Sourcing products from China for your Private Label business sometimes could be a lot easier and cheaper by using trading companies.
There’s a myth out there that the trading companies are more expensive, when the reality is that, even tho they markup the price they get, they can often get price much lower from the manufacturer that we can.

Why should you deal with trading companies when sourcing from China?

Everybody out there is teaching the exact same thing.

When you go to source for products, go to Alibaba, make sure you’re dealing with the manufacturer.

You’re not dealing with trading companies. There are gurus and courses that teach you how to find out if certain companies are trading companies or if they are the official manufacturer.

Now, dealing with the manufacturer is a good thing, I’m not saying it’s a bad thing.

But sometimes, it is more profitable, better and easier to go to a trading company. Let me tell you why.

Number one reason is trading companies can get better pricing than the manufacturer will give you in most cases.

The reason being is because these trading companies deal with the Chinese factories at a bigger level than most sellers can so they can get better pricing.

On top of that, they speak the same language. They are from same area so they know exactly what something should or could cost. 

Therefore, it’s easier for them to get better pricing from the beginning.

Then, of course, they are gonna mark this up. They’re gonna markup the products but even with the markup, test it.

Make sure you test this. Don’t just take my word for it. Even with the markup, you may get better deals. That’s number one.

Number two is some of the bigger and official trading companies, because you’re still gonna make sure that this company is official just like you do when you’re looking for manufacturers.

You want the manufacturer that has been around, the ones that are bidding on Alibaba for many years.

Same thing with the trading company.

Now, these trading companies, in most situations, have their own freight forwarders. You are allowed to use your freight forwarders in certain situations.

That’s something that you don’t have to worry about, and it would be included on the price. It’s a one-stop-shop, kind of. Alright?

That is another one.

Three, is some of the good, and again, I have to make sure that I say the good trading companies, have done the inspections themselves.

When you get the products from them, and because they want you to be a recurring customer, they have done the inspection themselves ’cause they know how the things work, so when they buy, they’ve done the inspection, and they can include that inspection also at the same cost to you.

One more is the fact that if you want to do bundles, if you go directly to the manufacturer, let’s say, if you are, I don’t know, you’re selling tuques and you wanna bundle it, tuque with socks, a tuque, a pair of socks, and a scarf, if your manufacturer is exclusively making tuques, now you would have to go deal with other factories to get everything together. 

When dealing with a trading company, you can get bundles of anything you want. You can get a tuque mixed with Bluetooth speakers. You can get a silicone spatula mixed with, I don’t know, chicken wings. Whatever you could think of, they will do it for you. They will get the packaging done for you. Now, we’re talking about professional trading companies, of course, not the Mom-and-Pop shop. 

Make sure you look for a trading company, a good trading company, to do the test.
Like I said, don’t just take my word for it. Find a good trading company, get pricing, and ask these questions. “Next time I place an order, will you also discount all the bad ones I received?” If there were returns, refunds if they will do that for you. Make sure that it will have an inspection or the inspection to take off for themselves, you wanna see those reports, you wanna see those inspections. Make sure you can do the bundles, and ask them for the pricing, and then compare that pricing with others. 

Just to finalize this, when you go to a good trading company, contact them and ask them, “What would this product cost, or this plus this?” Whatever, if you wanna, build a bundle, “What would it cost delivered to my door with all customs taken care of, and inspection done, everything included?”
So you don’t have to worry about anything, right?

You place the order, and that is done. You don’t have to worry about anything else. Plus, they still deal with Alibaba so you can make sure that your money is safe. You can do the same 30/70. Plus, a lot of these trading companies, as soon as you get bigger and bigger, of course, they will allow you to do some terms and that could be really beneficial for you. 

If you get 30-day terms, that means you only have to pay for your order 30 days after they make it, or depending on how the terms are set, it could be 30 days after they ship it, which is even better because the time from when they make it to the time they ship it is different.

With all this said, I want you to remember that buying from the manufacturer can still be really good or could still be better than a lot of trading companies because if you had built a relationship with the manufacturers, that’s number one.
You have to build a relationship. Also, you need to have enough quarter quantities that the price is gonna come down. While a trading company can get that same price that, for 500 units, they will get probably the same price for a thousand units, two thousand because, as I said, they are local.

Do your homework, go out there, do a few tests, and then let me know what you think. That’s it for now. Remember, start grateful, stay positive, and always profit.

Quin Amorim, Host of Amazon FBA Selling Online Podcast