China is the world’s manufacturing hub, and most retailers look east when sourcing inventory. However, procuring inventory remains challenging due to the requirements to work with Chinese suppliers. In addition, language barrier and distance are other issues you will have to deal with mid-transaction. With the possibility of things going wrong, you have to consider a China sourcing agent who is more in touch with the suppliers and manufacturers. The next thing to be to understand their pricing to stay within budget. Here are some pricing methods to consider.
Types of Fees
China sourcing agents price their services depending on what you need. Besides the basic services, you also have to include additional work you need. Here are some cost options to consider.
One Time Fee
A China sourcing agent can charge a one-time fee primarily for one-time services. These services include vetting manufacturers in the early stages. The agents in China for sourcing will identify potential suppliers, confirm their credentials and communicate your requirements to successful candidates. Once you find a suitable candidate, their duties shall end. By this time, clients will pay the finder’s fee after signing a contract with the supplier.
Flat Fee
A flat rate fee is a fixed rate that individual sourcing firms or agents charge retailers. The agent will calculate the costs depending on the product or the project’s timeline. Agents in China for sourcing may charge their services monthly or per hour. Most retailers consider this charge because it is cost-efficient and a popular option.
Manufacturing Management Fee
Most e-commerce investors opt for partnerships with sourcing agents offering services besides finding suppliers. This sourcing agreement handles the process of vetting suppliers and managing inventory during manufacturing. Both parties negotiate prices, prototype products, and oversee quality control during this process. Typically, there will be two standard fee-charging models for agents who manage inventory.
Commission/Percentage Service Fee
Agents in China for sourcing can charge their buyers a commission on the total value of the inventory a client purchases. The amount to charge could be around 5-10 percent of the order costs, which the client pays to the sourcing agent.
However, the percentage may also vary depending on your purchase order size and product type. For example, if you deal with bulk orders, you can expect an agent to charge around 3% commission. While doing this, you should double-check the costs and agent profile, considering lower costs could lead to poor product quality.
Alternatively, sourcing agents may work for factory commissions which they get directly from the manufacturer. They will find clients to buy the factory products and engage with buyers on behalf of the factory. Once a deal is reached, the factory will disburse commissions based on the sale’s value and the agreement’s terms.
Combined Fee
China sourcing agents can get their fees from a combination of two or more payment choices. For instance, you can pay a fixed rate for finding suppliers and then pay a commission once the order is complete. This combined model is a big motivator for China sourcing agents who perform better and aim for client satisfaction.
Once you land a reputable China sourcing agent, you have to discuss the best pricing methods for efficiency. You must understand the connection between the agent and the manufacturer for the best deals. In the long run, you will save money and time in ongoing business transactions.
