When you are ordering in larger quantities, it helps to work with a sourcing agent
who can find and vet suppliers, negotiate prices, place orders, conduct quality control and even help with logistics.
But if you have found a reliable supplier that is able to manage quality and deliver on time, you don't need to work with a sourcing agent.
If your quantities are too small, however, agents may not be too keen to work with you because their fees are a percentage of the order value (ranging from 5% to 10%), and if it’s a small order, the fees might not be worth the time and effort they put in to finding and vetting suppliers. Many agents have a minimum order value they will help buyers source.
It is a catch-22 situation for new sellers - you don’t know how to source and could use the help of an agent, but your orders are too small for them.
So what do you do?
Here are some options:
1️⃣ DIY your first few orders. It is actually not as scary as it looks. Go on to a sourcing directory such as Global Sources or Alibaba, search for the product, compare suppliers, send inquiries, and
to minimize risk, place a small order of about less than 100 pieces (may vary from product to product).
Find a good freight forwarder who understands FBA requirements and work with them for labeling and shipping.
Once you scale your orders, consider going via an agent to keep tabs on your orders, identify alternative suppliers and conduct QC.
2️⃣ Work with an agent for selective services and DIY the rest. This may or may not be possible depending on the agent but worth giving it a try.
In the entire sourcing process, vetting suppliers is probably
the most difficult thing to do remotely.
Without actually visiting the factory or having someone visit on your behalf, it can sometimes be difficult to tell if a supplier is really a factory, and how reliable they are. Having an agent or an inspection company such as QIMA vet and audit the supplier you have chosen may give you more confidence in placing your order.
Agents also have their own lists of vetted suppliers, and may be able to recommend companies to you from their own database.
In such cases, you would pay a flat fee to the agent instead of a percentage of the order value.
Once the supplier has been vetted, you
can go ahead and do the rest on your own. Again, many agents may not want to do this because they have the highest potential to earn when they manage your entire order.
A sourcing company may or may not share information about the suppliers they source from.
They also often charge a retainer fee of a few hundred dollars before doing product research and compiling quotes. This retainer fee is adjusted when the final order is placed.
Many big retailers and buyers sourcing products from India use buying agents to manage their sourcing. As an Amazon seller, as you scale production, it helps to outsource your sourcing so you can free yourself for focusing on other strategic aspects of the business.