Chapter 7 Sourcing Products For Ecommerce 101: How to Get Unique and Marketable Stock
Many moons ago, merchants embarked on long journeys to far away lands.
Traveling in caravans, sailing on schooners or riding atop of a horse, fearless traders wandered many miles from home to source products the local folk had never seen before.
Historical trade routes such as the Silk Road, the Amber Road and the Trans-Saharan Trade Route crisscrossed the globe and linked unique communities with one another.
Today, merchants can take the same amazing journey without leaving the comforts of their homes. Thanks to the increase in global connectivity, sourcing and trading products has become much easier.
What is Product Sourcing?
Product sourcing is the process by which a business attains stock to sell. To find marketable inventory for your online store, you can explore manufacturers, wholesalers, artisans and other types of creators and businesses who produce merch for sale.
Typically, the product sourcing process includes:
- Product ideas research
- Vendor analysis
- Price comparison
- Supply deals negotiation
After reading this post, you’ll learn where to find product suppliers for your online store, what things to consider during negotiations and how to stock inventory your consumers will love!
Types of Product Sourcing
The world of supply is wide-ranging and wonderful. But it’s easy to get lost in the rabbit hole of research.
To keep your search productive, prioritize the following five sourcing vectors:
- DIY products or services
- Manufacturers or wholesalers
- Trade shows
No option is inherently better than another, but there are a variety of factors to weigh when determining which works best for your business — and for you.
1. DIY products or services.
In 2020, the global handicraft market was valued at $647 billion.
From solo artisans producing exquisite handmade jewelry to acre-wide ateliers weaving heritage Persian rugs, there are many curious options you can explore.
Or perhaps, you are eager to join the maker economy — a movement of people, producing their own products for sale. If you have your hands itchy, this can be a great starter.
Another angle on DIY? Consider selling DIY kits and supplies to others. That’s what brands like Artbeads do — sell customers the joy of crafting their own jewelry!
Advantages of selling DIY products:
- One-of-a-kind products, competitors cannot replicate
- Full control over product quality
- Ability to pivot to new ideas fast
- Direct control over inventory
- Growing consumer interest
Disadvantages of selling DIY products:
- Potentially higher cost of goods sold (COGS)
- Constant need to source raw products
- Extra production space required
- Limits business scaling abilities
A Checklist to Get You Started
Flea markets, craft stores, estate sales, established retail businesses or even friends and family could provide you with raw materials for reworking. Determine what you need, where you’ll get the supplies and how much they’ll cost.
Decide on your pricing.
Materials and labor will present the bulk of your costs. But there are some operational costs too such as product handling, packaging, shipping, marketing, etc. Make sure that you pack these all into the price to take home a good Return on Sale (ROS).
Calculate how long your products take to make.
Mind the manufacturing time frame. Or else you risk having unbalanced stock. In addition, you need to decide if you will make items on order or keep stock on hand.
Determine how you’ll ship orders.
Will you be running to the post office yourself or hire a shipping service? Where do you plan to ship and how much should you charge? Write down the answers.
Learn what it will take to ship.
Give thought to packaging, since it will have downstream effects on total costs and could create shipping challenges later on. Look into companies like Noissue, which make it possible for your packages to reflect your brand feel. After all, the rise of the “unboxing experience” could have a long-lasting effect on your customer experience.
Consider where you’ll store your inventory.
Even if you’re small enough to legally run your business out of your home, that probably won’t scale with your business. Look into alternatives like renting a space, opening a retail storefront for BOPIS or using a 3PL.
Make a plan for communicating timelines.
You ought to set expectations about the turnaround times for products and orders. Add quick notes in your product description. Plus, in your shipping and returns policy. Then, reiterate it in your transactional emails. It’s best to be upfront and transparent so your customers feel confident purchasing from you.
2. Manufacturers or wholesalers.
Working with a manufacturer or wholesaler means you’re hiring a third party to provide the product for you:
- Manufacturers can either produce custom goods up to your specs or sell their standard stock (with customizations)
- Wholesalers merely supply you with the inventory they have sourced themselves elsewhere.
