Product sourcing companies are agents who facilitate relationships with suppliers. They specialize in importing goods from various regions of the world on your behalf. They locate the best sources at the most competitive prices to save your cost, at meantime, they contribute in quality control and communications.
1. How do product sourcing companies actually work?
Product sourcing companies source goods and, usually, store them in their warehouses to provide you with a responsive, reliable and a readily available service. They work with multiple wholesale suppliers and manufacturers aggregating purchasers’ needs into one service. Many products are sourced from low-cost countries in Asia, mostly China.
2. Who are the product sourcing companies?
They may be called trading companies, third party sourcing, importers, brokers or drop shippers and they only represent the purchaser, not the supplier. Services may include sourcing specified products at the best price to managing the whole import process and all possible services in between.
They make their profit through leveraging group spend, buying in bulk and selling for profit.
3. The advantages of using sourcing companies
Using product sourcing companies has the potential to save you costs and management time, and time is money. They can source your products where they get the best price and pass the cost savings, up to 50% directly to you. Some companies will also do new product research for you and deliver you samples for approval and competitive pricing.
Also, sourcing companies have QC inspectors who can visit factory frequently to inspect the products, monitor the production lead time, and feedback the first-hand status report to buyers.
4. Selecting the right product
Many business owners don’t even know where to begin because it is complicated and time consuming to find a reputable sourcing company. There are many unreliable and fly-by-night operators in this sector, so, it’s important to only choose the verified sourcing companies.
You may visit business forums (such as UK Business Forums) to ask for other people’s recommendations, or do Google search. Remember to do due diligence and ask for references from the candidates you have found.
5. Reputation is the key
A company’s track record is a good indicator of the service you can expect. If they have been in business for more than 5 years and can provide references from satisfied customers, you can be reasonably confident that they are able to perform the services you need. Talk to the references by yourself so you will learn full details.