This is the question all buyers have to ask in advance if they’re planning to buy from Yiwu 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 Yiwu help me with sourcing?”
This article would offer you some basic ideas about the DIFFERENT commission rates here in Yiwu.
If you search on Google with a search query like “Yiwu 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 though 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 fishman use in a fishing tournament.
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 Yiwu 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?!
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 haveabsolutely 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 Yiwu 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 calender, 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 of my clients from UK contacted a big Yiwu 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.
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 Yiwu agents are offering 1% commission rate, but still making quick money and driving Porsche / Mercedes .
Below is a comment i received via email from one of my visitors:
"Hello Jack. I must tell you that you were absolutely right. When I compare prices that X gave me few days before going to Yiwu, and what I have discovered for myself with my new bussines partner I see difference. Do you know how much??
Between 20 and 25 percent X prices are higher. That is really too much !!
I must thank you for your web pages and probably if I did not read it I would go to X Company. Probably most buying agents work like that and I think that is not fair. Most important is like you have said is to have relaible bussines partner like you and my other new friend from Yiwu.
Next time I am in Yiwu I buy you dinner :) Next time maybe we will work together also.
P.S. by Jack: X is the name of a "pretend-to-be-big" Yiwu company offering a fix commission rate, and claiming that they're the best agent in Yiwu.
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Jan.01-03, 2018. Market opens, stores 50%+ close/half-close. Visiting not suggested.
Feb.03-Mar.06. CNY holiday. Market closed/half closed. Can not visit.