Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Sourcing Agent — The Ultimate Guide of 2024

Key takeaways

  • A sourcing agent is a professional who assists in finding the right suppliers.
  • Sourcing agents and agencies streamline procurement, bridging language and culture gaps, reducing risks, and optimizing benefits.
  • Dealing with sourcing agents should be treated like any other negotiation; by doing research on their cultural backgrounds and treating them with equal respect.

Sourcing is innate in the procurement process. It is what we call the lifeblood of the company. With this in mind, we know that not all materials can be bought in a single country. Hence, how do companies source materials in other countries? Who are they going to contact?

This article will guide you on what a sourcing agent is. We will tackle their responsibilities and qualities. We are also going to discuss sourcing agencies and the services that they provide

Once you finish reading this article, you will acquire the knowledge needed to select the right sourcing agent or agency to assist your company’s sourcing process. So, without further ado, let’s begin!

I have created a free-to-download, supplier questionnaire template. It includes a PDF file that contains the questions that you can ask your suppliers to assess them effectively if they are the best partners for your procurement process. 

What is a Sourcing Agent?

A sourcing agent works with a company to help them locate sources of products and supplies for low prices. In simplest terms, a sourcing agent will help you find the right supplier that also matches your requirements. Sourcing agents provide the following services:

A sourcing agent can be a single agent or a business that serves various companies. After you select your supplier, the sourcing agent will help you negotiate the terms and conditions to ensure transparency. 

A domestic company may hire a sourcing agent to source for the best prices within the country. This is because sourcing agents have connections with numerous suppliers that the company needs. 

A company may also hire an overseas sourcing agent. They entrust the agent to locate companies that can work overseas. The sourcing agent will make sure to assess their needs and find the best supplier that matches their requirements. Sourcing agents do this to satisfy the demands of the company.

Types of Sourcing Agents

Here are the different types of sourcing agents you may need to be aware of:

1. Independent Sourcing Agents

These sourcing agents work on their own and can only work with a few clients due to their independence. However, working with a few clients gives the advantage of building a personal relationship with them. 

Independent sourcing agents usually work in the comfort of their homes or rent a small office. However, some have extensive experience working in a trading or sourcing company. 

Although they may have extensive experience in sourcing, they may be difficult to find. Independent sourcing agents also have smaller networks than those sourcing agencies. 

2. Sourcing Agencies

Sourcing agencies hire numerous agents and assign them to different focus products. For example, sourcing agencies may delegate the furniture to one of its agents and assign the beauty products to another. 

They boast a larger supplier network as they are supported by various teams employed in the agency. Sourcing agencies cost a little more than independent sourcing agents due to their large network. 

3. Full-Service Sourcing & Logistic Companies

These are companies that offer sourcing as one of their various services. Full-service sourcing is the most expensive of all three types. However, they pose a great advantage as they can also deliver essential products

Significance of Sourcing Agents

There is a saying that goes, “No one knows it all” and it is true. Dealing with foreign suppliers is a hard task as you have to learn their background. 

Sourcing agents know the language and cultural background of the country they are dealing with. This lessens misunderstandings that the suppliers might take offensively.

Sourcing agents also increase your chance of finding high-quality goods that match your budget or even for a lower price.

Benefits of Having a Sourcing Agent

Here are the benefits of having a sourcing agent that you need to be aware of!

1. Saves you time

Hiring a sourcing agent in your company saves you time. You do not have to spend a lot of time surfing the internet just to find a supplier.

Hiring one will simplify your task and you can also pick those who you think are best for you. Your sourcing agent will handle all the things for you that will save you time in sourcing your materials. 

2. Reduces barriers

A sourcing agent must know multiple languages which will reduce the language barrier. This lets them lay out the details of terms understood by the supplier.

A sourcing agent also knows the culture of the supplier. This will limit the omission of any offensive remarks that may upset the supplier. 

3. They are negotiation experts

A sourcing agent knows their network more than anyone else. It knows the limit of discounts a supplier can give regarding the price.

This allows them to maintain the quality for a low price. A sourcing agent makes the negotiation easy and fast by speaking the language of a foreign supplier.

4. Reduced the risk of scam

If you are sourcing for suppliers with little to no knowledge about them, you are in danger of getting scammed.

Sourcing agents help you by ensuring a supplier has its certificates and licenses to operate. It knows the criteria to meet the company requirements to avoid any scams. 

5. Extensive experience and wide network

If you hire a sourcing agent, you do not just hire a person. You also pay for the expertise and networks it has.

