Sourcing agent vs going direct to the factory: which fits your brand

What a sourcing agent does

A sourcing agent represents the buyer, not the factory. CBP's guidance on commissions defines buying commissions as fees paid to a bona fide buying agent for the services it performs on behalf of the buyer in connection with the purchase of the imported goods^[1], and it lists work typical of the role, including compiling market information, gathering samples, translating, informing the seller of the desires of the buyer, locating suppliers, placing orders based on the buyer’s instructions^[1]. Many agents also arrange a quality inspection or a factory audit. The scope and the fee are whatever your agreement says, so read it before you sign.

In a real buying agency, you keep the decisions. CBP notes that a buying agent usually does not control who the manufacturer is or what is to be purchased^[1]: normally the buyer decides and the agent carries it out. An intermediary that chooses the factory, sets the price and invoices you for the goods is closer to a trading company, whatever it calls itself, and its "commission" may really be a markup.

The three routes side by side

How customs treats the agent's fee

How you pay an agent can change your import entry. Bona fide buying commissions that you pay the agent yourself, outside the factory's price, are not included in the transaction value of the imported merchandise^[1]. A commission on the seller's side is different: US rules define a selling commission as any commission paid to the seller's agent, who is related to or controlled by, or works for or on behalf of, the manufacturer or the seller^[2], and the transaction value of imported goods adds any selling commission incurred by the buyer with respect to the imported merchandise^[3].

The paperwork has to show which one you are paying. CBP's simplest example of a clean setup is for the seller to invoice the buyer for the purchase price of the imported merchandise and for the middleman to invoice the buyer separately for its commissions^[1]. When the intermediary resells the goods instead, CBP warns that the so-called commission may be the intermediary’s mark-up or profit which would constitute part of the total price paid by the buyer and part of transaction value^[1]. As the importer of record, you are responsible for using reasonable care to enter, classify and determine the value of imported merchandise^[4], so keep the agency agreement and both invoices, and ask your customs broker how to declare the fee.

Questions to ask a sourcing agent before you sign

• How exactly are you paid: a flat fee, a percentage of the order, or a commission from the factory?
• Do you take any payment from the factories you recommend?
• Will you name the factory, and can I sign with it and pay it directly?
• Who pays for samples, inspections and travel?
• What happens, and who pays, if goods fail inspection?
• If we stop working together, do I keep the supplier relationships?

Knowing the factory matters for more than trust. For ocean freight, the importer security filing asks for the name and address of the entity that last manufactures, assembles, produces, or grows the commodity^[5], though a supplier's details can stand in, so ask the agent for the factory's name and address before the first shipment.

When going direct makes sense

Going direct fits when you have a clear specification, time to manage the conversation across time zones, and a way to arrange inspection yourself, through an inspection company or a visit. For a product of your own design, the factory you go direct to is a contract manufacturer, one that builds to your specification. Start with how to find a manufacturer, and send every factory the same request using the RFQ template.

When getting matched fits

Getting matched suits brands that want a shortlist of named manufacturers to start from, without a blank search, and are ready to handle the follow-up themselves. We introduce you to manufacturers that fit your request and they quote you directly. We do not negotiate for you, manage production or check quotes, so the contract, payment terms and inspection stay with you, as they do when you go direct.

For country detail, see the China sourcing agent comparison, the Vietnam sourcing agent comparison, the India sourcing agent comparison, the Mexico sourcing agent comparison and how to find a manufacturer in China.

Try a shortlist first

Request quotes and we introduce you to named manufacturers that fit your request. It is free for brands, we share your contact details only if you tell us we may, and the manufacturers quote you directly. If you still want an agent afterwards, you can give it the shortlist as a starting point.

Questions buyers ask

What is a sourcing agent?

A person or company that acts for a buyer: it finds factories, collects quotes, follows production and often arranges inspection, for a fee set by their agreement. The factory still sells to the buyer.

Do I need a sourcing agent to buy from overseas factories?

No. Many brands buy direct or start from a shortlist of named manufacturers. An agent helps most when you want someone on the ground managing follow-up and inspection.

How are sourcing agents paid?

However their agreement says, commonly a flat fee or a percentage of the order. Ask in writing whether they also take money from the factories, because that changes whose interests they serve and can change your customs value.

Is Manufacturer Quotes a sourcing agent?

No. We introduce brands to named manufacturers that fit their request, free for brands. We do not act for you or for the manufacturer, and any order is between you and the manufacturer.