E-commerce Product Sourcing: A Beginner’s Guide

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To start an online business, you need 3 major things: a store, customers, and products or services. In this article, I will be teaching you how to get one of those three things — products.

 

Sourcing products for your online store can get tricky, especially if you are a beginner. There are a lot of things to know and a lot of paths to take. I’ll be dissecting it all in this article. 

 

You will learn what product sourcing is, the different sources you can go through to get products, and some mistakes you should not make when you start out.

 

Common Product Sources For Your E-Commerce Store

 

Just look at product sourcing like you are shopping for your business. What you want is to get great products to sell from reliable suppliers or manufacturers at a fair price. 

 

It could be parts or raw materials you will need to manufacture your product, or it may simply be ready-made goods you aim to immediately resell.

 

The process involves doing your homework—researching, figuring out costs, making sure your suppliers are trustworthy, and engaging in negotiations to find the best deals. Your goal? Find great products at prices that leave room for healthy profits.

 

Of course, product sourcing isn’t as straightforward as it sounds. You’ve got to pick a strategy and do your research to find a good supplier (maybe even have a couple of backups, just in case).

 

Here are common sources of products:

 

Manufacture Your Own Products

 

Manufacture Your Own Products

 

One of the simplest channels for sourcing products is to roll up your sleeves and go the Do-It-Yourself (DIY) route. In 2023, the global handicraft market was at a staggering value of $787.85 billion, which goes to show that there’s a robust market for handmade products.

 

Previously, selling handmade items, such as original woodwork crafts, knitted blankets, handmade jewellery, and unique hand-drawn paintings, was limited to specific stores like Etsy or flea markets, with the high rise in demand for unique items has made DIY products a viable product source.

 

Advantages 

 

1.You get to control the production process instead of leaving it in the hands of a third party. You will be able to ensure all your products are made at the highest quality.

 

 This also grants you the flexibility to move to new products based on trends or implement new ideas faster.

 

2.You can manage the amount of manufactured products. Unlike manufacturers who require a minimum number of orders, you can just produce your products based on their demand. This reduces the cost of housing inventory.

 

3.You also get to sell a unique item your competitors would not have.

 

Disadvantages

 

1.Scaling problems: As a small business just starting, manufacturing your products may not pose any problems immediately but as you gain more customers and more demand, you will need to find a way to increase your production rate.

 

This could mean hiring help, finding a bigger production space, and inventory warehousing. This translates to spending more money.

 

2.You’ll need to personally find your supplies yourself. If your products are simple and straightforward, finding supplies can be pretty easy, maybe in craft stores or so; but if your products are complex and require special resources, you may need to pay extra or spend a lot of time finding them.

 

What You Will Need To Get Started 

 

1.Find supplies

 

Find supplies

 

Arts and crafts stores, retailers, and flea markets are just some of the places you can begin your search for the “raw materials” you will need for your products. 

 

If your product is more complex, you may have to do more research to find out where to source them from.

 

 I will recommend though that you start small, maybe making scented candles or so; when you have gotten experienced and have more contacts, you can then venture into more complex products.

 

2.Calculate the manufacturing timing.

How long will it take you to complete a batch of your product? You need to find the answer to this question before you begin.

 

This will let you know how often you can and will be restocking. It will also help you in deciding whether you will be making your products based on orders or you will keep a stock ready to go.

 

3.Plan out your storage and shipping.

 

If you will be keeping stock at hand, you will need a place to store them properly. Figure out where you will be storing your inventory, whether in your home or in a rented space. 

 

You will also need to learn about packaging and shipping the products to your customer. 

 

If you are into making custom apparel and clothing Globallyfulfill can help you with this. 

 

They are a Chinese-based fulfillment center that uses state-of-the-art technology to manage your inventory and also ensure your products are shipped right on schedule to satisfy your customers.

 

Use Wholesalers and Manufacturers To Source Products

 

Use Wholesalers and Manufacturers To Source Products

 

You can go this route if you know you do not have the resources or time to build and manufacture your products. 

 

The reason why I put both wholesalers and manufacturers together is because they both require that you buy products in bulk and then resell them for profit. Despite this similarity, these two options operate differently.

 

  • Buying from wholesalers just involves getting products from an individual distributor to stock or replenish your inventory. If you build a good enough relationship with them, you could negotiate for better prices or gain discounts.

 

  • Sourcing from manufacturers grants you a bit more control over your product. Depending on your manufacturing partner, you could get to customize their products with certain specifications.

 

When working with manufacturers, you get to completely cut out the middleman and can even opt for the direct-to-commerce (DTC) model. 

 

This way you do not need to manage inventory, you just market the product in your store and then ship any orders you get from the manufacturer straight to the consumer.

 

Globallyfulfilll can help you with this also. The company provides private label services that help you design, produce, and brand clothing the way you want it and then still provide fulfillment services to ship and deliver the products. 

 

Advantages of using wholesalers and manufacturers

 

1.Since you will be buying in bulk, your cost per unit price on products reduces a lot and as you build a rapport with them, you can even negotiate better deals or discounts.

 

2.Due to the large amounts of products they acquire, wholesalers only buy and distribute products that they know have a strong demand in the market; so sourcing from wholesalers means you know there is an already established consumer base for your products.