With this in mind, you know that you cannot go wrong in finding the right supplier due to its experience. 

Qualities of a Good Sourcing Agent

Now that you know the benefits of having a good sourcing agent how do you find one? Don’t worry we have you covered on that too!

1. Transparency

Sourcing agents must be able to show you that they have a license to clear any doubts about them. They must be able to rely on information about the costs of materials to ensure that no one omits fraud. If you want to visit the supplier, they should not hesitate to agree to show transparency. 

2. Communication skills

Communication is the key to building a good and long-lasting relationship with suppliers. That is why sourcing agents need to learn the language and background of the supplier. It is important to note that it will be the one who will mediate between the buyer and supplier.  

These agents need to communicate the terms that you want for your needed supply. Failing to communicate the details will not get you the products that you want. 

3. Have experience and networks

It is okay to work with starting sourcing agents. But if you have all the resources to hire an experienced one, why not? A sourcing agent’s experience shows that it is trusted in the sourcing community. It also shows that it has numerous networks that you can use to your advantage. 

Things You Need to be Aware of in Hiring a Sourcing Agent

If you’ve followed our steps so far then maybe you have a sourcing agent lined up but before you hire them here are some things you should know.

1. If it is paid by the supplier 

If a sourcing agent is paid by a supplier, then you should already doubt hiring it. Why? Because the loyalty of the agent is to the supplier it will push its own agenda toward you. This will only create a conflict of interest. 

2. If it works on commission

Some contracts state that a sourcing agent will only get paid when you accept the goods. If it has seen any defects in your products, there is a high chance that it will not tell. Because it will not get the commission unless you accept the products that you need. 

Where Can I Find Sourcing Agents?

As we told you earlier, a sourcing agent helps his/her clients locate sources of products and suppliers that they can buy for a low price. Thus, you need to find a trustworthy sourcing agent as he/she will save you lots of time, money, and effort in your procurement. 

These sourcing agents are mostly in China. Thus, it is important for you not just to search for sourcing agents but to treat them like you would any other negotiations; by knowing their cultural backgrounds to avoid miscommunication and treating them with equal respect. Furthermore, you can find lots of sourcing agents just by searching on the internet. 

You can also try to check for sourcing agencies to free yourself from the hassle of searching for independent sourcing agents. 

What is a Sourcing Agency

A sourcing agency, like sourcing agents, is employed by the client to source and purchase products that are far from its reach. That is why they are undeniably needed in international trade. 

In the past, the only job of a sourcing agent or a sourcing agency was to find suppliers for their clients. This includes selecting the right supplier, negotiating the price, quality control, product compliance, testing, and shipping. 

Before, they were not required to provide the full range of services. The scope depends on the agreement they agreed upon. However, times have changed a lot and so is the competition in gaining a client. 

    Difference Between Sourcing Agency and Sourcing Agent

    A sourcing agent is an individual sourcing agent who you can hire as a full-time agent. It usually has two people working for it and a small rented office.

    Some sourcing agents have several years of experience working in a sourcing or trading company. Some are freelancers that you can find on websites like Fiverr and Upwork. 

    On the other hand, a sourcing company is supported by a group of professional sourcing agents. It can serve numerous buyers at the same time as they are a group. Sourcing companies are usually seen or found in industrial clusters. 

    A sourcing agency and a sourcing agent are both a link between their clients and suppliers. The main difference between these two is which one you prefer the most to source materials for you.

    Services That Sourcing Agencies Provide

    Sourcing agencies have different functions and services they provide. Their responsibilities are not only limited to finding suppliers and handing them over to you. Here are the various services a sourcing agency can do for you:

    1. Supplier selection

    Supplier selection is the basic service a sourcing agency can provide. Typically, a sourcing agency will not give the information of the supplier directly. Since the information that they will give you is their asset that is why you can get a competitive price from sourcing agencies. 

    Additionally, they will not give immediately the information as some agencies charge based on the percentage value purchasing of the total goods. 

    2. Price negotiation

    Other than sourcing suppliers, sourcing agencies are the ones who will negotiate with the supplier on behalf of their client. 

    They do this obviously because they know the supplier better than their client. Also, it knows negotiation tactics that will give its clients the best price in the market. 

    3. Follow up the production and quality control

    A sourcing agency will coordinate with the factory to monitor the whole production process. This will ensure that the factory will finish the production on time and that the quality meets the requirements of the client.

    4. Product compliance and shipping 

    The last step of their service is to ship the products to their client’s location. Shipping arrangement needs a high level of expertise. 

