The right supplier is essential to building a successful dropshipping business. 83% of dropshippers say that the biggest obstacle to their success is finding a reliable supplier.
There are two main ways to find suppliers to partner with.
One is through major marketplaces like AliExpress. This method is fast and cheap but it’s more difficult for the dropshipper to find a high-quality, reliable, and long-term supplier who is capable of scaling with their business.
The second method is using a dropshipping agent. This is the method we’ll focus on in this blog post.
We’ll explain exactly who dropshipping agents are and how much they cost. Ready? Let’s go.
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Who Is a Dropshipping Agent?
A dropshipping agent is a person or a company that takes care of finding suppliers for you.
A dropshipping agent is usually located in the country where you’re sourcing products. So they know lots of suppliers. The agents know which suppliers manufacture high-quality products, can keep up with a large number of orders, and charge less.
Image source : https://leelinesourcing.com/dropshipping-agent/
Another thing is that agents hire several suppliers for your business, which minimizes the chances of products being sold out and therefore increases customer satisfaction.
Apart from being the middleman, a top dropshipping agent like BestFulfill also takes care of packaging, product labeling, bulk warehouse inventory, and product photos and videos from a professional photographer.
Two Main Factors that Affect a Dropshipping Agent’s Cost
The cost of a dropshipping agent varies based on two main factors:
1. Suppliers
2. Extra Services
a) Supplier
An agent is paid by both the dropshipper and the supplier. The dropshipper pays him to source reliable suppliers and the suppliers pay him to find long-term customers.
This fact influences how much you pay the agent.
If there’s a high-quality manufacturer who offers low commissions, the agent will charge you more. And if you’re unwilling to pay, he may find a lower-quality supplier who pays more.
This is why you should think twice about hiring very cheap agents. They may be paid very well by low-quality suppliers.
Image source: https://www.nexcess.net/woocommerce-resource/dropshipping-suppliers/
b) Extra Services
Some agents offer extra services like customized packaging, bulk storage, and order fulfillment.
How Much Does a Dropshipping Agent Cost?
Dropshipping agents price their services based on three models:
- Fixed price per order
- Percentage commission per order
- Monthly or membership fee
a) Fixed price per order
This is when a dropshipping agent charges you a flat fee for services performed per order. No matter the size of your orders, the fee remains the same.
The total agent fee depends on the services provided. So, you tell the agent what services you’re interested in and he charges you based on that.
For instance, you may decide that you want supplier sourcing, negotiation, and quality control. If the supplier charges you $300, $50, and $150, you pay $500 total.
Here’s how to calculate the total cost:
Total dropshipping agent cost = Service A cost + Service B cost + Shipping costs
Pros
- Flat fee regardless of order size
- Easy to calculate service costs
Cons
- Upfront payment with no guarantee of quality services
b) Percentage commission per order
This model charges a certain percentage commission per order ranging from 3% to 10%. This is the most common type of dropshipping agent charge.
What happens here is that you contact an agent who then sources suppliers and sends you price quotes. Some also send free samples. You don’t pay any fee until you approve a product.
Sometimes, the company charges flat fees for extra services like quality control. Sometimes, they include that in the percentage commission quotation.
To calculate agent costs:
Total dropshipping agent cost =
Order amount * commission percentage + shipping cost
Say you order $250 worth of products at a 4.5% commission:
Total dropshipping agent cost = $250*4.5% + $15 = $26.25
Therefore, you’ll pay a total of $276.25 to have $250 worth of products shipped to you.
Some companies charge an upfront fee or registration fee before sourcing suppliers and charging you a percentage commission. The reason for this is to only work with dropshippers who are ready for a partnership.
Beware of agents who charge you as low as 1% or even 0%. They either work with low-quality suppliers or add extra bills apart from the commission.
Pros
- No payment until you approve a product
- No risk of a high flat rate because charges are based on what you order, therefore what you can afford
Cons
- Price changes based on order size
c) Monthly or membership fee
This is usually used by agents who have a large database of registered suppliers and who offer you access to see these suppliers and select the ones you want.
Here, you pay a certain amount to be allowed access to the database, per month or year. There are MOQs and limits to order size. You pay for extra services like quality control and customized packaging.
The higher your monthly fee, the fewer service fees and agent fees you pay.
Pros
- Direct access to a large number of suppliers
- High service fee discounts depending on the membership fee
Cons
- Service fees are added to the monthly fee
Some dropshipping agents charge per hour or per month. The advantage here is that you work one-on-one with a freelancer or a very small company. The disadvantages are they may not have an extensive supplier network, they may not be working for all the hours you’re charged for, and there’s no guarantee of supplier quality.
Do I Need an Agent for my Dropshipping Business?
Here are some of the reasons why you should hire a dropshipping agent.
- Better Suppliers
Even though it’s easier to go on AliExpress or Taobao to look for suppliers, you’re more likely to find unreliable ones that cannot work with you long-term.
A dropshipping agent does the difficult legwork of sourcing multiple suppliers and visiting their physical locations to confirm the quality of production.
- Special Product Prices
Since dropshipping agents negotiate with multiple suppliers, you get better bulk buying discounts and special prices when you work with an agent. Suppliers contacted by agents are more likely to charge a lower price since there’s a high chance of a long-term partnership.
- Bulk Warehouse Storage
Many dropshipping agents allow you to store your products in a warehouse from where they ship them when customers place their orders. There’s also a long-term storage option. You can store products to be sold during peak seasons.
- Customized Product Packaging
A dropshipping agent will take care of private labeling and custom packaging products for you. The agent designs and prints labels, removes receipts or generic labels that come from the supplier, and repackages the product to match your brand style.
- Better Customer Service
Agents provide better customer service than suppliers. Suppliers, especially the ones on AliExpress and other major marketplaces, are usually too busy to deal with your issues properly. On the other hand, you can easily reach your agent through Skype or even WhatsApp.
Conclusion
Working with an agent makes being a dropshipper a lot easier.
You don’t have to deal with unreliable suppliers and wonder about how to store your products. You’re freed to focus more on attracting customers and marketing your brand.
BestFulfill is a top dropshipping agent that has successfully partnered with hundreds of dropshippers. We source reliable and high-quality suppliers that are fit for your particular business. We provide other services like quality control, product photos, and private labeling.
Contact us today for a free quote.
FAQs
- Does a beginner dropshipper need an agent?
Not really, but highly recommended. A beginner dropshipper doesn’t usually have a steady influx of customer orders and so may not be able to afford an agent. However, a dropshipping agent makes it a whole lot easier to run your business. It’s a good idea to invest in an agent who also understands that you’re a beginner.
- Should I use a dropshipping agent?
Yes. You should hire a dropshipping agent to source suppliers, negotiate product prices, and fulfill customer orders. Building your brand becomes more fun when there’s an agent who does the legwork.
- What do dropship agents do?
Dropshipping agents find reliable suppliers and negotiate prices with them. They also do some quality control, order fulfillment, customized product packaging, and private labeling.