So you have some product ideas but you are not sure about how to find a good supplier or doing all the work to find the product is too time consuming. Why not try an agent?
Here are our top tips for dealing with Sourcing Agents.
Tip 1 Work, Work and More Work
Okay, so you’ve got a great product idea.
Turning it from an idea to reality that’s ready to sell product is the hard part. Just on Alibaba or globalsources there can be 100 to 1000 factories who can make your item.
Before you can know which one to choose, you have to contact them all. Rather than try to do everything yourself, a local agent in China can find the exact product you need faster than you can.
Then later on, when it comes to checking the quality during production and booking local trucks and freight, having someone on the ground saves you a lot of time.
If you’re new to dealing with China, agents can guide you through the process with their years of experience.
Tip 2 Trustworthy
If you find a great agent, it can speed up your success.
The problem is finding a good, trustworthy agent. They need to know Western quality standards, be honest, understand manufacturing, and also be able to control and manage the factories.
I would recommend you try to find a Westerner based in Hong Kong or China who has been there for a few years doing a manufacturing related job.
Many Chinese agents have never traveled to Europe or America or lived there, so they can’t know what the standard of the product should be in those markets if they don’t use them in their day-to-day life. You need someone who is familiar with using your type of product or aware of what the quality standard should be.
It may cost you 5 to 15% on top of the product cost for a good agent but you will more than save this in the long run. Search Google, ask people on Facebook groups, and post in the forums asking for recommendations for a good sourcing agent.
Tip 3 Language
It helps massively if your agent can speak Chinese.
But more important is their ability to understand the mentality of the factories. If something goes wrong you need someone who knows how to handle negotiations delicately.
It’s very rare that a factory will say it’s their fault will offer fix it. Most of the time they deflect the blame to you or anything else they can, even when the error was caused by poor workmanship.
Knowing how to properly handle the factory can prevent delays and major quality issues. So if you are not experienced yourself, get someone who is on your team.
Tip 4 Price
The price for a hammer can go from $.10 to $10.
The $10 one might be worse quality than the $.10 one. Price and quality are not directly linked in China.
Instead of going after the lowest price, you should be looking for a factory that has a decent quality standard and a reasonable price. Asking your agent to negotiate the price down could end up saving you 2 or 3 times the commission you pay to the agent.
There’s no question that having an agent easily pays for itself.
Tip 5 Speed
You’re new to this business and so every step is a learning experience.
What takes you a few days might take an agent who is located in China just a few hours to sort out.You need a responsive agent who gets back to you within 24 hours or less with answers to your questions, someone who is nearly always available to go over important developments for your product.
If they have too many customers and things are moving slowly, it’s best to start looking for someone who can focus on your products more.
Tip 6 Bribes
A lot of the buyers from major retailers we used to deal with took bribes.
Many of the quality control inspectors from major global inspection companies also took bribes. Import export transactions can be for hundreds of thousands of dollars. People get greedy and want a cut.
Your agent may be charging you 5% percent but then also asking the factory for an additional kickback of 10%. That’s okay, because you will never have total transparency of your supply chain.
Even the factory that’s making the product might subcontract it to another smaller factory without telling you. You can’t monitor every single aspect of the supply chain. So what you should focus on is whether the people you’re working with are responsive, that the price is reasonable and the quality good.
If you are getting a decent product at a price that is profitable for you it doesn’t matter if your supply chain partners are making an extra 5%.
The best way to ensure some transparency is to offer a generous commission to agents in return for a total open book policy. What I mean is that instead of trying to squeeze them and only pay 5%, offer them 10 to 15%.
In return, they need to tell you exactly who the factory is, put you in direct contact and let you ask the factory about price if you ever visit the factory.
Tip 7 Quality
At the end of the day, if you pay $2 for your product or $3 it doesn’t matter if the quality is bad.
Your first focus when reviewing samples or choosing a factory should always be quality. Pay your agent $200-$300 to go and do an inspection of the goods during production and after production.
Spend the extra money up-front to make sure the factory can produce to a high standard. This will save you a lot of headaches later and will result in more positive feedback from your customers, boosting your conversions which in turn increases your sales.