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How To Source Products For Your Online Business

August 23, 2023
Written and researched by experts at AvadaLearn more about our methodology

By Sam Nguyen

CEO Avada Commerce

The crucial decision of sourcing products to sell online can significantly impact your business’s success, profitability, and overall mission. In this article, we show you how to source products that you can apply to your business. 

Key Takeaways

  • Sourcing products for your online business involves a range of strategies, from DIY production to manufacturers and trade shows. Diversifying your approach can provide unique advantages.
  • Local suppliers offer faster delivery, lower shipping costs, and support for local economies. On the other hand, international sourcing can offer cost savings and access to unique products, but it comes with challenges like longer lead times and potential legal complexities.
  • Enhance your decision-making by conducting thorough research, assessing suppliers, and engaging in negotiations. Keep key aspects such as supplier dependability, product excellence, pricing, and terms in mind. Prepare to handle challenges and interruptions to ensure a prosperous sourcing journey.

What Is Product Sourcing?

Product sourcing is a vital aspect of any e-commerce business. It involves finding and acquiring products that you can sell online to your customers. Product sourcing can be done from various sources, such as manufacturers, wholesalers, dropshippers, or marketplaces. Each source has its own advantages and disadvantages, depending on your business goals, budget, and niche.

What Is Product Sourcing?

Product sourcing is not a leap into the unknown but a guided journey. We’ll embark on a step-by-step exploration, helping you confidently navigate the terrain and arrive at your destination.

Step 1: Find What to Sell

The journey begins by pinpointing what products align with your vision. Ask yourself questions that ground your choices:

  • What kind of business are you running, and where are you located?
  • Who is your target audience, and how will your offerings address their needs in ways competitors don’t?
  • How much storage capacity will you require?
  • What shipping methods will you employ?
  • Is there a demand for the products you’re considering?

These answers lay the foundation for your product selection, guiding you toward practical choices that resonate with your objectives.

Step 2: Get Ready To Sell Online

Before reaching out to suppliers, it’s crucial to ensure that your online platform is well-prepared for transactions. Having a business license and a fully operational website is a must; reputable suppliers often request evidence of your business’s legitimacy.

You need to choose a suitable e-commerce platform, such as Shopify, WooCommerce, or Magento, and set up your store with a catchy name, logo, design, and domain. You also need to plan how to promote your products and reach your potential customers through social media, email marketing, SEO, or paid ads. We have a detailed article on how to sell online that hopefully can help you.

Get Ready To Sell Online

Step 3: Preparing to Connect with Suppliers

The final step is to find and contact reliable suppliers who can provide you with the products you want to sell. You need to compare different product sourcing sources, such as manufacturers, wholesalers, dropshippers, or marketplaces, and evaluate their quality, price, delivery time, and customer service.

Prepare a set of questions that will help you comprehend the landscape:

  • Who are their current clients?
  • Do they personally manufacture products or outsource?
  • Can you obtain samples, and when?
  • What are the typical order turnaround times and minimum requirements?
  • Uncover shipping costs and per-unit expenses, including any hidden fees.
  • Understand their return policy, particularly for defective items.
  • Delve into their ethical guidelines.

These responses will enable you to make informed decisions about logistics and the reliability of prospective suppliers.

Remember, don’t rush into commitments. It’s important to compare various suppliers, analyzing their offerings and pricing strategies. And you should negotiate with many supplier options before making a decision.

Moreover, take into account the implications of the shipping options provided by the supplier. Look for suppliers that offer discounts or free shipping for purchases that meet certain minimum order thresholds.

Sourcing For Your DIY Products

DIY products hold an inherent uniqueness that’s hard to replicate. If you have the talent for crafting with your hands and plenty of time, venturing into DIY products could be a rewarding path to explore.

Sourcing For Your DIY Products

However, it’s essential to consider both the advantages and challenges of this approach.

The benefits are clear: DIY products exude authenticity and charm that resonate with customers seeking something unique. Your creative touch sets these items apart in a world dominated by mass-produced goods. The source materials you locate depend on the nature of your product. You have a variety of options, such as mass production suppliers, second-hand and recycled material providers, smaller businesses, and even flea markets. Selecting a promising niche where your skills shine will enable you to ask for higher prices. 

