Sourcing Agent 101: How to Find Best Sourcing Agent?

Sharline Shaw

The global export business has been increasing vastly in recent years. Many companies are importing high-quality products for profitable businesses.

Yet, it is not easy to source good products. You’ll need to overcome barriers like language skills to deal with the suppliers. There are also certain possible risks when importing from other countries.

In this case, sourcing agents are the alternative to sourcing by ourselves. The sourcing agent is experienced in dealing with businesses for worldwide buyers. 

 We’ll share how, why, and where you can find sourcing agents for your sourcing process. Let’s dive right in!

Sourcing Agent 101

What Is a Sourcing Agent?

A sourcing agent assists global buyers in sourcing product suppliers. This sourcing specialist provides various services for international trades.

A reliable sourcing agent will save you much cost, time, and hassles down the supply chain. 

You can either visit websites or get referrals from friends to find a sourcing agent.

What Does A Sourcing Agent Do?

A Sourcing agent helps you locate an ideal supplier or products you need. 

You can source the products from your chosen supplier via a sourcing agent. Otherwise, you need to narrate your requirements to the sourcing agent.

The primary services of a sourcing agent can include:

What Does A Sourcing Agent Do
  • Communicating and negotiating with suppliers
  • Overseeing the production process
  • Updating you with the proceedings
  • Arranging with the logistics company for storage and shipping
  • Helping perform quality inspections

Advantages of A Great Sourcing Agent

Here are the advantages of hiring a sourcing agent:

  1. Strong Supplier Network

A good sourcing agent is experienced in verifying suitable suppliers. They often have a strong supplier network to source quality products.

  1. Cost-Saving

Professional sourcing agents can also help save money. It is worth it even after adding their service fees. These sourcing companies make a good price negotiation to get competitive prices for you. 

  1. Time-Saving

Sourcing companies have experience in inspecting, compiling, dealing, and shipping. You can save more time down the supply chain with sourcing agents.

  1. One-Stop Sourcing Service

A sourcing agent handles the entire procurement process for buyers from other countries.  For instance, quality inspections, factory audits, legal precedence. goods collection, customs clearance, etc.

  1. Better Security

A good sourcing agent help overcome possible barriers and risks. You can reduce the risks of bad suppliers, late deliveries, or inferior goods. It will vastly increase your core competitiveness.

Difference between sourcing agent, distributor, wholesaler, trading company

  • Sourcing Agent

Sourcing agents will make service contact with the potential suppliers and manufacturers. 

The sourcing agent sources the product as per the companies’ requirements. These sourcing agents earn commissions from the purchase. 

  • Distributor

Distributors will buy products in bulk from the manufacturers, sometimes exclusively. 

They sell large quantities of each product to wholesalers or retailers. Distributors can often stock large amounts of goods for up to a year.

  • Wholesaler

Wholesalers will buy goods in bulk from distributors. They then resell the goods in smaller quantities with a marked-up price to profit. 

Their customers are retailers, merchants, or others, but not the consumers. They often stock the products for about three to six months.

Trading companies are similar to wholesalers. They usually sell in a smaller quantity.

These traders sell different types of products to consumers, businesses, or governments. 

3 Types of Sourcing Agents

Here are the different types of China sourcing agents to help you find suppliers. They are the single-sourcing agent, sourcing agency, and sourcing company.

Types Of Sourcing Agents

1. Single-Sourcing Agents Who Work Independently

These China sourcing agents work independently, usually with a small network. They don’t have a performance history, So, it is hard to expect the service quality of a sourcing agent.

Moreover, there are chances of scamming from a sourcing agent. They can simply disappear compared to other big sourcing companies.

2. Sourcing Agencies

Sourcing agencies have many China sourcing agents, each with expertise at their disposal. The sourcing agency helps source consumer electronics, beauty products, furniture, etc.

A sourcing agency has stronger networks to find the products you need. But, the sourcing agency charges more compared to independent sourcing agents.

3. Full-Service Sourcing & Logistics Companies

These are the most expensive yet versatile types of sourcing agents. But, you’ll be strongly dependent on the sourcing company. These sourcing companies have huge networks of sourcing services. 

You can get a suitable supplier from different markets through the sourcing company. They also handle quality inspections, logistics, shipping, etc.

