What’s the Commission Rate of Guangzhou Agent
This is the question all buyers have to ask in advance if they’re planning to
buy from Guangzhou with the help of an agent. But it’s so confusing that the
quotes they get vary significantly from agent to agent, even from person to
person within a same agent.
“How much should I pay an agent in Guangzhou help me with sourcing?”
This article would offer you some basic ideas about the DIFFERENT commission
rates here in Guangzhou.
1% Is Not Reasonable, Nor Sustainable:
If you search on Google with a search query like “Guangzhou agent”, you may
find that many agents there are claiming that they only charge 1% commission.
Some of them even have a hint inside that their services are so cheap that you
can almost get them ALL FOR FREE.
If you just have a 2nd thought about those “miracles”, you would definitely
have one questions like:
– “they even don’t know what I buy and how much I buy, how they can offer a
fixed commission rate?”
– “If I just buy a carton of socks worth 100 USD, are they happy to get a 1 USD
as their commission?”
This is a typical “bait-and-switch” strategy: offer something that looks so irresistible
that you can’t help clicking onto their site and contacting them… then you
realize that you’ve been trapped, but it’s too late to step back.
This make me think of the flashing flying bait that fish man use in a fishing
tournament.
Busy Fool or Lose Money?
If you think the “one carton socks” is something too puffed. Then let’s look at
one 40 feet container (40,000 USD by average), 1% commission rate would be
400USD.
One experienced stuff average monthly salary in Guangzhou is at least 1,200USD
because basic living expense is already about 500USD per month. (apartment
renting, food, transportation…)
Sourcing, market visit, follow up, collect order, QC, arrange shipping… a 40
feet container would take one stuff at least 15 days.
The gross profit one staff can generate is about 800USD. How can a company make
ends meet? Who is going to pay this 400USD?
Not mention the employer needs to pay some money for staff insurance, pension…
Office rent, warehouse, advertising, tax…
Of course, above numbers are too good to be true. Base on the fact that only
50-75% visitors can place some orders. Only 10-20% visitors can order one
container or more than one container.
That means the agent makes nearly no money when they’re working 30days a month.
Are they happy to be a busy fool?
If they can not work 30days a month (Dec. Jan. Aug. Sep. almost no visitors),
they’re even losing money! Is anyone happy to lose money?!
How Do 1% Agents Make Money?
Yes, they have to use other “smart” ways to make money.
One very common trick goes like this:
The shop quotes you 1.00 yuan(CNY)for a pack of tooth picks, the
translator/agent people will manage to let buyers pay 1.10 yuan in the end.
They either translate as 1.10 yuan per pack, or simply tell shops to add 10%!
During this simple transaction(less than 3 seconds), they already increased the
price by 10%! But if you don’t know any Chinese, you will have absolutely no
way to find out what’s happening. You will probably share with your family or
friends that you have a nice cheap agent in Guangzhou who only charges you 1%
commission!!!
They can use body languages and write hints/signs at somewhere if you know some
Chinese.
It’s NOT something extraordinary that we see agents people lead buyers to the
shops and directly tell the shop “add me 10 points”, which means
buyers pay 10% extra.
If possible, I DO suggest you go to the market and look for products
information by yourself before going with anyone else. The price can also be a
bit different in this way, but i bet you can find out what’s going on in most
cases.
In this way, we can also put you on our schedule to ensure when you need us, we
can be beside you. If you’re not on our calendar, we may be too busy to take
care of you when you need us.
But for other tricks, it’s not this easy at all:
They’re always interested in showing you products in their showroom, or leading
you to a factory/shop that they claimed it’s their own factory/shop, or one of
their relatives’ factory/shop.
They promise purple and blue that the prices you get from these factories/shops
are the lowest because they have built “long-term-special” relationships…in
this way, they can tell the factory in advance to increase the price, even by
50%!!
Another typical way to make huge money is to switch suppliers. The agent people
show you around the market. The suppliers in the market quote one price for one
product, but after you wire deposit, your agent will desperately find another
supplier with a lower price.
The money in this switch is big. But the risk is also BIG. You can easily
receive something “Similar”, not exactly same as what you saw in the
market. This “jump-over” is not fair to these suppliers in the market
either.
To us, business is not only of money. Business can only grow when everyone is happy
and is done in a fair way to everybody.
One TRUE Story:
One of my clients from UK contacted a big Guangzhou agent (has 100+ employees
and their ads are showing everywhere both online and offline). This agent was
“so kind” to offer him a 1% commission. They promised that their prices are the
lowest because they own this topiary factory (my client was looking for
artificial topiaries).
But this “clever” agent guy made a small mistake by telling my client that the
factory owner (who was driving them to hotel) is the agent company’s full time
driver. My client was clever enough to find out that the driver was not a real
driver. So he told me this and wanted me offer some suggestions.
The next day, after spending 2 hours searching for a nearby factory zone, we
parked our car outside of a factory and the boss who greeted us inside was the
“so-called-driver” by the agent guy.
The “so-called-driver” was actually the owner of the topiary factory. My client
was right!
Later on, we found that the agent had told the factory owner to add 10% more
price if they introduce my clients to their factory. Guess what? The factory
owner further lowered his price by 19%, with our help!
We helped our client saved 29%!
This is how the “smart” agencies are making money. They tell you a 1%
commission first, and then make a 20+% commission either by taking “kick-backs”
or/and increasing price behind you.
What’s Reasonable?
It’s a 3%-10% of your total purchase value, according to what you buy, how you
buy and how much you buy.
I can’t go further to explain how these “3 HOWs” matter, because situation
varies from case to case. But you can use your common sense here:
The commission rate for buying one container pencils from one supplier is
definitely different from buying one container 100 different products from 30
suppliers.
If you need most of your products to be customized, the commission rate will
definitely be higher.
Hope this article helps you understand why many Guangzhou agents are offering
1% commission rate, but still making quick money and driving Porsche / Mercedes
.