Now we have put together a helpful checklist to find the right one for your business.
Document exactly what you need
Create a document that lists your requirements from your sourcing agent as well as your supplier. Take your time to ensure that you have listed all your requirements. Remember that business practices differ in each country. Don’t assume that something is understood just because it is a standard in your country.
For your sourcing agent, you must include the scope of services, level of experience, location, language proficiency, and payment structure. Make sure you also define the requirements for the supplier-working conditions, material types, quality, and delivery times.
Set a budget
Your budget is an important factor in choosing the right sourcing agent for your business. Remember to be flexible with your budget as unexpected expenses may crop up anytime. Be certain you are sure about the number of units that you wish to produce. Also, determine the price you want to pay for your products and how much you are willing to pay the sourcing agent. Be realistic.
Decide the type of sourcing company you want to do business with
Sourcing agents can be classified into three main categories:
1) Single sourcing agents: These agents work on their own. The advantage is that they do not work with too many clients at a time and hence may be able to create a personal relationship with your business. The disadvantage is that a single person may also have limited connections. It will be difficult to verify the credentials of a lone individual, which amplifies the risks.
2) Sourcing agencies: These are sourcing companies that employ several sourcing agents, each with their area of expertise. These companies have more resources, and thus, larger supplier networks. The downside is that these companies tend to be more expensive than individual sourcing agents.
3) Sourcing and logistics companies: These are usually larger companies with sourcing as one of the many divisions. These companies, typically, also offer logistics and quality inspection services. The biggest upside is that all your tasks – from finding a supplier to delivering your product to your warehouse – can be done by a single company. The downside is that they can be very expensive. Also, depending on one company for all your needs, especially logistics, comes with its own set of risks.
Since each type of sourcing agency comes with their own pros and cons, you need to decide which one works the best for your business.
Research your sourcing agent
When researching your sourcing agent, don’t limit yourself to Google. Most of us tend to use the first result that pops up on Google. Instead, do a deep dive using other platforms. You should read about the reviews from other sellers and buyers. You should be able to narrow down your choices based on the reviews and testimonials.
You should also speak to their references to find out more about their service and product quality.
Ask for a written quotation
For getting the best deals, it is wise to shortlist a couple of sourcing agents. Request a quotation from each of them, including the price for each service, the way the price is calculated, and the different payment structures that they offer.
Don’t forget to ask for a copy of their business license too. Now choose the offer that best suits your requirements and budget.
Try negotiating the price
Once you have shortlisted an offer, try negotiating the price. Larger companies generally have fixed prices. However, they sometimes have some margin for discounts, which can sweeten the deal. Negotiations can go better with independent sourcing agents because they are more flexible with their payments
You may also want to find out if the price would go down if you place repeat orders.
Document everything that you agree upon
To avoid disagreements in the future, make sure that you document everything that you agree upon. Log important factors like what happens if the product received is of inferior quality or if the consignment is delayed.
Confirm the payment structure, including the amount and type of payment by both parties. Documentation always helps if things don’t go the way you expected.