How Much Does A Sourcing Agent Cost?

Commission

You need to strategize for the costs of your China sourcing agent. Here’s what you can expect to include from the service of a sourcing agent:

  • Commission

Most sourcing agents work on a commission. The commission depends on the quantity and the frequency of the order. In general, it lies within 2-10% (6% mostly), which is higher for smaller orders.

The sourcing agent agrees upon the commission when the primary proceedings are completed. These include finding suppliers, communicating your specifications, negotiating pricing and quality, etc.

  • Hourly Rate

Some sourcing companies charge pay based on the hours worked. But, there are two major drawbacks. The China sourcing agent may waste more time than required in finding suppliers. 

A sourcing agent might also charge for unnecessary extra hours. It is hard to assess how long it takes for a sourcing agent to complete their work. 

  • Flat Fee

This is a simpler way to decide the fee at the beginning of the project.  The catch? 

The sourcing agent gets paid even if you don’t choose any suppliers they provide. The China sourcing agent might not make a maximum effort into finding reliable suppliers.

  • Mixed Payment Structure

This model can test the ability of sourcing agents, besides the product quality. You will pay a flat rate fee to the sourcing agent for a certain amount.

When the order exceeds the threshold value, you can charge a commission on it. You can also ask for a small amount and get the products made to verify their quality.

How To Find The Best Sourcing Agent For Your Business

Step 1: Know Your requirements. 

This is important since you cannot dive into the market without any knowledge or strategizing about what you need.

This assessment will give insights on the product market to focus on, the location to concentrate, the target segment to connect with, etc.

All these elements are necessary to be defined since your sourcing agent can only be recruited when you’re able to relay these insights.

Step 2: Plan Your Budget

Setting your budget is another important element. As highlighted earlier there are several types of sourcing companies that are working in the market.

Each company and firm have its perks, cons, and costs. You need to make sure that when you strategize your budget, you keep aside some amount for adverse circumstances.

Moreover, ensure that you get the services first before handing over the entire payment.

Step 3: Choose the Sourcing Agent 

When you go deep in the market, you can come across several firms that will be offering sourcing services in your preferred domain.

Moreover, keep a close eye on assessing their workability since a small ignorance can result in poor choice, which would affect the overall proceedings.

Step 4: Negotiate the Payments

This will allow you to relay the information to different sourcing agents. You can then pick their details for comparison and choose the one that is offering services the most according to your needs.

Having a comparison will allow you to know what kind of sourcing agents are working in the market. It will also help in saving yourself from scammers.

Step 5: Prepare the Agreements 

This will allow you to know what offer works the best for you, and what can you do to negotiate the price with the sourcing agents.

Why choosing to check for licenses of the chosen sourcing companies is that any scamming company will mitigate their communication, and you can also find out about them from their license number.

It will help save the time and resources needed for the assessment phase and will enable quick selection.

Step 6: Negotiate Payments

When you’ve compiled up a list of the most suitable candidates as sourcing agents, its’ time that you negotiate in terms of money.

You need to assess and select what kind of payment method will the sourcing agent agrees to. Also, assess the overall payment strategy, keeping in the mind the overall budget you’ve set.

Price negotiation will not take time, and you can get clear answers from them. Moreover, you can also negotiate in terms of increasing or decreasing the commission in case you re-order.

Step 7: Write Down Everything That Was Agreed On

Last but not the least, you need to have everything in the contract. This is another crucial element because this will allow you to get everything streamlined.

In such a way you can secure your end from any adverse circumstance such as payment issues, the difference in the quality, etc.

Choosing these methods will allow you to select a competent sourcing agent. You can ensure that every necessary step is taken for the selection phase.

Looking for the Best Sourcing Agent?

Leeline Sourcing helps you find factories, get competitive prices, follow up production, ensure quality and deliver products to the door.

Top 20 US Sourcing Agents

Sourcing agent acts as your outsource sourcing staff. They handle the entire process of product sourcing from the US market. 

Also, a sourcing agent ensures quality control and competitive price down your supply chain. You can get a suitable supplier via them.

Refer to this article if you are looking for a good sourcing agent in the US.

