The business of procurement can be quite unpredictable due to the large number of variables involved. It is also difficult to monitor any part of the business and more often than once, the expected outcomes do not meet the set expectations. It is for this reason that the business in low cost markets is even more risky.
However, the risk can be greatly reduced when you know what you are getting yourself into. When you find that you are running an organization that sources their products from large markets, for instance China, then you will need to hire a sourcing agent or a distributor. In order to ensure that you get the most out of these, it is important to understand the difference between the two.
A distributor can be defined as a person who buys goods in bulk and then re-sells them at a retail price to make profits. On the other hand, a sourcing agent can be defined as a person that reaches out to the manufacturer or producer on your behalf and sources all the products you may need. After the transaction, the sourcing agent will receive a commission from the manufacturer or producer of the products sold.
Sourcing agent vs. distributor: the criteria for selection
Even though these people perform duties that are very similar to each other, it is important to know that hiring either of them will greatly determine the success of your procurement business. Here are some factors to consider when you are deciding whether to choose a sourcing agent or distributor:
- The range of products they offer
As mentioned above, the distributor buys products in bulk. This means that most of the distributors will therefore have limited products and brands. On the other hand, a sourcing agent has links with many manufacturers and producers all over the world and they can get the specific products needed. Customization is also possible with sourcing agents than with distributors.
- The cost
When you choose to work with a sourcing agent, the cost will be greatly reduced. This is because all the payments that the sourcing agent will receive will be from the commission offered by the manufacturer. The buyer will also get the products at the original cost charged by the company, compared to when they are bought from a distributor. This is because a distributor can add any amount over and above the regular rate for profit.
When you are looking for a product that can be delivered urgently and does not require customization, then the best option will be the distributors. This is because they already have the inventory compared to the sourcing agents that may take longer to have the inventory ready.
- Prototyping possibility
When you want to have a prototype before you order the products then you need to hire a sourcing agent. They also enable you to choose the best manufacturer for the job compared to the distributors that only deal in already finished products.
Finally, another factor that can help you choose the best option for your procurement business is quality control. When you want products that are perfect for your needs, a sourcing agent is the best option for you. This is because they can get the products to be designed as per the specifications you give. In conclusion, the decision you make depends on your needs. When you are looking for the best sourcing agent, you can visit the website leelinesourcing.com , it is the best sourcing agent company in China.