Nowadays, purchasing agent play an increasingly important role in the global supply chain. However, many enterprises are still confused about the services and advantages of purchasing agents, especially the ambiguous and outdated information on the Internet that misleads them.
Therefore, I have sorted out six purchasing agent problems that buyers are most concerned about and confused about. In this article, I give you the most objective answers, hoping to help you.
Purchasing agent are individuals or organizations that purchase goods and products that buyers cannot reach. Purchasing agents are often required in international trade.
Traditionally, sourcing agents have only sourced suppliers for their clients. In fact, the services provided by purchasing agents can include selection of suitable suppliers, price negotiation, follow-up production, quality control, product compliance and testing, international logistics transportation, etc.
Three major advantages of purchasing companies：
Reliable sourcing plays an important role in the international sourcing trade.
A. They can find suppliers with competitive price and good quality.
A good sourcing agent can help you find competent and reliable manufacturers. Because a good purchasing agent has accumulated a lot of high-quality factory resources that may not be found online.
B. Purchasing efficiency can be improved.
China sourcing companies can help you overcome cultural and language barriers. He knows exactly what you want, negotiates product details with suppliers, and then passes the information to you in fluent English, greatly reducing communication costs.
C. Reduce the risk of importing from overseas.
A good sourcing company is experienced in handling product production, quality control, compliance certification, import and export process rules, and international shipping.
Purchasing service fees vary depending on the scope of services you order with your reseller. Therefore, it is necessary to clarify the scope of services and charging standards before starting cooperation to prevent some potential disputes.
The following are the main services provided by most purchasing agents:
1) Purchasing product suppliers
Verifying and selecting suppliers that meet customer requirements is an essential service for every sourcing agent. They will negotiate with suppliers on behalf of buyers to get the best price and confirm production details.
However, some buyers may struggle with whether a sourcing agency company should provide them with supplier information. Some even believe that agents are cheating them or making dirty money by not providing them with supplier information.
Let me explain to you here that whether supplier information is provided to buyers depends on the service model of the purchasing agent.
Personal Purchasing Agent
Some personal buying agents can be found on Fiverr or Upwork, and they usually earn a flat salary (by the hour/day) or individual projects for a commission. This kind of cooperation is like finding yourself a purchasing assistant in a foreign country.
Essentially, the buyer pays the commission to obtain the supplier’s information, so the agent is obliged to provide the buyer with the supplier’s contact information, and the buyer will communicate with the supplier to negotiate the price.
In the case of Purchasing Agency, they will not provide supplier information directly to buyers. Here are two core reasons.
First of all, these high-quality suppliers are their accumulated resources (including those that cannot be found on B2B websites, such as 1688.com), that's why you can get competitive prices from sourcing companies.
Secondly, they charge service fees according to a certain percentage of the total value of the goods, that is to say, this is their profit model.
Although they did not tell the buyer the contact information of the factory, they are willing to take the buyer to visit the factory so that the buyer can have a certain understanding of the factory's production capacity. But this usually happens with larger orders.
If a buyer buys $5,000 in clothes or $5,000 in groceries, they're less likely to take the buyer overseas to tour a factory.
2) Follow up production, inspect quality, arrange shipment
Once you've found the right supplier, it's time to arrange the production of your merchandise. The purchasing agent company will help to coordinate with the factory, monitor the whole production process and make sure the factory completes the production on time and guarantees the product quality.
They will also provide quality inspection services. They will cooperate with quality inspection companies to inspect the products and minimize the defective rate before shipping.
In addition, some excellent purchasing agency companies will also have their own product quality inspection team, they will provide buyers with more intimate Product Quality Inspection Service, which not only reduces time and communication cost, while ensuring product quality.
Then the final step is the shipping arrangement, which requires a high level of expertise. In addition to the competitive shipping cost, they also need to inform you which documents and product certificates you need to prepare for customs, such as CE, RoHS, FDA, COC, etc.
Most purchasing agents or companies can also provide these services. You can choose any part of their service according to your situation.
3) other service
In addition to the above-mentioned mainstream services, some large-scale professional purchasing companies also provide private label solutions, including but not limited to the following aspects:
Free Product Photography for Ecommerce
1) People with no import experience
Importing from overseas involves too many complicated aspects, such as finding suitable suppliers, follow-up production, product testing and product quality control, as well as international shipping, etc.
If you have no experience in overseas sourcing, you can find a Chinese sourcing agent to help you start your import journey.