Read more: Top 20 US Sourcing Agents

Sourcing vs. procurement

Both procurement and sourcing services are essential for your supply chain. Yet, there are differences between these two services.

  • Sourcing

The sourcing process is to determine the buying requirement and find suppliers.

  • Procurement

Procurement is to make purchases of goods and services from qualified suppliers. Read this article to learn more about sourcing and procurement. 

Read more: Sourcing vs. Procurement

What is Product Sourcing ?

Product sourcing is done by a sourcing agent on behalf of buyers from a foreign country. It includes several product sourcing procedures and channels. For instance, sample production, bundling, quality control, etc. 

You can get exactly what you want from a sourcing agent, regardless of the category.  Let’s study further about product sourcing by a sourcing agent here.

Read more: What is Product Sourcing?

What is a Purchasing Agent?

A purchasing agent buys goods and services from an appropriate supplier. They cooperate with a sourcing agent to ensure proper supply, costs, and quality. 

Besides, they plan budgets, negotiate contracts, and manage suppliers. 

If done well, a purchasing agent can enhance the entire supply chain. You can visit here to gain information about a purchasing agent. 

Read more: What is a Purchasing Agent?

What is Low-cost country sourcing?

Low-cost country sourcing is a strategy to lower costs in your supply chain. The sourcing companies source technologies, raw materials, or services from these countries. 

The strong supply chain of these countries allows low-cost product sourcing. There are many quality products from reliable suppliers here.

Want to know more about low-cost country sourcing? This article is for you.

Read more: What is Low-cost Country Sourcing?

Best 30 Sourcing websites

Besides hiring a local sourcing agent, you can also source from sourcing websites. You can gain access to their factory audit report and business license. 

With this product sourcing method, you can also find the best supplier based on your needs. Also, the sourcing website lists suppliers with high-quality products at a factory price. Click here to learn more.

Read more: Best 30 Sourcing websites

How to Source from Asia?

Product sourcing from the US and EU companies is becoming challenging. Thus, the sourcing company or China sourcing agent sources goods from Asia. 

Businesses choose Asia in locating suppliers to improve the supply chain. Thanks to strict quality inspection, you can get quality products here. You’ll also find the best supplier with a business license. Let’s discuss this further here.

Read more: How to Source from Asia?

FAQ

How does the sourcing agent ensure quality control?

In general, a sourcing agent has an extensive list of suppliers. After knowing your needs, the sourcing agent will visit the suppliers to make a factory audit. 

A good sourcing agent will also follow up timely and update you. They have the experience to check on the product’s quality for you.

Isn’t it cheaper to buy directly from factories than hiring a sourcing agent?

The answer is no. Without a sourcing agent, you’ll need to spend more time finding and dealing with suppliers. It is especially troublesome when there are language barriers.

You also have to arrange shipments and payments on your own. Some businesses even face scams and inferior goods. 

How much can I save from hiring a sourcing agent?

It is hard to tell the precise amount saved using a good sourcing agent. But, we can share some experiences. 

Some companies save thousands and more by hiring a good sourcing agent. It cuts your travel expenses and translators’ fees. 

There is also no need to hire in-house procurement staff.

What are the types of products a sourcing agent can help source?

A sourcing agent can typically source all kinds of goods you need. The most common products are fashion apparel, footwear, accessories, etc.

You can also source furniture, kitchenware, hotel supplies, food, etc. Just tell your requirement to the sourcing agent, and they will source for your need.

Final Thoughts

Procurement Strategy

A sourcing agent or sourcing company is widely needed today. You’ll enhance the supply chain by getting a sourcing agent to source the products you need.

You can choose an independent sourcing agent, sourcing agency, or sourcing company. Hiring bad sourcing agents will only cost you more money and hassles. 

So, look for a professional sourcing specialist as your sourcing partner. I hope you find everything you need to know about a sourcing agent in this article. 

Leeline Sourcing is a professional sourcing company. Talk to us today to hire a skilled sourcing agent for your business.

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sharline

Article by:

Sharline Shaw

Hey I'm Sharline, the founder of Leeline Sourcing. With 10 years of experience in the field of sourcing in China, we help 2000+ clients import from China,Alibaba,1688 to Amazon FBA or shopify. If you have any questions about sourcing , pls feel free to contact us.

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