Why Sourcing Companies Are Better Than Direct Manufacturers?
For many importers especially small one, choosing whether to deal with a direct manufacturer or a sourcing company depends on the nature of the business, and the order quantity.
Direct manufacturers offer more attractive costs, however, will require higher order quantity and may ask for better payment terms -- such as 30% deposit at time of order, and 70% balance before shipment.
On the other hand, sourcing companies can help many importers. The following are some reasons:
1. They should strictly follow timeline
A dependable sourcing company should practice what it preaches. When your contact says the items will be delivered on Friday afternoon, it should be delivered on that exact day and time. Much better if earlier, but it should be advised in time.
More than the product cost, a good sourcing company should have a better understanding of the entire business process. Likewise, it should give importance to product quality, so you only get the best out of its price.
2. They understand their customers
Unlike manufacturing companies, most sourcing companies focus on customer satisfaction. Since they do not directly manufacture the products they sell, they make up to it by providing utmost client service. Communication is crucial for business, and this is usually sourcing companies are strong in – they have staff who have excellent English skills and can communicate with customers in professional, efficient, and effective way.
3. They are good at building relationships
They are basically experts in relationship building. On one hand, they usually deal with multiple factories in sourcing their products from, so they have good understanding about capability and capacity of factories. So, they know which products are best suitable for which factories, and when to place orders.
On the other hand, they also build a good relationship with their clients and satisfy their business needs. They understand their clients’ concerns, know the key areas their clients focus on, and can get know the ultimate needs of their clients. So, they know how to clearly work on behalf of their clients and get the maximum interests for their clients.
4. They are willing to go the extra mile
Many sourcing companies can take the extra task of sourcing other products aside from their current inventory. If you need additional business requirements such as dedicated labeling, sourcing companies can do that for you. Also, they can re-pack the goods, allocate them to different markets, and consolidate products from multiple suppliers.
5. They can offer better price
Sourcing companies know the local supply bases better, so they know where the best place is to source a specific product. For example, you may source metal products in Shenzhen, but usually not at the best price. If you go to the manufacturing hub of such products, such as Zhongshan, you can find the most competitive prices.
Most sourcing companies have a small office or warehouse spaces, unlike manufacturing companies. Hence, the former can only incur lower overhead costs than the latter. Also, building/space rental is cheap in China, so rental costs should not be a big deal for sourcing companies either.
6. They are ideal for small importers
Sourcing companies accept a smaller MOQ, which is a major concern for small importers. Likewise, they can also offer a wide variety of products you can choose to sell, each at affordable MOQ and fair price. For small importers, it usually does not make sense to try to work with direct manufacturers, as a very high MOQ will be required; even if the MOQ is acceptable, the manufacturers will not put smaller importers in priority, for both lead time and quality.