On the other hand, there are challenges to navigate: Meeting significant orders might prove difficult due to the hands-on nature of crafting. Smaller supply orders could incur higher material costs, impacting your profit margins. Storage and assembly space requirements need to be factored in as well. Moreover, the time investment required for DIY production can result in the need for higher pricing compared to mass-produced counterparts.

Consider these tips:

  • Source Materials Wisely: Depending on your creations, source materials from various channels. Mass production suppliers, second-hand and recycled material sources, smaller businesses, and flea markets can provide various materials to suit your vision.
  • Craft a Unique Pricing Strategy: Pricing DIY products differs from traditional mass-produced items. Account for material costs and your own time, branding, and packaging expenses. Crafting a pricing model that adequately reflects the effort you invest while remaining competitive is key.
  • Niche Selection Matters: Choose a niche that aligns with your skills and passions. The more unique your expertise, the better positioned you are to command premium pricing for your distinctive creations.
  • Quality and Love Matter: Embrace the artisanal quality of your products. Highlight the craftsmanship and love that go into every piece. This storytelling aspect can resonate deeply with customers who appreciate the dedication behind handmade items.

Direct Source Products From Manufacturers

When sourcing products for your online business, connecting directly with manufacturers can offer unique advantages.

Direct Source Products From Manufacturers

Well-known manufacturers like IKEA and Volkswagen are part of our everyday lives, and there’s a reason they hold appeal. By collaborating with established manufacturers, you can enjoy several benefits:

  • Scalability and Packaging Relief: Manufacturers eliminate the burdens of scalability and packaging that DIY approaches often entail. This allows you to focus on other critical aspects of your business.
  • Customization Potential: Many manufacturers offer customization options, allowing you to tailor products to your brand’s vision and customer preferences.
  • Regulatory Compliance: Established manufacturers are well-versed in product regulations and compliance, ensuring the products you source meet industry standards.

However, this path comes with its share of challenges:

  • Upfront Costs: When dealing with manufacturers, you must pay for everything upfront, including potential setup fees.
  • Timeliness: Manufacturing processes can be time-consuming. You might have to wait months for your first order to be produced and delivered.
  • Competition Concerns: Since manufacturers cater to multiple clients, they may create similar products for your competitors.

While there are countless manufacturers, here are a few well-trusted ones to consider:

  • Maker’s Row: This dedicated platform connects you with American manufacturers known for their adherence to quality control and ethical standards.
  • Thomas Net: Another platform that helps you find manufacturers based on your specific needs and location, ensuring accessibility.

As you begin sourcing products directly from manufacturers, consider these tips:

  • Establish Clear Communication Channels: Effective communication is key to successful direct sourcing. Establish clear and open lines of communication with potential manufacturers. Clearly articulate your product specifications, quality standards, quantities, and delivery schedules. This will help avoid misunderstandings and ensure both parties are on the same page.
  • Negotiate Terms and Agreements: Negotiate terms that work for both you and the manufacturer. This includes discussing pricing, payment terms, minimum order quantities, lead times, quality control processes, and return policies. Make sure all terms are documented in a written agreement to prevent disputes in the future.
  • Conduct Quality Assurance and Due Diligence: Before finalizing any manufacturing partnership, conduct thorough quality assurance and due diligence. This may involve requesting product samples, visiting the manufacturer’s facility (if possible), and evaluating their production processes. Ensure that their quality standards align with yours to maintain consistent product quality.
  • Consider Sourcing Consultants: If you need help navigating the manufacturing landscape, consider hiring a sourcing consultant. While there’s an upfront cost, they can save you time and money by connecting you with qualified manufacturers.

Source Products From Wholesalers

Wholesalers operate by buying in bulk and offering you products at a reduced price per unit. In exchange, you take on the task of breaking down the inventory into individual orders and managing the shipping process.

Here are some of the key advantages:

  • Cost Savings: Wholesale purchasing allows you to buy products in bulk at lower prices than you would pay for individual items. This translates to higher profit margins when you sell the products at retail prices.
  • Wide Product Range: Wholesalers often offer various products across different categories. This lets you diversify your product offerings and cater to various customer preferences.
  • Easier Scaling: As your business grows, wholesaler relationships can accommodate larger orders to meet increasing demand.
  • Convenience: Wholesalers handle the logistics of sourcing, storing, and shipping products. This saves you time and resources compared to dealing with multiple individual suppliers.

