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

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. Check if the Sourcing Agent is paid by suppliers 

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. Check If the Sourcing Agent works on a commission basis

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. 

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. 

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.

Sourcing Agencies Business Model

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. 

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.