    Other than bargaining for low shipping prices, a sourcing agency also informs you of the necessary documents and certificates that you need to prepare for Customs of the country.

    How Do Sourcing Agencies Get Paid?

    Do you pay sourcing agencies for their service? Not really. As a client, you don’t have to pay a fee upfront when you avail services from sourcing agencies. Instead, sourcing agencies profit from these:

    1. Gain from the price difference

    Typically, the agency can provide suppliers with competitive prices with good product quality that is impossible for their clients to find just by searching on the internet. With this, they can gain profit with the price difference of the product. 

    2. Percentage fee based on the product value

    This method is the most common among sourcing agencies. Since they provide services from sourcing to shipping, they charge a certain percentage value of the goods as a service fee. It is common in China to have a service charge of around 5 to 10% of the final order value. 

    Many sourcing agencies do not accept a service charge lower than 5%. Some will try to attract you with a lower service charge but you will end up finding that the price of the product is higher than what you can find online. 

    Who Needs The Services of a Sourcing Agency?

    Are there specific types of clients needed to avail of the services of a sourcing agency? Of course not. It’s not a requirement, but a few clients with specific qualities may need the services of a sourcing agency. These are:

    1. People with no experience with the importation

    If you import overseas, you need to comply with a lot of requirements and documents to authorities. That is why it is better to hire experts who have experience in overseas purchasing to help you with your business. 

    2. People with multiple product categories

    When selecting suppliers, you will not immediately have a list. You will also go through the process of calling 10 suppliers to ask for a single product. This is a tedious task that requires a lot of patience. 

    This is the time you can consider hiring a sourcing agency. Sourcing agencies will help you in calling numerous suppliers for your multiple product categories. 

    This will allow you to focus more on other things as the sourcing agency will do all the sourcing for you.

    3. Large retailers

    You may think that retail giants do not need sourcing agencies as they have extensive experience when it comes to sourcing. But that is far from the truth. Retail giants need them to manage their supply chains efficiently. 

    Large retailers have many products and it would be impossible to purchase the products directly from the suppliers themselves. That is why sourcing agencies are needed so that they will be the ones to do all the tasks in purchasing the products. 

    4. People with special product categories

    It is quite difficult to find suppliers of special products on the Internet. A sourcing agency can help you as they have a huge network of suppliers to source your special products. 

    Examples of Sourcing Agencies 

    Due to its rising relevance, there are many emerging sourcing agencies worldwide. To help you with your sourcing needs, here are a few examples of sourcing agencies specializing in different focus areas: 

    1. Jing Sourcing

    Jing Sourcing is named after its founder, Mr. Zhu Jing. This sourcing company is based in Yiwu, Zhejiang which is the leading hub for wholesale products in China. 

    Jing Sourcing has a great digital presence and offers small buyers free product sourcing services. All it needs is the product name and it will get back to you with quotations from its network of suppliers. 

    2. Asiaction Sourcing

    Asiaction is a French-owned procurement agency based in Guangzhou, China. It is originally focused on the home and furniture space. Today, it offers a wide range of product development and procurement services that cover several industries. 

    3. Baysource Global

    Unlike other agencies, baysource global is based in the United States and its head office is in Tampa, Florida. It mainly offers a wide range of services to US clients from contract manufacturing to sourcing services

    It is another agency that offers a complete set of sourcing services from product identification to product development and delivery.

    Conclusion

    Sourcing agents and agencies may initially appear as an additional expense for your company.

    However, the benefits they offer far outweigh any associated risks. With their expertise and networks, sourcing agents and agencies can streamline your procurement process, negotiate favorable terms, and ensure timely delivery of quality goods.

    Now equipped with comprehensive knowledge about sourcing agents and agencies, you can confidently seek out the perfect partner to suit your company’s needs.

    Whether it’s navigating international markets, managing supplier relationships, or optimizing cost-efficiency, a reliable sourcing agent or agency can be instrumental in driving your business success.

    Frequentlyasked questions

    What is a sourcing agent?

    A sourcing agent helps a company to find its needs through its various networks.

    Do I need one?

    There is no rule that states you need a sourcing agent. But it will benefit your company greatly if you have one.

    How much is the salary of a sourcing agent?

    The average salary of a sourcing agent in the USA is $65,000. The salary depends on each country. It also depends on whether the sourcing agent is on a commission or an hourly basis.

    About the author

    My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.

    Marijn Overvest Procurement Tactics