There is always a debate whether to hire sourcing agents or to get the work done by your in-house team. If you have a small business, it makes sense to get your orders completed by your in-house team. In case of big business, your in-house team will not be able to handle all orders and look after every aspect of the work. In such situations, sourcing agents are your safe bet.
In House Purchasing Team V/s Sourcing Agents
If you are thinking of hiring a sourcing agent in China, then you might need to do your homework and pick out the best ones. Different sourcing agents have different cost structures depending on the nature and volume of work. You need to be at par with your negotiation skills to get the best quotes.
Sourcing agents also have a thorough knowledge of custom clearances, international shipping, and packaging details. If your product gets stuck in customs, they will be able to clear them without any hassles.
You might think that hiring purchasing managers can help you save on costs, but what about their skills. They might have limited knowledge about inspections and customs clearances. Sourcing agents, on the other hand, will have expertise in all aspects right from production to shipping.
Hiring an in-house procurement team requires you to pay salaries, get them trained, and look after their leaves and transportation costs. In simple words, you need to spend more on your team as compared to hiring sourcing agents. When you hire agents, you only need to pay for the projects and supervise them occasionally.
Secondly, when most of the work is outsourced to a sourcing agent in China, your team has ample time to focus on other key aspects of your project. Many of the sourcing agents do not charge on an hourly basis, but the final output.
Last, but not least, there are high chances that employees in your organization might venture out to other companies after a time. You might need to invest again in training the replacement leading to further cost depletion. This is not the case when you hire sourcing agents. They will ensure that your projects get completed as per the deadline irrespective of staff changes.
Cost of Sourcing Products for E-commerce Platforms
Now, that you are finally convinced to work with sourcing agents, the next thing that might have you worried is the cost incurred for sourcing projects. As said earlier, this again might depend on certain factors such as:
- Project completion time
- Procurement planning
- Software and tools used in the project
- Product packaging
- Patent costs
- Product development costs
Searching for a credible sourcing agent in China is easy. You can use sites such as Alibaba, enter your product details, and choose from the list of suppliers based on your budget. Once you have finalized the supplier, you might meet the supplier and explain your requirements to them. Ensure that all the details are mentioned in the contract before you sign the dotted line.
China has proven time and again as one of the leading manufacturers of good quality products. In addition to this their labour costs are comparatively lower than other countries.
When you outsource projects, there is a specific timeline for the project to get completed. It might take about 3 – 4 months for your product to get finally shipped. In the case of new product development, the timeframe could be more than 6 months.
Secondly, everything needs to be planned correctly. One mistake from your end can be detrimental to your business. When you are developing a procurement plan, ensure that you know your target audience, your market niche, and your brand and product positioning.
You might even need to hire purchasing managers to look after the overall project. They can help you with:
- Validate the terms and conditions of the contract
- Find legal advice
- Check up on the production progress
- Carry out inspections
- Deal with transportation of the products
You might even need to invest in software tools to generate reports and track the progress of your projects and the procurement expenses. You might even need to invest in third-party inspection companies to ensure that the products are manufactured as per your requirements.
You also need to consider the packaging costs of the product. How does it need to be packed? Are there any special requirements? Your sourcing agent in China might also specialize in colour box packaging and you might need to consider these expenses as well.
Next are the patent rights. You need to apply for a patent so that your product is not copied by competitors. There are two types of patents that you can apply for:
- Utility Patent – This patent covers the functional or creative part of your product. It takes about 5 – 10 months to get the patent
- Appearance Patent – This patent focuses on the visual aspect of your product. It takes approximately 4 – 6 months to get the patent
If your product is patented, you can easily file a complaint, if you find competitors copying your product. If your business is located in China, then you can file the complaint yourself. If not, you might need to find a Chinese citizen who can file the complaint on your behalf.
While filing a complaint you might need the help of patent agencies for quicker filing. They will have the right expertise in handling queries and issues at the time of filing. You only need to have your STD CAD drawing software of your product for filing the complaint.
You cannot ignore the product development costs involved. You might have an idea of your product, but you need to have the right prototype or 3D model for your sourcing agent in China to get interested and involved in your project. Secondly, you might need a translator who is fluent in Chinese to put forth your idea to your sourcing agents.
Hiring sourcing agents is much more cost-effective than having an in-house procuring team. You need to weigh the pros and cons of each sourcing agent before you finalize the one that best suits your requirements.