What is a buying house? Bangladesh sourcing explained

What does a buying house do?

A buying house is a local company in Bangladesh that stands between a foreign buyer and the factory. It takes your order, finds a factory that can make it, follows production and checks quality before the goods ship. A sourcing agent does similar work, and many people use the two terms for the same thing.

Buying houses are normal here, not a warning sign. About 70% of factory orders in Bangladesh still come through them, according to one industry leader quoted in May 2025. That is an estimate, not an official count. Big brands use buying houses. So do small ones.

In the classic model, the buyer opens a letter of credit (LC): a bank’s promise to pay the seller once the shipping documents are correct. The buying house transfers the LC to the factory, the factory is paid, and the buying house takes a commission at an agreed rate. It can also earn a margin between your price and the factory’s price (OGR Legal).

The work also depends on the order type. Most garment prices are quoted FOB (Free On Board): the price covers the goods loaded on the ship in Bangladesh, and you pay freight and import costs after that. On an FOB order, the factory handles everything from cutting to packing. On a CM order (cut and make), the factory only does the making, and the buying house arranges trims (buttons, zips, labels), washing and quality checks. Scope and fees differ between the two (Apparel Resources), so ask which one you are paying for.

How much does a buying house charge?

There is no official rate. Our research found no reliable published survey of Bangladesh buying-house commissions for 2025–26, so the benchmarks below are general:

How the fee is charged	Benchmark	Note
Commission on order value	5–10%	Vendor guide, not Bangladesh-only
Commission in a US Customs ruling	10% of FOB	Agent with operations including Bangladesh
Flat fee, simple product sourcing	US$500–1,500 per project	Vendor guide
Flat fee, full project management	US$3,000–10,000 per project	Vendor guide

Some agents mix the two, for example a 3% commission plus flat fees for quality checks, samples and audits. Very high rates draw attention: in one US Customs matter, officials said a 25% commission was above the normal rate for genuine buying agents.

Watch for two hidden costs. First, the fee may not appear on your quote at all, because it sits inside the unit price as a margin (OGR Legal). Second, some agents take “points”: secret payments from the factory. A July 2026 trade guide warns about them and notes that flat fees reduce this conflict of interest (Tianwen).

Does a buying house need to be registered?

In 2019, Bangladesh’s Ministry of Textiles and Jute made registration with the Department of Textiles (DoT) mandatory for garment buying houses. The papers include a current trade licence, an income tax certificate, a bank solvency certificate and an estimate of yearly turnover (same source). Membership of the buying-house trade body (BGBA) comes first, and uptake was slow: only 37 buying houses had registered by August 2019.

The rule has been argued over. BGMEA, the garment manufacturers’ association, disputed the buying-house association’s role in licensing. A Commerce Ministry draft policy proposed registering buying houses with the Export Promotion Bureau instead. As of 14 October 2026, we had found no report that the draft was adopted. Treat a DoT certificate as a useful first check, not a guarantee.

Membership matters for another reason. In a 2017 fraud case worth about Tk 600 crore, the two buying houses involved were not BGBA members. That fraud hit factories rather than foreign buyers, but it shows why you should check who you are dealing with.

Two questions to ask before you pay

1. Who is the factory? Ask for the factory’s name and address, not only the buying house’s. Then check it yourself. The International Accord publishes a free list of Bangladesh garment factories with safety inspection reports.
2. What is your fee, and how is it charged? Ask for it in writing: a commission, a flat fee, or a margin inside the unit price. Ask whether the factory pays the agent anything as well.

A good buying house answers both at once. A bad one hides the factory and the margin. Hiding the factory is not only a price problem. In 2012, workers died at the Tazreen factory, and Walmart and Sears said their suppliers had moved work there without permission. That is hidden subcontracting: your order moves to a factory you never approved.

Buying house or direct to a factory?

Going direct shows you the real factory price and builds a direct relationship. The trade-off is that you handle language, follow-up and quality yourself. Many factories also set a high MOQ (minimum order quantity, the smallest order they accept per style). Seller blogs put Bangladesh MOQs at roughly 500–3,000 pieces per style, but treat those figures as indicative only.

A buying house finds the factory and watches production for you. The trade-off is the fee and one more layer between you and the people sewing your goods.

There is a middle route: buy the checks separately. Independent inspection in Bangladesh is advertised at about US$268–298 per inspector-day, checked in October 2026. These are advertised rates, not quotes for your order.

What this means for your order

A buying house is a fair choice if it works in the open: a named factory, a written fee and a registration you can see. If it will not tell you the factory or the fee, walk away. If you go direct, budget for your own factory check and a pre-shipment inspection. Loom & Harvest does factory checks, sample coordination and inspections for fixed fees and takes no payments from factories; you can tell us about your order here.