What is a sourcing agent? And how to find the right one

TK Wang

We’re fond of sourcing agents here at Epic Sourcing (obviously), but there is a fair amount of confusion about what they (we) do. So, in this chapter of our Starting Sourcing series, we’re taking things right back to the start to answer a simple (but not so simple) question: What is a sourcing agent? Understanding how sourcing agents operate will help you determine whether or not it’s a service that can benefit your business. We also cover sourcing agent fees, and some tips to help you find the right sourcing agent for your business.

What is a sourcing agent?

The scope of the role is broad, but a sourcing agent (sometimes known as an import agent, buying agent, or sourcing broker) essentially manages any or all stages of the procurement process. If your business wants to import a ready-made product (or to have one made), a sourcing agent will help you get that product into your hot little hand. From supplier prospecting, contract negotiation, and managing production, to quality inspections, shipping, and everything in between. It’s not just about relieving yourself of the burden, it’s about doing things right with an expert that truly understands the sourcing landscape. Every great golfer needs an expert caddie. A top sourcing agent will hand you the perfect club, every time. Looking to import golf clubs? 

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Why use a sourcing agent?

There are many reasons a business may engage the services of a sourcing agent or sourcing agency. For a small business, importing from a low-cost region like China can seem like a daunting prospect. Sourcing agents can help you navigate the process from start to finish. Ultimately, they are there to help you source with confidence, by reducing the risk, relieving you of the hassle, and negotiating pricing and terms that work for your business. A good sourcing agent is like your right-hand man/ woman to ensure that the process goes smoothly. Many businesses go it alone, and we love that gung-ho attitude. But, the reality is that many businesses don’t have the time or the resources to take on this task completely in-house. Step in, the sourcing agent.


How to find the right sourcing agent for your business

If you are looking for a sourcing agent, there are some important things to look out for to ensure you find one that suits your unique needs. Not all sourcing agents are created equal, so what should you consider before jumping in?

Experience

Look for a sourcing agent with plenty of experience and a proven track record. Becoming an expert takes time and the best qualifier is delivering results for clients. There are many different facets to sourcing products from China, so finding an agent that understands all of the moving parts is key. A top sourcing agent will be able to step in at any stage of the process and provide advice and solutions. Testimonials, reviews, and case studies are an excellent place to start when trying to gauge the experience of a sourcing agent.

Check out some of our happy clients.

Specialisation

Look for a sourcing agent that understands your industry and has had success sourcing the type of products you are looking for. Different regions within China specialise in different products, so it helps if the agent understands where to go for the type of products you seek. 

Excellent communication

It should go without saying, but communication is at the heart of building solid relationships. If a sourcing agent communicates swiftly and effectively with you, it’s an excellent sign they will do the same when contacting and liaising with suppliers and manufacturers in China. Remember, poor communication can lead to a host of problems further down the track.

Transparency

Transparency follows on from communication. A top sourcing agent will keep you in the loop. Bad actors will keep information from you in the hope of controlling the process to gain leverage. A sourcing agent is not a middleman/ woman, they should be working with you to obtain the best outcomes possible for your business. Transparency also reduces the risk of any conflicts of interest.

Home and away teams

Epic Sourcing was built on the idea that having teams in New Zealand and China is the most effective way to deliver results for our clients. Having closer contact with clients, and being able to sit down for a chat, gives us a chance to learn about their business and build better relationships. We then have a team in China that can conduct factory audits and quality control checks, manage shipping and logistics, and ensure everything runs smoothly at that end. We are your eyes and ears on the ground in China.


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Competitive pricing

Simply looking for the cheapest option isn’t a great strategy when looking for a sourcing agent, but you still want to know you are getting a good deal. There is significant variability in sourcing agent fees, so it pays to shop around. You might find that a certain type of fee structure works for you, more so than the pricing itself. We’ll look at fees in a little more detail next.  

Sourcing agent fees

Flat fee

Here a fee is agreed upon prior to the project commencing. For one-off sourcing solutions, this model can work well. However, for an ongoing relationship, renegotiating this fee for every interaction can be cumbersome. The real benefit of having a sourcing agent in your corner is that you can call on them at any time to support you on your sourcing journey.

Regardless, the flat fee system can be a useful one. Epic sourcing is in the process of building more easy to purchase one-off products. For example, we offer a cost-effective Supplier Verification service


Need to verify your supplier or manufacturer in China? Book a Verification report

Commission

Commission based agreements are also common. Commissions usually range from between 5-10% depending on the quantity and frequency of orders. While there is a risk of a conflict of interest here, a commission-based fee structure can work well if a sourcing agent puts a premium on transparency.

Hourly rate

For Epic Sourcing, operating on an hourly rate is the preferred option. We think that this is the most transparent and cost-effective approach for small businesses. It enables us to cap the number of hours we work according to clients needs so that businesses on a budget are not thrown off by a large and unexpected bill. For more details on our simple and efficient pricing, head over to our Pricing page.

Where to start

If you’re looking to find a sourcing agent, start by assessing exactly what you need support with. From there, it pays to contact a few and get a feel for the service they provide. We recommend sitting down with prospective sourcing agents to get a better feel for how they operate. You might decide to test the waters by setting a trial period (or task) to evaluate their performance. Enlisting a sourcing agent to help you find the right supplier or manufacturer is a good place to start. This is one of the most important stages in the sourcing process and one that an experienced agent will be able to expertly handle.

Conclusion

If you’re sourcing products from China for the first time or looking to streamline an existing operation, a sourcing agent is worth considering. Take some time to find the right option for your business, and it will pay off in the long run. If you would like to sit down and discuss how we can help your small business source from China, simply fill in the form and book your FREE initial consultation with me, TK!