Procurement is a risky business operation. The outcome can be unpredictable due to the factors that can affect it since monitoring every step is impossible. This problem is even more magnified when you are procuring in a low-cost market such as China. Because it is in a different country, more often than not, your expectations might not be met due to miscommunication caused by the language barrier.
However, there is a way to mitigate these risks and have a successful procurement. When dealing with the Chinese market, you need to find someone who knows their way around. Someone who is capable of acquiring the products you want
What is the difference between a sourcing agent and a distributor?
You have two choices when it comes to an expert in procurement: a sourcing agent and a distributor. If you want to lessen the risk and be more confident that you will be able to get good products, then it’s better to hire either one of the options to maximize the procurement process. But what do they actually do to source products?
A sourcing agent acts on your behalf and meets different suppliers or manufacturers and sources the products you are looking for through them. They earn by making a commission on their sales. On the other hand, a distributor buys products in bulk or wholesale and they earn by re-selling these products at a marked-up price.
Before hiring anybody, you must know the difference between a sourcing agent and a distributor. Both of them have similarities when it comes to the nature of their responsibilities but there are key differences that can help you to determine which is the better option for you.
Here are the criteria when deciding which one are you going to choose:
- The range of products offered
Because they only buy in bulk, a distributor can only offer a limited range of products and brands. You can only choose from the available items in their inventory. A sourcing agent gives more flexibility since they can connect to a wide network of manufacturers that can produce the product that you have in mind.
A sourcing agent offers customization of your products, unlike a distributor. If you have specifications in mind, an agent can pass them along to the manufacturer for production. You will also have the final say when approving the final product or have it changed to your liking.
- Varying costs
Costs are something every business owners always take into consideration especially if they are new. You would want to hire someone who would get your money’s worth. The most cost-effective solution would be getting a sourcing agent since you can buy the products at their original price and the agent will earn a commission once the sale pushes through. You may get the products offered by a distributor but they mark up their prices above the regular rate.
Want to source a product but you’re not sure if it is what you are looking for? Then, you should consider prototyping. Prototyping is asking the manufacturer for a product sample to see whether the product fits your specifications before placing your order. A sourcing agent can help you find the right manufacturer or supplier that will deliver your expectations. Distributors cannot offer prototyping as they only deal with finished products.
- Quality control
Nobody wants a defective product which is why quality control is important when sourcing products. You want the products you sell to be in great condition when they reach your customer’s doorstep. A sourcing agent offers quality control service to ensure that there are no defects and that the manufacturer followed the specifications closely. On the other hand, a distributor can’t give you the same service as they only offer the products they have as is.
If time is important and you won’t be needing customizations for your product, then you could get a distributor. Since they have products ready on hand, delivery won’t take long. Businesses with small volume orders would also greatly benefit from hiring a distributor. Hiring a sourcing agent is the way to go if you have large volume orders and opt for customization. They provide more flexibility and control but that would also mean it would take time before shipment.
So what is the best option when sourcing products? It will be completely up to you. You should consider the criteria listed above to help you make the right decision. There’s not a one size fits all choice so the factors mentioned should be your guide. If you don’t care much about customization and want to purchase ready-made products for fast delivery, then a distributor would be a suitable partner. However, if you have a specific product that you want to be made, a sourcing agent can help you better.
Need to put your ideas into a product? Lansil Global can assist you in finding the right manufacturer that can do that for you. Drop us a message today!