As a dropshipper or e-commerce business owner, if you’re thinking of hiring a sourcing agent, then it’s only logical and smart if you know the common China sourcing agent fees. Meanwhile, as you may already know, there are thousands of Original Equipment Manufacturers (OEM) and sourcing agents in China. That’s why it’s difficult to find any industry standards for China sourcing agent fees.
While many sourcing agents will try to attract customers with free service for trial orders or the cheapest rates, low-cost offers often translate into low-quality products. To make sure you’re paying the right amount, you need to understand how pricing works. Continue reading to discover some China sourcing agent fees and how much they cost.
Fixed or Flat-rate Fee
This is one of the most common pricing methods used by China sourcing agents. Just as the name implies, most agents will charge you a fixed monthly or weekly, or hourly fee for a specific product or project. In this type of arrangement, the agent will connect you with a supplier and you can directly build the business relationship.
Naturally, this is the cheapest route to hire a sourcing agent in China. However, it’s the riskiest as low-cost agents are often not qualified and have little or no genuine work experience. So, you’ll most likely end up with a poor-quality supplier.
Another way is to hire a full-time sourcing agent or company for the duration of your project for a fixed monthly fee. Although this strategy can cost you a little more, you’re more likely to find qualified and experienced individuals or agents. Additionally, they will help you to oversee your project and supplier communication.
One-time Finder’s Fee
There are sourcing agents that are only involved in the early stages of vetting manufacturers. These professionals find and identify potential suppliers, verify their credentials by checking if they are located where they claim to be, if they supply the required product, if they are a manufacturer or a trading company, and communicate the retailer’s requirements to the prospects.
When the candidates get shortlisted to just one, the role of these sourcing agents ends, and communicating with suppliers is given to the retailer. Retailers must pay the finder’s fee after a contract gets signed between the buyer and the supplier.
Manufacturing Management Fee
Partnering with a sourcing agent that offers services beyond funding a supplier is ideal for new and old dropshippers or ecommerce players. This type of sourcing liaison takes care of inspecting suppliers and managing inventory as they get manufactured. This process includes tooling, sampling, negotiating the prices, prototyping products, and arranging high-quality check control.
Commission or Percentage Service Fee
Many sourcing agents also charge buyers a percentage service fee or commission on the total value of the purchased inventory. This amount may be anywhere from 5% to 10% of the order cost as sourcing fees.
However, the percentage will depend and vary based on the product sourced and the order size. If your order is bigger, some sourcing agents may work on as low as 3% commission. Again, make sure you double-check the costs and the agent profile though, as lower costs often translate into poor product quality.
How Much Does It Cost?
If you are new to dropshipping or e-commerce business, understanding how China sourcing fees work might be confusing. Number one is that there are no industry standards. Secondly, the charges will surely vary according to the scope of services (as discussed earlier), the product size and quantity, the dollar value of the purchase order, and the complexity of the part required, among other factors.
Hopefully, this article has done justice to you knowing about some China sourcing agent fees and how they charge. However, when it comes to partnering with sourcing agents, going for the candidate that offers their services for the lowest prices isn’t always the best strategy. It’s crucial to vet and deliberate on each sourcing agent thoroughly.
China sourcing agents serve as a retailer’s representative abroad. They must be able to communicate a business’ demands and expectations with ease. From there, it can be deduced that finding the right sourcing agent in China, and being well-informed of their fees and how much they cost is very critical for successfully outsourcing your manufacturing needs.
Contact us today at Fulfillman to know more about our services. We provide a wide range of services including Global Fulfillment, China Sourcing, Drop Shipping, Third Party Logistics, and lots more. Our trusted experts will be happy to speak with you and provide suitable answers to your questions and concerns. A fantastic experience awaits you.