Having lived in Guangzhou, China for the last 7 years, I have come to observe many things and here I am discussing with you points based only on personal experiences and ideas. Like always, I intend to provide value, serve, educate and keep every reader informed about the current trends in this industry.
- New Amazon Sellers want to learn everything about sourcing from China at once which includes -
- Sending messages to suppliers through Alibaba/1688/Global sources
- Getting samples sent to them
- Finalizing terms and conditions
- Getting goods inspected by a Quality control company(and sometimes getting no inspections done to save cost)
- Letting the supplier arrange the shipping/documentation.
- Amazon Sellers who are very niche in their products feel they don't need to work with a sourcing company.
For example, consider an Amazon Seller wants to focus only on LED Televisions as their only product. In China, there are about 5 to 10 big trusted factories that manufacture top quality LED televisions. The information about suppliers and prices is easily available for any buyer.
So, Amazon sellers usually need to visit China twice or thrice a year, either by attending the Canton Fair or paying a visit to the factories to discuss their issues and future orders, etc. Later, they hire a good inspection company to do all the quality control work. Hence, Amazon Sellers feel to make more money, things are smoother and faster this way.
- Also, many Amazon Sellers don’t want to work with a sourcing company because of not wanting to give out their product information and trade secrets. They feel they have a really good product idea or have invested a lot on their product research. Hence, they simply don't want a sourcing company to execute their plans.
Also, many sellers feel trusting a Chinese supplier is already a huge risk and having another company in the middle is simply too much. Especially, it’s a little difficult for new Amazon Sellers to find a trustable sourcing company hence they take the direct route to the supplier.
- Sellers' decision is usually based on past experiences, and hence factors such as the benefits of working with a sourcing company, ROI, risk are to be considered. However, it is not only about ROI because even when an Amazon Seller prefers to work with a sourcing company, but they also have to bypass them because of the competitive prices. They simply have no choice but to do business directly with the manufacturers.
- Some Amazon Sellers feel that going through a sourcing company requires more work and is a potential time-waster. So, when they want to develop a new product, they feel it might slow down the process of launching a new product. They also feel they have free access to all the suppliers and their information through Alibaba, Global sources, etc. websites. So, by going through a sourcing company, they don't want to complicate and slow down the process.
- Last but not least, many new Amazon Sellers don’t even know that a Sourcing company Exists! They think the whole ecosystem is based on them directly contacting the suppliers. They feel all the work of price negotiation, samples arrangement, issuing contracts, inspections, arranging to ship, etc. has to be done all by themselves and the supplier.
So, these are some of the reasons why Amazon sellers do not wish to work with sourcing companies or any middlemen in general.
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