2) Amazon, eBay and other e-commerce platform online stores
Companies or individuals operating on e-commerce platforms such as Amazon, Ebay often face fierce competition from similar businesses. To maintain a leading edge in terms of price, quality, and style, they need to find a reliable purchasing agency company from China to solve problems such as product purchasing, quality inspection, and international transportation for them.
3) Large retailers, supermarkets
Does it mean that large importers with capital and experience do not need purchasing agents? of course not! Large enterprises also need them to better manage supply chains.
Take supermarket chains as an example, they need to purchase thousands of types of goods. It is almost impossible for them to personally go to every factory to source every product.
Retail giants such as Wal-Mart and Target purchase products through purchasing agents or trading companies.
Since there are thousands of sourcing companies and individual sourcing agents around the world, there is no specific fee schedule. Purchasing agency fees vary greatly depending on the scope of services, cooperation methods, product categories, and order amounts.
In order to let everyone have a general understanding of purchasing service fees, I will introduce three common charging methods for purchasing agencies below.
1) Charge per order or monthly
Many individual buying agents charge a flat fee per product or for a specific period (week/month). They usually charge less than $50 per product. It's cheap, right? You can discuss your products and establish business relationships directly with your suppliers.
But the disadvantage is that these agents are usually unprofessional, and the suppliers they find are usually not the most cost-effective.
Some experienced buyers prefer to hire an individual full-time sourcing agent for weeks or months to do more delicate sourcing tasks such as sourcing suppliers, translating and communicating with suppliers. If you want to import from China, you can hire a full-time Chinese sourcing agent for around $800 - $1000 per month to work exclusively for you.
2) No additional fees, but benefit from the difference
Many purchasing agency companies use this method of charging. Usually in this case, there is no problem with the product quality, but the product price may be much higher than other purchasing agency companies, which will undoubtedly increase your purchasing cost.
Conversely, if buyers can find competitive prices on their own, they will never consider such a sourcing agent.
3) Service charge based on percentage of product value
Charging a percentage of the entire order value is the most common practice for buying agency companies. Why? Because they usually provide other services, such as order follow-up, product quality control, international shipping, etc. So, they charge a percentage of the value of the item as a service fee.
In China, the general purchase service fee is about 5-10% of the total order value. Another point, product category and order size are also likely to affect this percentage. For example, if the order is for a highly price-competitive, high-demand product such as steel, or if the order value exceeds $500,000, the service fee may be around 3% of the order value.
Usually, very few purchasing companies are willing to accept a service fee of less than 5%. There are indeed some sourcing companies that may try to woo you with a service fee of 3% or less, but you will end up finding products that are priced much higher than other agencies or most online suppliers like 1688.com. Or, even if you get a sample that satisfies you initially, you may end up receiving a poor quality shipment.
Note: No matter which charging method is adopted, it should be evaluated whether the purchasing company can reduce your overall procurement cost, improve procurement efficiency, and ensure product quality, etc.
You may have heard some bad things about purchasing agents, such as accepting kickbacks from suppliers, shoddy goods, and lack of experience, which make buyers afraid to choose purchasing agents easily.
Next, I will analyze the purchasing agent issues that everyone cares about.
1) Rebates from suppliers
For example, suppose you get two identical prices from supplier A and supplier B. If supplier B gives a rebate to the purchasing agent, the purchasing agent may choose B regardless of whether B’s product is of good quality or not.
If your purchasing agent accepts kickbacks, you may encounter that the goods you receive do not meet your quality requirements, or the products do not meet the certification requirements of your market, so they are illegally imported and sold.
If the quality of the product is in dispute, your sourcing agent will not side with you nor try to defend your interests for you, but is more likely to excuse the supplier with various reasons.
Objectively speaking, this kind of kickback behavior usually occurs on large orders of tens of thousands of dollars. For small orders of thousands of dollars, most sourcing agents won't bother to engage in kickbacks or bribes.
Compared with 4-5 years ago, there are much less kickbacks now, especially in the daily necessities industry. Because buyers can directly find suppliers through many channels, such as B2B websites including Alibaba, Made In China, DHgate, GreetBuy.
They can make a comprehensive comparison by themselves, and then weigh whether the product price and service commission provided by the purchasing agent are reasonable.
2) The service fee looks low but is actually high
Many purchasing agent companies attract customers with low service fees or even free trial orders, but buyers will eventually find that the overall procurement cost (product cost + shipping fee + time cost) is not low at all. Buyers may receive unsatisfactory goods even when agents claim they have inspected them.
In fact, although the purchasing agent charges a low service fee, it does not mean to provide you with a good product purchasing service. They will give higher product prices to compensate their profit, but you have no idea. Customers who do not understand the product can easily be deceived.
