Sourcing companies fully manage importing and Quality Control (QC) operations for their clients, essentially becoming their client’s office overseas. We oversee their sourcing and product development, handle negotiations, manage contracts, ensure QC, and frequently handle logistics. We differ from trading companies by maintaining independence, and we don’t earn commissions from sales on behalf of factories. Consequently, our interest is vested in best representing our client’s business, rather than in protecting manufacturers.
Sourcing companies vary significantly in size, scope, and sophistication. Across the industry, you’ll find freelancer sourcing agents, small to medium-sized companies with anywhere from three to fifteen employees, and very large sourcing companies that work primarily for retail giants.
So, who do you choose? Different sourcing companies fit with different kinds of buyers. Some are great for buyers just starting out, while others for buyers with massive orders and different priorities.
Sourcing companies are advantageous because they can leverage pre-existing supplier networks for better per unit costs and conflict resolution. For example, disagreements could arise over delivery schedules, quality of the goods, variance in price, intellectual property infringements, or other issues, and sourcing companies know how to troubleshoot. A good sourcing company works to understand specific consumer needs, and tries to solve product issues by understanding the root of the problem, rather than offering an under-researched quick fix.
In addition, critical components of the process, like compliance, certification, and international trade procedures can be confusing to those who aren’t experienced with them. Sourcing companies tend to better understand these processes, which helps ensure that the imported product meets the standards and regulations of the importing market. It is important to note, however, that sourcing companies aren’t experts at setting compliance standards, only in enforcing them on the ground.
Though sourcing companies are costly, particularly for small orders, it’s due to the significant amount of manpower and work required. Time intensive tasks like cultivating strong relationships with a broad network of suppliers, pinpointing the right company for the client, negotiating quotes, and communicating back and forth regarding samples are risky if the client declines to pursue the project. To cover the costs and risks associated with their duties, sourcing companies reflect these charges in their services.