Either is a good option if you can’t produce the goods yourself or when you are ready to scale your DIY manufacturing. Also, it’s a great way to diversify your inventory and carry other brands, popular with your target audiences.
Many online brands today choose to go the direct-to-commerce (DTC) route. They commission goods directly from a vetted manufacturer and have them ship the products straight to the customer without any intermediaries.
By the end of 2021, ecommerce DTC sales in the US are poised to reach $21.15 billion. You probably heard about DTC startups, now valued at billion dollars, such as Away, Casper and Warby Parker among others.
But there are many more small and mid-market companies, pursuing the DTC route. Burrow is one innovative example. The modular furniture retailer managed to reduce their product manufacturing prices by a sizable notch by working as a manufacturer.
Sourcing products from a wholesaler or distributor has its perks too. As you can immediately access a wide selection of inventory, compare prices and negotiate bulk purchase discounts. Moreover, you can stay in better control of supply as you’d be dealing with one company, rather than many people at once.
Advantages of working with manufacturers and wholesalers:
- Great deal of assistance with production and supply
- Ability to scale product catalog and carry more brands
- Access to new niche products and custom goods
- Risk diversification and minimization
Disadvantages of working with manufacturers and wholesalers:
- Higher startup costs — you need to pay for goods before making a sale
- Inventory risks to account for
- More paperwork and contract negotiations
- Most have a minimum order quantity (MOQ) you need to meet
A Checklist to Get You Started
Find a supplier.
If you’re looking for a product to buy in bulk, you have several options:
- Partner with local businesses or artisans. Or approach another brand with a direct offer.
- Look for foreign small business suppliers on platforms such as Alibaba or eBay.
- Partner with an existing company to take their business online or from B2B to B2C.
- Building relationships with makers on Instagram or on social media communities.
- Browse local or international wholesale directories such as Etsy Wholesale, Wholesale Central or Closeout Central.
If you’re looking for a manufacturer to make your products, you can easily research options online. Remember that finding the right partner can take some time, so don’t get discouraged.
Vet the new business partner.
Next, you’ll want to check references for the manufacturer or wholesaler in consideration. If you’re doing business with someone, make sure they are legitimate.
Reach out to others who have used the manufacturer or wholesaler. Maybe do a little digging at the Better Business Bureau. It’s a good sign if the company you’re researching asks for information that proves that you have a legitimate business, too. Be prepared to provide necessary licenses or tax information.
Evaluate your supplier.
Be sure to ask the following questions of each company you’re considering:
- What will the total cost of production and shipping be? Are there any potential hidden fees?
- How long will it take for them to create, fulfill and ship the product?
- What does shipping and inventory management look like? Will you need to ship and store or is that included as part of their service? What are the timelines and conditions? Do you have control over package branding?
- What do the contracts and terms look like? Is there any wiggle room for things your business or customers need? Is there an evaluation period or terms for termination?
- What do support and communication look like? How frequently will you be updated on information like inventory, product changes or even discounts?
- What are the minimum order quantities (MOQs)? Will you have to commit to a certain number of units or spend a minimum amount?
Once you’ve found a contender or two, order several sample items you plan on selling. Before you sign on with anyone, make sure their products meet your expectations. While some manufacturers will charge a fee to send you a sample, you can often negotiate a deal to only pay for it if you keep it.
Weigh your options.
Don’t rush with the decision. You want to ensure you’re making the right choice in terms of price, quality and market demand. But that doesn’t mean you should sit in research mode forever. Worst case, you pivot and go another direction.
Dropshipping is a method of product sourcing where another vendor fully fulfills a customer order. Essentially, you only list their inventory on your ecommerce website, while the dropshipping partner handles everything that happens after the sale — packaging, shipping, etc. This way you don’t have to deal with the inventory.
Dropshipping is a great option for starting a new online store. But it also works for expanding the product catalog of an existing store.
