Sourcing your products becomes the basis of your e-commerce business. It will determine your quality standards, inventory, margins, and scalability. You need to ensure that your procurement is legitimate, controlled, and appropriate for your business.

China can be difficult to navigate, especially for new sellers and importers. Mistakes in the early stages of importing can drastically impact the future potential of your business.

The best way to mitigate the risks of improper procurement is with a sourcing firm.

What are the options for procurement, and why is a sourcing firm your strongest opportunity for growth?

Sourcing Options

There are four major options for procurement: direct purchasing, commissioned agent, trader, and sourcing firm.

1. Direct Purchasing

Purchasing direct from a manufacturer means that you handle all interactions with the supplier yourself. You find the supplier, choose the products, negotiate price, draw up contracts, handle claims and disagreements, perform quality inspections, build relationships, request samples, and more.

A number of new sellers mistakenly think this is the best avenue because they can maintain full control of their supply and aren’t charged a fee that cuts into their margins.

However, this is also the riskiest method. Unless you’re an experienced pro in the manufacturing industry, you make yourself vulnerable to scams, costly processes, and other inefficiencies by purchasing direct. Plus, you have to learn the entire industry yourself, which takes a significant time investment. Without the appropriate resources, you’re often trying to blindly navigate a complicated world.

2. Commissioned Agent

You can hire an individual agent to help you find suppliers for your product.

These agents are usually overseas and have a large network of partners and resources. They’re also low cost and fast.

However, they are very rarely professional and offer very few services. The agent will find you a supplier, but then you are on your own. They usually don’t help you build long-term relationships with these manufacturers or provide other consulting services. Agents tend to keep their resources locked up, giving you very little visibility or access to your own supply chain.

Plus, the majority of agents get a commission from the supplier. This means they’ll usually defend the supplier in the case of negotiations, error, or disagreements. They usually aren’t looking out for your interests.

Read: Why You Should Source Overseas With A Firm, Not An Agent

3. Trader or Distributor

A trader is like a middleman for locating applicable suppliers. They will help you find a manufacturer and they’ll handle payment.

This is not popular for procurement because it’s the most expensive option for the lowest return. Traders take a percentage of your margin on every order, which can heavily cut into your revenue. They also maintain total control over your supply chain with little transparency.

Do You Really Need A Sourcing Firm? Agent working at computer

4. Sourcing Firm

A sourcing firm is the strongest option for almost all sellers and importers. This is a third party that works with you, not for you. This builds a partnership to help you find suppliers, assess products, negotiate price, build contracts, handle claims, and build supplier relationships and communication.

The only con to a sourcing firm is that it can be an upfront investment. However, long-term, working with a sourcing firm is the most efficient and profitable solution.

Why Use A Sourcing Firm

1. Services

Sourcing firms offer a catalog of services for you. Agents and traders charge you for just the facilitation of a manufacturer relationship. Sourcing firms take a more holistic, service-based approach to your procurement.

2. Cost-Efficient

Sourcing firms usually don’t take a percentage based on unit quantity. Rather, firms usually cost a flat fee per product (not per unit). These flat fees help you better calculate your monthly costs for sourcing with little variation. This flat fee is also a lower-cost option overall, allowing you to maintain your margins and revenue.

3. Transparency

You have control over your own supply chain. You are the final decision-maker and you have visibility to every process, cost, and partner. This transparency helps maintain seller security and control.

Only through supply chain transparency can you ensure consistently streamlined operations towards scalability. Procurement transparency is the best way to protect your business.

4. Resources

Sourcing firms spend day-in and day-out working on procurement. They have access to credible, quality suppliers and shipping partners. They know the industry regulations, and they have the skills for negotiation and contracting.

Firms also have more individuals at their disposal. This means you have a team of experienced professionals in a variety of areas to give you advice and information. There’s no greater asset for your Amazon business than a crew of knowledgeable sourcing partners.

5. Time-Efficient

This sourcing firm team not only provides you with top-notch procurement partners, but it also frees up time for you to focus on marketing and selling.

You can hire the firm to take care of sourcing from A to Z, and they have the resources to get the process done quickly and efficiently. You don’t have to learn the industry yourself or build your own networks and connections.

They can source and handle the back-end logistics swiftly and effectively, while you have more time to focus on growing the front-end of your business.

6. Product Consultation

One of the greatest services of a sourcing firm is product consultation. You don’t have to select a product all on your own and hope that the inventory you purchase will sell. Sourcing firms usually offer a catalog of potential products that are trending or high sell-through. This can be a great starting point if you don’t have customer data or product analysis.

Plus, a firm will ensure that your product portfolio is consistent and brand-driven. Every product you source is specific, handpicked, and deliberate.

Not sure what to source? A firm can help you find a generic product to private label.

Already know what you want to source? A sourcing firm will help you build and find the perfect product with associated quality standards. They may also help you with customization options.

Do You Really Need A Sourcing Firm? handshake

7. Supplier Assessment

Agents can help you find suppliers, but those suppliers often pay them to get business. Agents get commissions from the factory to bring them clients. Agents are, in a way, salespeople for the manufacturer.

Firms are not paid by suppliers. Thus, a firm can ensure that the supplier you work with is not only credible and honest but also the right supplier for you. A firm is responsible to you more than to the manufacturer.

8. Disputes

This also means that a firm is responsible to you for contract agreements, price negotiations, and claims disputes. A sourcing firm is on your side to create win-win-win solutions throughout the procurement process.

Read: 11 Must-Haves On Every Sourcing Contract

9. In-Person Inspection

Sourcing firms are often global, so they’ll have a team on the ground overseas. This helps build face-to-face relationships with suppliers to avoid scams and promote quality control processes. This allows for in-person inspections and ensures social compliance.

Plus, the greater your relationship with your manufacturer, the better your chance of reduced costs and speedy lead times. A sourcing firm is the simplest, strongest way to build these vital seller-supplier relationships across seas and borders.

10. Analysis

Sourcing firms collect data using tech and human resources. They can then analyze this data to find areas where your supply chain is lagging. From there, they can implement ways to improve and enhance your processes. They can watch your supply chain efficiencies, while you can stay busy selling and marketing your products.

The Bottom Line

Sourcing firms are the strongest and safest method of overseas procurement. If you want to be efficient with time, resources, and relationships, you need a sourcing firm.

Look no further than Ask Idea Sourcing.

With our extensive set of services, we can provide you with a personalized plan to meet all of your procurement needs.

Request a quote now!