 

3.0You also gain access to a wide array of products since you can source from various manufacturers producing various products. Wholesalers also tend to carry various products so your store’s product diversity and catalogue can get as big as you want.

 

Note: If you are just starting out, do not bite off more than you can chew; start off by selecting a niche and then sourcing for products around that niche. Once your customer base starts growing, you can then begin to diversify.

 

Disadvantages of using wholesalers and manufacturers

 

1.You will need a significant amount of start-up capital if you are going this route. Most wholesalers and manufacturers would have a minimum order quantity you can get from them. So you will need to invest some money from the start before you can start making sales.

 

2.Competition is higher. The products you will be selling are by no means unique. You and a lot of other stores will definitely be sourcing from the same manufacturer or wholesaler so unless you work out a private-label product deal with your manufacturer, you will have a lot of competition.

 

What You Will Need To Get Started

 

1.Get a supplier

If you are looking for a distributor or manufacturer to buy products in bulk, you could:

 

  • Partner up with a company that is interested in expanding its focus from B2B to B2C.
  • Use local and international directories like Etsy Wholesale, Alibaba, and others to find businesses that make their own craft or are willing to sell to retailers.
  • Find businesses operating on the traditional business model of using a physical store and offer to partner up with them in taking their business online.

 

2.Evaluate your supplier

  • Before getting into a contract with your supplier, check them out to see if their business is legit. 

Scour the internet for customer reviews and ask for important documents like licenses and tax information. Be ready to provide yours too.

  • Check to see if their product’s quality is up to the standard you want. To do this, you can ask for samples, search for reviews online, or ask for certifications.
  • Ask about product availability also. Things like how long it takes to manufacture products and the backorder policies put in place to prevent product stock outs should be known.
  • Compare prices. The goal of sourcing for products is to find quality products at the best deals so compare the prices of bulk orders for different companies.

 

Check to see if they offer discounts and negotiate, negotiate, negotiate.

  • Find out how they ship and track their products, how long shipping takes and their insurance and return policies.
  • Test their customer service and communication.

 

The Dropshipping Model

 

The Dropshipping Model

 

Dropshipping is a retail business model that allows you to operate your online store without holding physical inventory. 

 

Instead, you work with third-party businesses called dropshipping suppliers, who will be responsible for the process of storing, packaging, and directly shipping the products to customers. 

 

This streamlined approach removes the need for expensive upfront investments in inventory, making the fulfilment process more efficient and cost-effective.

 

Globlallyfulfill can also help with this. Through their dropshipping platform, they can help you source your apparel and clothing products, store them in conducive environments, and ship your orders out for you. Check them out and give them a try.

 

Advantages of the dropshipping model

 

  1. Since you don’t need to purchase inventory in bulk upfront, you are not left with excess stock if products don’t sell as expected. 
  2. The logistical aspects of order fulfilment, such as packaging and shipping, are often handled by the suppliers, freeing you from the complexities of warehousing and fulfilment.
  3. With dropshipping, you can offer a broad range of products without the constraints of managing physical inventory. This flexibility allows you to experiment with different product categories and respond quickly to market trends without the need for substantial inventory adjustments.

 

Disadvantages of the dropshipping model

 

  1. With dropshipping, you rely on third-party suppliers to manage inventory and fulfill orders. This lack of control can lead to issues such as stockouts, backorders, or shipping delays, impacting customer satisfaction. 
  2. Since you’re not buying products in bulk, the cost per unit is higher, and the difference between the wholesale and retail prices may not be as substantial as with traditional retail models. 

 

How To Get Started

  • Identify a niche or product category that has demand in the market. Conduct thorough research to understand your target audience, competition, and potential profitability.
  • Select an e-commerce platform that supports dropshipping. Popular choices include Shopify, WooCommerce, and Magento. These platforms often have integrations and apps that make it easier to manage dropshipping operations.
  • Research and establish relationships with reliable dropshipping suppliers. Consider factors such as product quality, shipping times, and the supplier’s reputation.
  • Create an appealing and user-friendly online store. Customize your store with your chosen e-commerce platform, adding product descriptions, high-quality images, and clear pricing. 

 

Ensure that your website provides a seamless and secure shopping experience for customers.

 

  • Plan and execute a marketing strategy to drive traffic to your online store. Use a mix of digital marketing techniques, such as social

 

Common Mistakes Beginners Make When Sourcing Products

 

1.Setting Unrealistic Expectations: It’s good to have big ambitions but for a starter, try to dream realistically. Beginners sometimes set goals that are too ambitious without considering the practicalities. 

 

Setting unrealistic manufacturing or shipping timelines and profit expectations can lead to disappointment. So set achievable goals that can help build your store for sustainable growth.

 

2.Not doing enough research: In haste to start selling, beginners tend to jump into unfavourable contracts and deals. Do your research. Check out your supplier, and see if everything they provide aligns with your brand image.

 

Imagine your brand is all about clean health, exercise, and fitness and your partner is with a protein shakes company. 

 

Now due to a lack of proper research, you failed to see the negative reviews previous consumers have left regarding the protein shakes. That could spell disaster for you and your brand.

 

So do your research.

 

Conclusion

 

To wrap it all up, sourcing products for your store can be quite overwhelming at first but with the knowledge you have gained in this article hopefully it gets easier. 

 

What you need to do now is find which route is best for you and your business, avoid the mistakes I listed, and go ahead with your business.

 

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