You may be surprised to learn that 12% of Amazon FBA stores with annual revenues of above $1 million use dropshipping.
Pros of dropshipping:
- Wide selection of new products to choose from
- Low-cost and fast way to start a new online business
- No inventory risks or extra inventory management overheads
Cons of dropshipping:
- Lower profit margin — you need to sell a lot to make a good profit.
- Competition with other brands, sourcing same products
- Little control over product quality
- More challenging return process for customers
A Checklist to Get You Started
Here are the steps to find a dropshipping supplier for your store:
- Find some dropshipping companies
- Check their references and reviews
- Evaluate product options in terms of price, MOQ, sizing grid
- Ask about customizations and branding options
- Determine the feasible delivery timelines and returns process
- Ask for samples
Finally, pick one partner and get going! Read more about starting a dropshipping business.
Today, you have a double advantage when it comes to dabbing into marketplaces. You can browse locally in-person or source globally online.
All-purpose online platforms such as eBay, Aliexpress, Etsy, are great ways to discover more goods for sale. In particular, if you plan to sell:
- Vintage and pre-loved items
- Artisanal products
- Decor and art
- Handmade goods
Or pretty much any other type of trending item, local consumers are dire to get! If you are looking for quality products in a specific vertical, you should also head to niche online marketplaces. For example:
- Houzz — home items and decor
- GAME — toys, collectibles, computer games and hardware
- AbeBooks — new and second-hand books
- G2A — games and electronics
- StockX — mainly clothes, electronics and collectibles
- Reverb — music instruments
- Taobao — China’s peer-to-peer marketplace, selling clothes primarily
- Discogs — vinyl records, CDs/DVDs.
Finally, don’t discard local markets you have access to. From garage sales to private estate sales, farmer’s markets and annual fairs, there are many places to cultivate relationships with potential suppliers to procure the best-sellers!
Pros of using marketplaces:
- No minimal order quality
- Fast way to source small, but diverse stock
- Easy ordering process — no legal paperwork
- Ability to locate unique items
Cons of using marketplaces:
- Your pay higher retail prices, rather than wholesale
- Limited stock availability
- Unpredictable shipping times
- Requires regular commitment for replenishing stock
A Checklist to Get You Started
When it comes to using marketplaces for product sourcing, you need to remember several things:
- Have a good idea of what you are looking for
- Inquire about current stock volumes and opportunities for replenishment
- Negotiate discounts and aim to build long-term sourcing relationships
Similar to wholesaler search, read reviews and evaluate different stock ordering options.
Remember, many sellers on online marketplaces are no pros and may have limited access to products. If some products are sold out, but you already have a customer waitlist, this can be problematic.
On the other hand, online and physical marketplaces are a good way to discover small manufacturers, budding entrepreneurs and emerging brands to partner with. These can turn into long-lasting allies for your brand and help you scale into multi-brand operations!
5. Trade shows.
Trade shows were effectively designed to connect suppliers and distributors with prospective brand owners.
So it’s always a nice place to mingle in search of new private label products, manufacturers without an online presence or product ideas, new to your target market.
2020 wasn’t a tradeshow year. But the industry is gradually bouncing back. Some of the confirmed product trade shows for 2021 include:
- Ohio State Fair 2021
- The Ultimate Women’s Show (multiple locations)
- Los Angeles Christmas Cash & Carry Christmas Gift Show
- Big Boys Toys 2021 – The Innovation & Luxury Lifestyle Exhibition
- COUTURE Las Vegas 2021
- Las Vegas Antique Jewelry & Watch Show 2021
So mark your calendar and consider attending!
Pros of trade shows:
- Access to a host of different suppliers at once
- Ability to see and feel the product in person
- Novel and innovative products
- Faster pace of supply deal negotiation
Cons of trade shows:
- Extra travel and attendance costs
- Intimidating process for first-timers
- Many suppliers prefer to work with bigger brands
A Checklist to Get You Started
Trade shows can be overwhelming. So get there with a clear agenda in mind. Specifically decide:
- What products do you want to buy?