While this arrangement offers certain advantages, it’s essential to understand the potential challenges:

  • Upfront Investment: Wholesaling requires paying for all the products upfront, which can be a substantial financial commitment.
  • Sales Uncertainty: Unlike dropshipping, there’s no guarantee that every item you buy in bulk will be sold. This uncertainty exposes you to the risk of unsold inventory.
  • Storage Considerations: Bulk buying demands more storage space. As your inventory grows, you must factor in storage costs and logistics.

To embark on your wholesale sourcing journey, consider these platforms:

  • Alibaba: A popular online marketplace that connects you with international manufacturers. Simply input your desired product, and Alibaba provides you with manufacturer options along with transparent pricing.
  • Shopify Handshake: This wholesale marketplace offers a curated selection of products. It provides more stylish and curated options than traditional wholesale platforms.
Shopify Handshake

As you navigate the world of wholesale sourcing, here are some tips to keep in mind:

  • Explore Labeling Options: Consider white labeling, where the wholesaler attaches your branding to the product, or private labeling, where you customize the product before adding your label. Even if you choose not to customize, inquire whether the wholesaler offers branding and packaging options.
  • Request Samples: Before committing to a large order, request samples of the products you’re interested in. Evaluating samples helps you assess product quality, design, and compatibility with your brand.
  • Check References and Reviews: Ask the wholesaler for references from other businesses they’ve worked with. Additionally, look for online reviews and testimonials to gain insights into their reputation and customer satisfaction.

Source Products With Dropshipping

Dropshipping is a relatively hassle-free option among the various avenues to source products for your online business. This approach offers distinct benefits and challenges worth exploring:

Source Products With Dropshipping

Source products with dropshipping shine as one of the simplest methods. Here’s why:

  • Low Upfront Investment: Dropshipping demands minimal upfront capital, making it an accessible choice for starting.
  • Reduced Risk and Overhead: Without inventory costs, you avoid the risk of holding unsold products. Additionally, you don’t need to manage warehousing, packaging, or shipping, which lowers your operational overhead.
  • Focus on Marketing and Sales: Since you’re not tied up in managing inventory and fulfillment, you can allocate more time and resources to marketing, customer service, and growing your customer base.

However, there are some considerations to remember:

  • Intense Competition: Dropshipping’s ease has attracted many participants, intensifying competition within the field.
  • Narrow Profit Margins: Due to its accessibility, profit margins can be more limited than other sourcing methods.
  • Supply Chain Issues: Any supply chain disruptions can negatively affect your business since you’re the public face of the products.
  • Customer-Centric Approach: Successful dropshipping requires significant time to understand your target audience, adjust product offerings, and maintain customer satisfaction.

When it comes to selecting dropshipping providers, consider these well-regarded options:

  • AliExpress: This platform offers a wide range of products from various suppliers, making it a go-to for many dropshippers.
  • SaleHoo: A directory of verified suppliers and products offering reliable options for your dropshipping needs.
  • Printful: Specializing in print-on-demand items, Printful allows you to customize products with your designs.

When selecting dropshipping providers, focus on the following:

  • Supplier Reviews: Always check reviews of potential suppliers to gauge their reliability and reputation.
  • Fees and Subscription Costs: Be aware of any subscription fees associated with dropshipping platforms, product prices, and customization options.
  • Shipping Times: Transparently communicate shipping times to your customers, as this can significantly impact their satisfaction.

Once your dropshipping business is up and running, use tools like Google Analytics to gain insights into your customers and understand their age, location, and spending habits to fine-tune your pricing and inventory strategies.

Source Products From Trade Shows

Trade shows offer a tangible advantage as you get hands-on experience with the products before making any decisions. Beyond this, there are further perks:

Trade shows allow checking out supply options, comparing products and prices in real-time, and even interacting with representatives on the spot. Negotiating becomes more accessible due to the immediate presence of competitors in adjacent booths. Representatives are eager to secure deals during the event.

