How do Sourcing Agents Work, and Should You Hire One?

by | May 4, 2021 | Sourcing

Many international traders import goods from China, Vietnam, Malaysia, and other countries due to their low manufacturing costs. And whether you’re an entrepreneurial Amazon seller or you work for an established consumer brand, you’ll find that importing from these countries requires a lot of effort and expertise.

Sourcing agents can help facilitate the sourcing process, freeing you up to focus on other aspects of your business. But you may not be entirely sure what a sourcing agent is, what they do, or whether you need one. This article will give you a better understanding of the role these professionals play so you can decide if hiring one is the right choice for your situation.

What is a Sourcing Agent?

A sourcing agent is an individual or company that helps businesses source products in another country. For example, if you are in the US, you can contract a sourcing agent to help you identify a supplier in China, Vietnam, or elsewhere. They can locate and visit different manufacturers to establish whether they meet your cost, quality, delivery, and other requirements.

Ideally, your sourcing agent should be located in the country of manufacture and within the geographic vicinity of potential suppliers. They should also speak the country’s language in addition to English to ensure efficiency in communication.

A sourcing agent’s mandate can extend further than identifying a supplier — it can also include price negotiation, quality control, product testing, import/export duty, and shipping logistics.

Top Reasons to Work with a Sourcing Agent

Professional typing on a keyboard when dealing with sourcing agent

Sourcing agents can help you save time & money and verify licenses & certificates, and you can leverage their expertise & networks

Perhaps you are wondering whether it’s necessary to work with a sourcing agent. Here are the top reasons why you should consider it:

No. 1 – They Can Save You Time

Once you’ve decided to source your product, the first thing you’ll do is to start looking for the right supplier. Without a sourcing agent, you may spend dozens of hours searching for suppliers online.

After identifying several, you’ll likely vet them through a series of phone calls or emails. If the manufacturers have limited English ability, this can make the process more difficult. Contracting a sourcing agent can help you avoid all this, saving you time so you can spend it on growing your business.

No. 2 – They Can Save You Money

When you contract a reputable sourcing agent, they will provide you with several quotations from suppliers who meet your requirements. Getting several quotes helps you gain a better understanding of pricing and protects you from paying more than necessary.

Similarly, a sourcing agent can help you with price negotiations without crossing the threshold where a manufacturer is forced to lower quality to accommodate discount requests. Manufacturers in low-cost countries may substitute lower-quality materials over time without telling you, a phenomenon known as quality fade. A sourcing agent that can communicate clearly with the supplier and understand their situation can help you avoid this.

When an agent connects you with a professional supplier, you will be more likely to receive quality goods on time. This saves you the headaches and losses associated with delays, product recalls, and damage to your brand image.

No. 3 – They Can Help You With Certificate / License Verification

As you decide to engage a manufacturer in China, you want to ensure that they have the proper licenses and certifications to manufacture. Imagine paying a tidy sum to a factory in China, only to hear later that it was closed for violating local laws.

The process of trying to get your money back would be complicated, if not nearly impossible. You may request certification directly, but it would likely be in the local language and require spending money on translation fees.

Contracting a reputable sourcing agent can help you mitigate this problem as they can discern which factories meet the necessary requirements.

No. 4 – You Can Leverage Their Expertise & Networks

You can benefit immensely from your sourcing agent’s expertise and networks. If they have been in the industry for a considerable time, they might immediately know which types of suppliers might be suitable for your product. They can also play a role in getting you better prices and priority in production.

Similarly, a sourcing agent can quickly leverage their networks to cut through red tape, particularly in logistics and shipping. In cases where corruption and bribe-taking are ingrained in the culture, a sourcing agent is better placed to navigate through on your behalf.

Can a Sourcing Agent Help You with Quality Control?

Product inspector photographing a tooth whitening kit during inspection

One of Insight’s inspectors conducting a product quality inspection

A sourcing agent can help you with quality control, but not all sourcing agents have the necessary expertise.

Your sourcing agent can be an individual who works independently from a small office or even from home. Some of these individuals could be sourcing full-time or for a good number of years and therefore experienced.

However, they may not have the resources to monitor production on an ongoing basis. If you use an individual as a sourcing agent, we recommend that you contract a third-party quality provider (like Insight) to conduct product inspections.

You may also use a larger sourcing company/sourcing agency to help you find suppliers or manufacturers in China or elsewhere. When it comes to quality control, a sourcing company could be better positioned to help you as they may have dedicated departments for sourcing, production quality, warehousing, and shipping logistics.

While they may be more expensive than individual sourcing agents, you can count on them to have your best interests in mind. At Insight, we offer sourcing assistance to our clients and have a strong focus on ensuring product quality since quality services are our primary business.

Should You Trust Sourcing Agents in China and Other Low-Cost Countries?

There is an ongoing debate on whether importers can trust sourcing agents in low-cost countries. We acknowledge that some importers have been conned out of their hard-earned money or supplied with inferior goods.

Yet, the benefits of having a good sourcing agent can far outweigh the risks. We believe that you should find a trustworthy sourcing service to help you navigate the market with due diligence.

Here are some things to keep in mind when selecting a sourcing agent:

 

  • Choose an agent located in the country of manufacture. If you are importing from China, an agent on the ground is better equipped to help you. They understand the language, local culture, and business customs.
  • Select an agent who specializes in your product. If you are importing baby products, you will benefit more from a sourcing agent in that segment than one who only has experience with building materials.
  • Ask for referrals — a legitimate sourcing agent will be happy to provide you with referrals from satisfied clients that you can call.
  • Check for working experience — an experienced sourcing agent will understand the industry and have better networks.
  • Be sure you understand how the agent gets paid — they should only be paid by you and should not receive any kind of kickback from the factory to ensure impartiality.

Download Your Free Step by Step Guide on The Sourcing Process

If you are new to international trade, you may find that using a sourcing agent can help you overcome hurdles in the process. You may also be curious about how product sourcing works, from selecting a sourcing agent to production and shipping until you receive your goods. To shed more light on this, download our free step-by-step guide on The Sourcing Process.

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