- How much can you spend per item?
- How much inventory are you looking for in total?
- What MOQ is fine with you?
- Can you charge a good profit margin based on the price?
- Is the product unique?
- Is it easy to ship?
- Can you add a bundle or upsell it with current stock?
- Is there sufficient demand? Is it too competitive?
When approaching sellers, prepare a quick elevator pitch for introducing your business and your needs:
- Describe your experience and your business size, target market and past experience with product sourcing.
- Explain what products you are selling and what you are looking to add to the mix.
- Indicate your ability to buy — how much inventory you plan to get.
- Then pass the ball to the wholesaler and prompt them to talk about their business and goods.
This easy conversation opener can help you make a bunch of valuable connections in no time!
Finding a product to sell online no longer requires dodging robbers and escaping pirates.
But to get the best goods for trade, you still need to venture into the new territories, online or in-person.
Product sourcing strategies are aplenty. You just need to choose the optimal approach (or experiment with several!) and keep your research activities well-structured to avoid getting overwhelmed.
Sourcing Products for Ecommerce FAQs
1. How do you source a product for selling online?
Typically, you have three main options. First, make the product yourself, hire a traditional manufacturer or on-demand provider. Secondly, find a supplier — dropshipper, distributor or wholesaler to provide you with products. Finally, you can use any combination of the above, as well as partner with local physical businesses that are not online yet.
2. How do I find ecommerce suppliers?
The best way to find ecommerce suppliers is to start with an online search. Browse wholesale directories, check online marketplaces, approach individual small business owners and artisans. If you want to carry a particular brand, talk to them directly about doing a direct wholesale deal.
3. What products are trending in 2021?
Trends come and go, but some of the long-stay ones include consumers’ interest in eco-friendly products (across categories), vintage and preloved items, plants and garden supplies among others. Hobby-related and DIY products see a spiked demand too as many people continue to pursue pet projects, started during the pandemic.
4. How do you source product materials?
If you plan to produce your own products for sale, look for raw material suppliers in your area (to reduce shipping delays). Browse online directories to locate nearby partners, then approach them directly. For some types of materials, online marketplaces can also suffice to purchase product materials in bulk with less hassle.
5. Which product is easy to manufacture?
Small-scale, non-complex products, requiring few raw materials are the easiest to manufacture yourself. These include candles, soaps, jewelry and accessories, small leather goods, small decor or furniture items, some types of garments, sweets, confectionery and other types of foods.
6. How do you source clothes for an online store?
The sourcing strategy depends on your store concept. For example, as a multi-brand store owner, you can curate clothes from local designers or place wholesale orders with international distributors. You can also partner with a small clothing atelier to produce private label clothes. If you plan to run a vintage store, estate sales, garage sales and online marketplaces are your best bet to find garments for sale.
7. How do I find American suppliers?
Start an online search among regional producers. Look in online manufacturing catalogs or supplier directories. Thomasnet, Clever Wholesale and SaleHoo among others have up-to-date listings of US suppliers — wholesalers and manufacturers. Also, don’t discard individual makers in your community.
8. Can I dropship from the USA?
Yes, any registered ecommerce business in the US can act as a dropshipper for another business or work with a dropshipping supplier. Just make sure you have a proper business registration and tick all the tax requirements. You also have plenty of tools and extensions to run smooth dropshipping operations both ways.
9. How do I find the best suppliers?
A structured supplier research process is key to finding the best business partners. Before you launch into search, determine how much inventory you want to purchase, at what price per item and what minimal order quantity you can afford. Research different suppliers with a request for proposal (RFP) document to get their input. Analyze the responses, read reviews and then order samples for an in-person inspection.
10. How do I find dropshipping suppliers?
Instead of going to popular dropshipping platforms such as Aliexpress and Alibaba, look for local manufacturers first. The idea is to find a small company that produces high-quality products but doesn’t do online B2B sales. Then you can pitch in to act as their digital storefront, while they do the supply and shipping.
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