What to Avoid in a Sourcing Agent

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For as long as there has been commerce, there have been middlemen. Sometimes they add value and justify their cost. Other times, they provide no useful service, latching on undetected like a parasite to a healthy business transaction. We don’t say this lightly — after all, we are sourcing agents — but international sourcing agents are much more likely to fall into the second category than the first. If you can’t readily observe what value your sourcing agent is providing, there’s a pretty good chance you’re getting fleeced. Here’s what to look for.

How do they earn their fee?

If your sourcing agent earns their pay by tacking on a percentage to the final cost of your order — this is usually anywhere between one and five percent — then you may have reason to question where your agent’s allegiance. Think about it: you’re hiring a sourcing agent in order to find the right supplier to manufacture your production at a fair price. Your sourcing agent, however, now has a stake in steering you towards a more expensive supplier in order to secure a bigger commission payment. This is clearly a conflict of interest that should be avoided.

What about kickbacks?

Some sourcing agents will be quick to assure prospective clients that they do not charge a commission on orders. But this alone does not ensure against a conflict of interest between buyer and sourcing agent. Kickbacks, or financial incentives offered by factories to sourcing agents in return for delivering clients, pose the same risk to buyers. If your sourcing agent accepts kickbacks from factories, how will you know whether the suppliers they source are really the best for your production, or only the ones giving out the biggest kickbacks?

Is the process transparent?

Many sourcing agents will swear up and down to their clients that they don’t accept commissions or kickbacks. But without a transparent sourcing process that’s fully accountable to the client, it’s impossible to be sure. And what’s worse, it’s not uncommon for these sourcing agents to route all payments from buyer to supplier through themselves, tacking on a “blind markup” at every stage of payment.

What makes Guided Imports different?

We got into this business because we recognized a big need for honest, transparent and accountable sourcing agents to help importers take full advantage of China’s vast manufacturing industries. That’s why we were among the first sourcing agencies to offer all services on a flat rate basis. That means our profit isn’t tied to clients’ order sizes or to the selection of one factory over another — it’s tied only to customer satisfaction.

We employ strict internal auditing at every stage to ensure that agents can’t be swayed by kickbacks from factories.

And best of all, our process is completely transparent. Clients have full access to all suppliers’ contact information, as well as inspectors and freight forwarders, so there’s no room to hide any hidden fees or markups. If a client wants to manage their own relationship with a supplier for future orders, they’re free to. We’re so confident in the value of our service that we don’t feel any need to withhold this information. Importers who choose to use our services do so with a clear picture of what they’re getting and why it’s worth the price. That’s why we say using Guided Imports is like having your very own procurement department on the ground in China.

Interested in learning more? Schedule a time to chat with our founder, Sam, by picking a time that works for you here.

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