While the trade show atmosphere can be exciting, only place orders impulsively after thoroughly researching the company and market prices.

Selecting the right trade show is paramount for a fruitful sourcing experience. Here are some recommendations:

  • Magic Las Vegas Trade Show: This widely attended fashion event boasts 70,000 attendees and 4,000 exhibitors, making it an excellent platform for sourcing clothing and accessories.
  • Global Pet Expo: If your niche revolves around pet-related products, the Global Pet Expo, featuring 15,000 attendees, is a prime opportunity to source and connect.
Source Products From Trade Shows

Here are some valuable tips:

  • Research the Trade Show: Prioritize well-reputed trade shows with broad appeal. Look for events that align with your niche and industry. Websites like “Trade Fair Dates” can provide valuable information on worldwide trade fairs.
  • Prevent Impulse Decisions: Avoid making impulsive decisions while the lively trade show environment can be enticing. Thoroughly evaluate the companies, products, and pricing before committing.
  • Have a Backup Plan: Always have a contingency plan to mitigate potential supply chain disruptions. This could involve local manufacturers, alternate dropshippers, or maintaining a small reserve of products to tide you over during supply shortages.

Bottom Line

With numerous sourcing product options available, you’re bound to find a suitable match. Research, explore, and don’t hesitate to reach out to suppliers. Remember, they’re eager to collaborate. Embrace the opportunity – it could be the start of something incredible. Share your preferred method in the comments!

FAQs

Certainly! Sourcing products from multiple suppliers can offer various advantages and considerations. By diversifying your sources, you reduce the risk of relying heavily on a single supplier. This approach allows you to compare prices, quality, and terms across different suppliers, potentially leading to better deals.
However, managing relationships with multiple suppliers can increase complexity, requiring effective communication, logistics coordination, and potentially higher administrative costs.
Sourcing products from local brings several benefits. Faster delivery times are a major advantage, reducing the time it takes for products to reach your customers. Additionally, proximity and proximity often associate lower shipping costs with local suppliers.
You should visit suppliers and assess their facilities. Working with local suppliers may also provide improved customer service and support, and by supporting local businesses, you contribute to your community’s economy and sustainability.
Ensuring supplier reliability is crucial. To determine this, consider multiple factors. Check reviews and ratings from other buyers to gauge their experiences. Certifications from recognized industry bodies indicate adherence to quality standards. References from other businesses that have worked with the supplier offer valuable insights.
Requesting product samples can help you assess quality firsthand. If feasible, visiting the supplier’s facilities provides direct observation. Third-party inspection services can provide unbiased evaluations of products and facilities, further bolstering your confidence in their reliability.
Sourcing products from international have its benefits, but it comes with challenges. International suppliers might offer lower manufacturing costs or access to unique products unavailable locally.
However, challenges include longer lead times due to distance, potential language barriers impacting communication, and cultural differences that might affect expectations and interactions. Shipping costs could be higher, and customs duties and taxes may apply. Legal issues related to international trade regulations and intellectual property protection also need consideration.
Negotiating favorable terms requires a strategic approach. You need to research market prices to understand fair pricing benchmarks. Building long-term relationships with suppliers can lead to better deals over time. Bulk orders often enable you to negotiate lower unit costs.
Paying invoices can enhance your reputation and negotiating power. Requesting discounts or incentives for larger orders can be effective. Flexibility and respect in negotiations can foster positive relationships and more favorable terms.
Sourcing products involves various costs beyond the product’s base price. Shipping costs depend on the origin and destination, while customs duties and taxes vary by country and product type. Insurance might be necessary to safeguard against shipping and quality issues. Storage fees could arise if you maintain inventory. Quality inspection fees might be necessary to ensure products meet your standards.
Some potential challenges you might face in the product sourcing journey are: finding trustworthy suppliers, ensuring product quality and safety, complying with regulations and standards, managing inventory and cash flow, and dealing with delays or damages.

Sam Nguyen is the CEO and founder of Avada Commerce, an e-commerce solution provider headquartered in Singapore. He is an expert on the Shopify e-commerce platform for online stores and retail point-of-sale systems. Sam loves talking about e-commerce and he aims to help over a million online businesses grow and thrive.