A common sourcing challenge for FBA sellers working with overseas manufacturers is distinguishing genuine factory contacts from trading company intermediaries—a distinction that can cost 15–30% in unnecessary premiums.
The Intermediary Problem
- Marketplace masking: On Alibaba and similar platforms, trading companies routinely list themselves as “Manufacturer” or “Direct Factory,” making it difficult to identify who actually owns production capacity.
- Skills mismatch at source: Top-tier factories with genuine capacity and pricing power often lack English-language and cross-border marketing expertise; those who excel at foreign communication are typically intermediaries taking a cut.
- Cost impact: Sellers unknowingly paying 15–30% markups by routing orders through intermediaries rather than connecting directly with production.
Red Flags & Verification Steps
- Request factory certifications, production photos, and equipment specs—not just marketing materials.
- Ask detailed technical questions about production processes; genuine factories answer with specificity; intermediaries deflect or provide generic responses.
- Request direct communication with production or quality teams; intermediaries may insist on acting as the sole point of contact.
- Compare pricing quotes across multiple “manufacturers”—unusually wide variance often indicates intermediary layers.
How Squatio Helps
Understanding your product’s true cost of goods and competitive landscape is foundational to sourcing strategy. Prospect (Product Database) helps you research competitor ASINs and reverse-engineer their pricing and volume, giving you a baseline for what margins are realistic in your category—and therefore what supplier costs should actually be. If a quote seems high relative to market competition, that’s your signal to dig deeper into whether you’re paying for intermediation rather than production.
Have You Encountered This?
Have you discovered you were working through an intermediary, and if so, how did you identify and pivot to a direct factory relationship? What verification steps proved most reliable for you?
Source: Reddit