Here’s how to know which product sourcing is best for your business
Oct 18, 2021
In the last article on product sourcing, we discuss the different ways in which you can source products for your business. Manufacturer, drop-shipping service, wholesalers are the three product sourcing agents from where you can source your product. But, how to know which product sourcing fits best with your business requirements. It is essential to weigh each product sourcing method’s advantages and disadvantages when deciding which one is the most suitable for your business’s requirements.
Large and established businesses choose to source products directly from the manufacturers to cut out middlemen, which also allows them more control over the product design process, and to purchase products in huge quantities. They are also capable of handling complex shipping processes, sizable upfront investments, and long lead time. Oppositely, smaller businesses that are intended to source products quickly, simplify logistics and minimize risk avoid working directly with the manufacturers. Small scale businesses, growth-minded retailers, and confident entrepreneurs are likely to prefer the wholesale method. Wholesale product sourcing doesn’t call for such large investments as manufacturers' method. Nonetheless, it still provides control over inventory, branded packaging opportunities, and good margins. Lastly, new entrepreneurs and those businesses with very little startup capital may consider sourcing products from drop-shipping suppliers as there is no need to invest in inventory upfront, which means there is a little-to-no risk factor. It also helps beginners to learn the ins and outs of selling, purchasing, eCommerce, and digital marketing. That being said, you can even consider using more than one of the methods if your business calls for it.
Here are some steps which may help you while evaluating how to source products for your business:
Proper market research: before deciding where to source products, it is of essence to conduct proper market research to ensure there is demand for the product idea. Make certain to research pricing, competitors, and target market. It’s better to create a plan by using this research strategy to differentiate your business.
Choosing the right product sourcing method: before getting started with product sourcing, know where your business stands and what are your business requirements. Be clear, if you want to work with a manufacturer to create a new product or source products from drop-shipping suppliers and wholesalers.
Decide on to product source locally or from Abroad: it depends on which type of product you want for your business and if it is available locally or not. Make sure to weigh the pros and cons of domestic as well as global suppliers before deciding from where to source product.
Always have a backup supplier: when sourcing products from drop-shipping suppliers or wholesalers make sure to ensure that you don’t run out of stock. You don’t have control over the supplier’s capacity to supply therefore, it helps to have some other suppliers within your contact.