Business is not charity. No purchasing agency company hopes to charge less than other purchasing agencies, but provide the most reasonable product quotations and provide the best quality and complete services.
The collection of service fees must comply with industry regulations. Therefore, the service fee should not be the only criterion for you to choose cooperation with purchasing agent.
3) Unprofessional or inexperienced purchasing agents are common
In recent years, many sourcing agents emerge in an endless stream, but most of them are not professional or inexperienced in China sourcing. They just know very little about this industry, and then a few people start their own business with almost zero foundation.
They do not have the concept of purchasing services, do not expect long-term cooperation, and only do one-off business, so the quality of service cannot be guaranteed. If you are new to importing from China and have no experience in choosing a reliable sourcing agent, it should be no surprise that you find unprofessional or inexperienced sourcing agents.
As mentioned above in purchasing services, a series of services provided by purchasing agents require time, experience and resource accumulation, including a lot of cooperation, trial and error.
With these accumulations, they can find the best products and suppliers for customers from numerous factories and suppliers. But young or unprofessional purchasing agents cannot provide or realize these resources.
Conclusion: There are good and bad sourcing agents in this industry, but you don't have to be afraid to try sourcing services. A good purchasing agent plays an important role in your supply chain management, helping you get competitive product prices, and also responsible for the follow-up process, because good service is the core competitiveness of their business model.
1) Method 1: Choose Chinese Sourcing Agent VS Choose Non-Chinese Sourcing Agent
Since China is the largest exporter of consumer goods, Chinese sourcing agents account for the vast majority of global agents. So I divide purchasing agents into two types: China purchasing agent and non-Chinese purchasing agents, and list their differences, advantages and disadvantages respectively.
Pros and Cons of Non-Chinese Sourcing Agents
Generally speaking, purchasing agents in other countries are locals of a certain country, helping buyers in their own country to source goods from China, Vietnam, India, Malaysia and other countries.
They usually have their own offices in the purchasing country as well as their own country. The team usually has several people, mainly serving some big buyers.
Pros and Cons of China Sourcing Agents
Compared with non-Chinese sourcing agents, Chinese sourcing agents charge much lower service fees.
However, they have a more professional purchasing team and richer Chinese supplier resources than non-Chinese purchasing agents.
However, due to language differences, they may not be able to communicate with you as well as your local agent.
In addition, China's procurement industry is mixed with good and bad.
2) Method 2: Choose a purchasing agent who specializes in a certain industry
If you want to import many different types of consumer goods, choose a sourcing company that has already sourced many consumer goods for previous buyers.
If you specialize in the import of certain industrial products, then find a buying agent who specializes in this industry, such as building materials, medical products. Because these purchasing agents must have accumulated a lot of good suppliers in this industry and can give you reasonable purchasing and production suggestions.
3) Method 3: Choose a purchasing agent close to the industrial cluster
Each country has its own industry clusters, which are collections of similar and related companies within a specific geographic area.
For example, if you want to source daily necessities from China, a purchasing agent in Yiwu is a good choice. In terms of clothing, Guangzhou has more advantages.
Close to industrial clusters, it is convenient to contact with factories and reduce intermediate costs, such as product quality inspection fees, international freight, etc. For example, if you want to purchase electronic products, the purchasing agent in Yiwu will not have a better price advantage than the purchasing agent in Shenzhen.
4) Method 4: Inquire about the services provided by the purchasing agent
An excellent and reliable purchasing agent will not only help you purchase and transport goods, they will provide you with competitively priced products, they also need to escort your product quality, and at the same time provide you with considerate after-sales service .
So you can see what a buying agent does best: are they good at finding the best prices or inspecting products? Can they provide good after-sales service?
5) Method 5: Choose a purchasing agent with longer purchasing experience
Purchasing experience is an important factor you should consider. A company with 10 years of purchasing agency experience is obviously more reliable than a purchasing company that has only been established for a few months.
The number of years he has been in the industry is a testament to his track record. This means he is consistently delivering quality business to his clients.
He should be very competent in quality control, logistics and auditing in addition to his knowledge in selecting suppliers.
For example，GreetBuy is a trusted sourcing agent company。Greetbuy provides global users with one-stop and full-process purchasing agent services for Chinese goods, product sourcing, order processing, product quality inspection, photo taking, free storage for 90 days, international logistics delivery, after-sales and so on. Our excellent and considerate service of purchasing, quality inspection, product photography, value-added service, warehousing, logistics, after-sales service and so on can solve all the problems you encounter in purchasing Chinese products.