Purchase by Yourself or Use a Sourcing Agent?
If you are starting to buy from China, your first decision will be: should I manage this by myself?
If your team can’t dedicate 1-3 hours a day (per supplier) to follow what happens in China, you might need help from a sourcing company that can handle these tasks:
Identifying new suppliers that can make your products at the right price and quality levels;
Helping develop new products/styles with these suppliers;
On-going management of the supplier relationships (communication, quality control, shipments follow-up, quality problems, and so on).
You may have 3 options:
1. Purchase direct
This is what 80% of importers try to do. They want to control the whole process, and avoid paying commissions to any middleman or agent.
If you are organized enough to manage suppliers, and if you can satisfy the minimum order quantities (MOQs) of suppliers, this is probably the best option for you.
2. Purchase from a trading company
This is a good option if you cannot satisfy the MOQs. A trading company can place production in a smaller workshop that accepts small orders. Aside from this particular situation, I don’t advise to work with a middleman.
3. Use a sourcing agent
This is the best option if you just start to source from China, and you forecast large orders down the road. Some agents provide a service and charge a fee. Everything is transparent (supplier names, process followed…).
Such agents used to be very rare but I am sure it will become more and more common. The best ones tend to work like a procurement office and to be well organized.
Qualifying an agent
Here are a few questions to ask sourcing agents before you engage one:
1). How will they get paid, and by whom?
2). Will you be able to visit the factories before/during production?
3). Can they provide referrals or testimonials from satisfied customers who are using his services?
4). Who buy the same type of product as you? Make sure to contact two of them and get confirmations.
5). Do they do quality inspections by themselves? Or do they resort to a specialized third-party? Will you get a report every time?
6). Will you get an update every week on the production status?
7). Can they share their management system with you? You need to make sure they have processes in place. The vast majority of agents don’t follow any established procedures.
8). What guarantee do they offer in case supplier scams you? If shipments are behind schedule? And if you receive junk products in your warehouse?
9). Are they located in the area where your products will be sourced?
10). If you keep re-ordering the same products from the same sources, will you pay less after the first order?