Sourcing Agent Vs. Distributor: Which Do I Need?

Buying products through a distributor and getting them sourced via a sourcing agent are two of the most popular solutions for stocking inventory, but not all sourcing solutions are created equal. Since your product source has a significant impact on your margins and overall business, it’s important to determine which method is best for your needs. The following factors should be carefully considered when choosing between a sourcing agent and a distributor.

Variety & Selection

When you buy a product through a distributor, you are limited to the inventory selection that they have on hand. For example, if you wanted to sell a coffee maker, a distributor would offer you a few varieties of finished coffee makers for you to choose from. Alternatively, if you were to approach a sourcing agent with the same need, the sourcing agent would find the best way to source a coffee maker with your specifications. This may include getting individual parts or components from multiple factories.

Customization

One of the biggest drawbacks to using a distributor is the lack of customizability. While some distributors may carry custom finished products produced by other companies, they cannot make any changes to these products. For example, a distributor may be licensed to sell a custom branded coffee maker on behalf of another company, but cannot change it in any way.

When you work with a sourcing agent, you can change any aspect of your product to suit your needs. In addition, you have the final approval on quality, adjustments, and other specifications.

Prototyping

If you need help developing a prototype, a sourcing agent is the best choice. Since distributors only carry finished products, they cannot assist with the prototyping process. A sourcing agent, on the other hand, can assist you with prototyping, quality control, and price negotiation with the factories.

Cost

When you work with a sourcing agent, they will help you develop a contract manufacturing agreement between you and the factory. Since there is no intermediary step through a distributor, you are essentially getting your product at factory direct pricing.

Although there is a markup for both distributors and sourcing agents, markup prices are typically lower through sourcing agents. This is because a sourcing agent will negotiate an exact markup percentage in your contract. In contrast, distributors often add a fixed price markup, and the original factory prices may or may not be disclosed to you.

Time

Since distributors carry finished items ready to be sold, they can often be shipped quickly. In addition, distributors do not invest in molds or production, so smaller quantities are often more feasible. If you need your items quickly, or you only want to order a small quantity, this might be a good option for you. However, keep in mind that your margins may be reduced due to the additional markup.

Quality Control

As outlined above, a sourcing agent will provide you with complete control over your inventory. Therefore, the quality control standards for your products are built around your specifications. When you buy through a distributor, you are getting the finished product sold as is.

So, Which is the Best Option?

There is no “one-size-fits-all” approach for every business. The best choice depends on which of the above elements are most important for your particular project. If you need your items quickly, do not require any customization, or if you only want to order a small quantity, a distributor might be the right option for you. If you need more control over your product, need help with a prototype, or if you want to increase your margins, a sourcing agent is the best option. You can check this video below to help you decide.

Asian ProSource is an experienced China sourcing agent that takes pride in offering turnkey solutions for all your sourcing needs. From manufacturing & sourcing to customs and logistics, we can help guide you through the process. Call 702.616.2298 for a free project evaluation today!