Simply fill out the contact form below and we will be in contact with you shortly.

 

 

 

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