As a seller, you have numerous options when it comes to overseas sourcing. You can source directly from a supplier, find a trading company middleman, work with an independent sourcing agent, or hire a sourcing firm. Unfortunately, not all of your options will give you the same results.

In fact, working directly with a vendor or trading company has proven time and time again to land sellers in legal, manufacturing, and transportation troubles that can devastate their businesses.

So this article will focus on finding a qualified sourcing partner who will connect you with suppliers and offer additional sourcing services.

Should you use an independent agent or a sourcing firm?

What’s the difference between a sourcing firm and agent?

A sourcing firm is a company with the purpose of sourcing overseas. They generally have several employees with different roles and specialties. They can often operate both on the ground both at-home and overseas. They tend to have more expansive operations than a single agent.

Independent sourcing agents are contractors who will pair you with a supplier. You can usually find these agents through referrals, on contract sites like Upwork or Elance, or on their own websites. Agents may offer some sourcing and logistics services in which they specialize. Think of an agent as someone to which you outsource certain processes.

Some sellers have been moving towards independent contractors in the belief that this will help them cut costs. They envision that using an independent agent is similar to hiring a sourcing manager—but for less money.

However, this notion is sorely misguided. Independent contractors fail time and time again when put up against small to mid-sized sourcing companies.

What are the problems with independent agents?

There is a glaring issue with independent sourcing agents that is proving highly challenging for sellers: many agents don’t work in the best interests of their clients. They instead “work” for their suppliers.

Independent agents usually work on a commission rate. That means that you pay them a percentage of those items that they help you source from a supplier.

But they may also be taking a commission from the supplier. Often, suppliers will pay agents a high commission fee to feed them clientele. This means that an agent may have a supplier paying them to push their services. This not only makes the agent bias towards certain suppliers… this makes them obligated to those vendors.

Thus, an independent agent will push you towards a given sourcing supplier… even if they aren’t the right choice for you. Furthermore, their partnered suppliers often bring with them troubling concerns. They could be new, unfounded, or have unethical practices. Or they simply may not offer you the services and products that you need. But your agent will still push you into that supplier.

This also means that a sourcing agent will likely be “on the supplier’s side” if something was to go awry. This can leave you with an uneasy partnership that feels more like a shady transaction rather than a legitimate sourcing partnership.

Sourcing agents aren’t as transparent.

Companies tend to have more transparency because they have to in order to stay in business.

Firms are dedicated to finding the right supplier for you. While an independent sourcing agent will stick to a few suppliers that are paying them, firms have wider reach and access to a variety of vendors and products—so you are sure to find the vendor that aligns perfectly with your sourcing needs.

What are the benefits of sourcing firms?

Even if you find a quality agent who truly has your interests at heart, China is challenging to navigate. Even a contractor with decades of experience may have trouble traversing all the intricacies, regulations, barriers, and communications needed to appropriately source overseas.

A team of experienced contractors—a sourcing firm—can work together in order to better navigate this sourcing field. A firm hires multiple individuals, each with different specialties and responsibilities. In this way, sourcing firms have more available resources, time, and expertise.

With each individual’s specialty comes a unique area of understanding, whether that’s in legality, shipping, packaging, product selection, and more. This generally makes available not only resources and expertise but also potential services. Sourcing firms are able to provide a variety of sourcing and logistics services—because they have the manpower and skills to do so.

This experience also better ensures compliance with global and national regulations. There are more people there to make sure that every step of your process—from consultation to production to shipment to customer service—is impeccable. Firms can help with price negotiation, contract creation, inspection, sampling, order monitoring, and more.

In addition, the best firms have global teams that are based both at-home and overseas. This helps to overcome any cultural barriers while also ensuring that foreign suppliers are credible, reliable, trusting, and delivering on their promises.

Firms also offer connections and resources to which single contractors usually don’t have access. They also tend to offer superior technology processes for data consolidation, inspection, order tracking, and analysis.

Plus, firms tend to be more affordable than contractors. You often pay a flat fee or per service fee, which regulates your costs. When working with an independent contractor, you often have to pay a retainer and commission fee—which can be unpredictable, costly, and ineffective.

The Bottom Line

Ultimately, an independent contractor is a worker. A sourcing firm is a partner.
You want a partner who will grow with you, share mutual goals, and have your best interests at heart.
You want a partner like Ask Idea Sourcing.

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