Commission or trading model?
How each way of buying works, and which one suits your import setup.
By BizShip International, Lahore | Buyer guide | 6 min read
Commission or trading model: it is one of the first decisions you make when you buy textiles through a buying house, and it changes who you sign with, who you pay and who stands behind the goods. Neither model is better for everyone. This guide explains how each one works, how they compare, and how to choose the one that suits your import setup.
Key points
- On the commission model, you buy from the factory and pay BizShip a separate commission.
- On the trading model, you buy from BizShip, with one contract and one invoice.
- The factories, the quality standard and the inspection are the same either way.
- You can choose differently for each order or program.
The commission model
On the commission model, you buy directly from the factory. BizShip works as your buying agent: we find and qualify the factory, negotiate for you, manage samples and production, and inspect the goods before shipment.
The factory invoices you at its net price and you pay the factory directly, by LC or bank transfer. Our commission is set out in a written buying agreement and invoiced separately, so you always see the factory price. Shipping documents come from the factory, and your sales contract is with the factory.
The trading model
On the trading model, BizShip is your supplier. You sign one contract with BizShip, receive one invoice and make one payment. We buy from the factory, manage production and inspection, and ship the goods to you with BizShip documents. Our margin is included in the price.
Payment can be by LC, including a transferable LC: you open one LC in favor of BizShip, and the bank can transfer part of it to the factory under the same terms. You deal with one party; the factory still gets the security of an LC.
Commission or trading model, side by side
| Commission model | Trading model | |
|---|---|---|
| Your contract is with | The factory, plus a buying agreement with BizShip | BizShip |
| Invoices | Factory invoice at its net price; BizShip commission invoiced separately | One invoice from BizShip |
| You pay | The factory, by LC or bank transfer | BizShip, by LC (including transferable LC) or bank transfer |
| Price visibility | You see the factory price and our fee separately | One price, with our margin included |
| Quality and inspection | Managed and inspected by BizShip | Managed and inspected by BizShip, as your supplier |
A summary. The full comparison, with payment terms and documents, is on our How We Work page.
A note on customs value
In many markets, a genuine buying commission that is invoiced separately is not included in the customs value of imported goods, under rules based on the WTO Customs Valuation Agreement. On the trading model, our margin is part of the price, so it is part of the customs value. Rules and the documents customs expects vary by country, so confirm with your customs broker before you rely on this.
Which model suits you?
- Choose the commission model if you are an experienced importer, want to see the factory price, are comfortable contracting with a foreign factory, and can manage LCs or transfers to more than one supplier.
- Choose the trading model if you want one supplier, one contract and one point of responsibility, are buying from several factories in one program, or prefer not to contract directly with factories abroad.
- Not sure? Many buyers start on the trading model for a first order and move to commission once they know the factory, or the other way round.
Whichever you choose, BizShip finds the factory, holds it to your approved sample and inspects every order with our own team. You can compare both models in detail on our How We Work page.
Questions buyers ask
How much is a buying house commission?
It depends on the product, the order value and the services you need. It is set out in a written buying agreement before you commit to anything, and on the commission model you see it separately from the factory price.
Is the trading model more expensive?
Not necessarily. On the trading model our margin is included in one price, and you save the work of contracting and paying factories yourself. Compare the total landed cost, including duty and bank charges, on both models.
Can I switch models later?
Yes. The model is agreed per order or program, so you can start with one and change for later orders. The factories, the quality standard and the inspection stay the same.
Not sure which model fits your order?
Send us your product and quantity. We explain both models with your quote, with the numbers for each, and you choose. We reply within one business day.