Starting an online store can be an exciting and rewarding venture, but there are many things to consider before jumping in. One of the most important steps to launching a successful e-commerce business is to learn how to source a product for your customers.
Understanding and utilising the various sourcing options available in this competitive e-commerce world will not only help set your business up for success but will also benefit your store best in terms of cost and ease of procurement.
Whether you are just starting up your online store or planning to launch a new product, it is essential to know which type of product sourcing will best fit your business and budget. Keep reading below to help you explore the different ways to obtain relevant products for your company and stand out from your competitors!
What is product sourcing?
After generating an idea for your online store, the next step you need to take is to decide how you will obtain the necessary equipment or products for your business. Product sourcing is a critical part of the procurement process, as it allows you to compare different suppliers and enter into negotiations once you have established the quality and price.
By thoroughly researching and evaluating the product’s stocks, characteristics, and the best place to source them, you can ensure that you get the best deal and the highest quality products for your business.
Types of Product Sourcing
The goal of product sourcing is to obtain the best quality product at the most competitive price. Businesses must consider the cost of manufacturing, shipping, and storage when sourcing their goods, as well as potential costs associated with returns.
It is also important to evaluate the potential risks associated with the suppliers in order to ensure customer satisfaction and improved customer service. To guide you in the whole sourcing process, here are some product sourcing services that you can utilise according to your business’s preference and capability:
DIY products
Before delving into the more technical and complicated ways to source your goods, the first thing you can consider for your online store is to craft your own products. The options for DIY products are endless from beauty supplies and jewelry to clothing and artsy stuff.
Although you’ll be making products yourself, you’d still need to find a supplier that will provide you with the necessary materials. You’d also need to consider the cost of the shipment process, whether you’ll need warehousing and storage, and labor.
If you decide to go down the DIY route, here are some things you should keep in mind:
Pros
You’ll have the chance to stand out among other competitors as you’ll provide your consumers with something unique and personalised. This can also be cheaper, depending on the materials you’ll need.
Cons
Time and scalability are your greatest enemies when it comes to handcrafted goods. Creating your own products can take time, especially if you don’t have help. Will you be able to meet customer demands once your store takes off?
Wholesaler
If you can’t create the products yourself, then sourcing from wholesalers is a good way to go. Their services are also perfect if you’re looking for established products in the market and need to have the stocks asap as they are easier to manage compared to other sourcing options.
Moreover, getting products in bulk can cost cheaper than retail orders and would quickly scale up your online store, giving your customers access to a wide range of goods to choose from.
Pros
The acquisition of products is less time-consuming as they are already made and produced. The buying process is also relatively straightforward, as many wholesalers offer a wide variety of products that many consumers might need.
Cons
Competitions in the market can be fierce since you’ll be selling goods that other businesses are already offering. To order successfully, you may need to invest more upfront, as most suppliers will likely require you to order in bulk.
Manufacturer
Sourcing straight from manufacturers is ideal if you can’t make the products yourself but want to have higher control of your brand and pricing. Some even go beyond sourcing from different countries like China as they’re known for manufacturing goods for a lower price. This is why some businesses tend to hire services from sourcing agents like Connected Sourcing to help them find the right supplier and get a better deal.
There are two types of products you can source through manufacturers:
- Private label – this type allows a manufacturer to create a private label product for your store, depending on the specifications and instructions you will provide. This will give you full control over every aspect of the production – from the materials used to the packaging and labeling.
- White label – these products are usually generic and sold to other retailers as well, making them ideal for larger customer segments due to their wide availability and low cost.
Pros
Working with manufacturers will give you better control over your brand and the quality of your products, and possibly at a lower cost.
Cons
You’ll have to invest more upfront since manufacturers will require you to order in bulk. There is also a lot of paperwork required if you’re going to source from another country.
Dropshipping
Dropshipping is one of the simplest ways to fulfill customer orders, as you don’t have to worry about stocking or shipping products yourself. Instead, your dropshipping partner will take care of all the hard work once a sale is made through your store. All you have to do is market the product and keep your stocks up to date on your site.
Pros
Ideal for starting businesses as this method is a fast, cost-effective way to launch an online store with no risk of inventory mismanagement.
Cons
Dropshipping typically has lower profit margins since you don’t necessarily manage the inventory yourself. You will also have little control over product quality, which can make the return process for customers more difficult.
Choose the Right Product Sourcing for Your Business
Keep up to date with the latest market trends to help you stay ahead of the competition and find the best sourcing solution to your needs. By understanding the advantages and disadvantages of each various sourcing option, you can now assess which one is best for your business.
Whichever method you choose, make sure that you’re working with reliable suppliers to ensure that your customers receive the best possible experience.
