Working with a sourcing agent has been the norm for businesses that are in the e-commerce landscape. Sellers on platforms such as Amazon or eBay are most likely getting their products in China through the services of a sourcing agent and for very good reasons, too. Why China? Mainly because of the lower production costs which will undoubtedly help a business save more money.
Sourcing in China comes with a lot of risks since you will be dealing with foreign manufacturers. You will need to have sufficient knowledge and experience when dealing with them. Hiring a sourcing agent can reduce those risks but it is still not a foolproof plan. To guarantee that you get your money’s worth and avoid getting scammed, here are 7 mistakes you should avoid when looking for the best candidate.
- Not researching well about the agent’s background. Since product sourcing is pretty much an on-demand service nowadays, the number of China sourcing agents has gone up as well. There are many places where you can find agents or companies which can be intimidating if you don’t know where to look for. One big mistake you can do is not doing a background check on a potential choice.
It’s easy to just pick the first option you think would fit within your budget and expectations that can provide sourcing services immediately. However, this is a bad practice and probably gives you problems. You are lucky if you choose someone reliable but it’s better to be safe than sorry so you need to assess their background well. You have to meticulously go over the details such as how they work, where are their offices located, or how they solve problems. You can cross-check their reliability by asking for references to solidify your decision. Also, ask for their business license to prove that they have the permit to operate.
- Choosing an agent who lacks experience. The market is already full of candidates so why would you gamble with someone who isn’t experienced? Product sourcing in China requires knowledge since they have different laws and regulations. Experienced agents know where to look for legitimate manufacturers and suppliers, avoiding those who have poor working conditions and a history of unlawful practices.
You need to get an agent who can lead you to a reliable manufacturer and help you maximize your profits. They must understand how the Chinese market works and also understand their language. Agents who have been in the business for years are already fluent in Chinese which allows clear communication between you and the manufacturer. They are also experienced negotiators who will get you the best deals while ensuring that the manufacturer will give produce quality results.
Payment before verifying. Never pay upfront before verifying the authenticity of both the agent and the manufacturer. If an agent tells you to pay everything in advance, it’s probably a scam and you should stop working with them. Normally, there would be an agreed payment structure between you and the agent or they would ask for a deposit first and then pay the rest after the services have been provided. This is why you should validate if the agent and the manufacturer are legitimate because you don’t know if your money is used for production.
Poor communication. Mistakes in production are usually in the hands of the manufacturer, but there are instances where it also falls on you due to poor communication between you and the sourcing agent. Not being clear on your demands would only result in substandard product quality. You have to accurately define your standards and expectations from the start so that the agent would relay them to the manufacturer.
Details are very important because your agent will use them as a basis on how to find the right supplier or manufacturer. If the communication isn’t clear between you and the agent, there would likely be miscommunication and misunderstanding with the manufacturer as well.
- Not asking for product samples. Once your agent finds a manufacturer that can produce the specifications you want, don’t just wait until your orders are finished. Ask for a product sample to check the finished product and see whether they pass your standards or not. If you proceed with bulk production immediately, you won’t know whether your products will come out just as you want them to. This would only result in logistics and financial problems which you don’t want to happen.
So by asking your agent to have the manufacturer send samples, you can tell them your suggestions on how to improve the product and align it with your vision.
- Not doing a pre-shipment inspection. If you have approved the product sample and ordered to proceed with the production, there’s still no guarantee that all products would be in great condition. Quality control is an essential part of the process to ensure that the products would be ready for shipment. If your sourcing agent doesn’t perform inspections, defective products would pass through shipment and end up on your customer’s doorstep. This will result in dissatisfaction from your clients and will affect the performance of your business.
A good sourcing agent inspects the quality of the products throughout the whole production process. They should know your specifications by heart so they know what to look for. If they spot some mistakes in the quality, they could have the items fixed or replaced immediately to avoid delays in shipment.
- No written contract. The biggest mistake you could ever make when hiring a sourcing agent is not having a written contract. A contract is important for all business transactions. It serves as protection in case your sourcing agent fails to hold his end of the bargain so you need to put your agreement into writing to prevent any loopholes. The details of the contract should be clear and specific and you should check the facts a few times before signing it.
Documenting the things you have agreed on will be your basis in case problems arise or if you need to settle a dispute with your agent or manufacturer. If you can, ask the help of an attorney to draft your contract.
The benefits of hiring a sourcing agent outweigh the disadvantages, but it doesn’t mean that you are free from the risks. If you aren’t careful, you could be losing more money by choosing an agent who’s not credible. So to guide you in the selection process, avoid the points mentioned above and be diligent with your decision-making. Still unsure? Here is a short guide you can read.
Trust only the best
The best sourcing partner you could ever have is someone who will help you grow your business. Lansil Global is packed with experience and armed with other services that can maximize the potential of your business and give you the best results.