There are more online eCommerce businesses than ever before. The growth of integrated platforms likeÂ Shopify among others has simplified the process to start a business, to accept payments, and marketÂ to customers.
It can be free or cost very little to set up an eCommerce business until itâ€™s time to source products.Â When youâ€™re sourcing products, you have a wide variety of options available to you according to DavidÂ Zheng, writing for Wise Merchant. For example, you might make your product, or you may use aÂ manufacturer. Other options include using a wholesaler or going the dropshipping route.
The following are some general strategies and things to keep in mind when it comes to sourcing products for the online business youâ€™re working to build.
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Strategies to sourcing products for the online business
Doing It Yourself
One option that wasnâ€™t mentioned above is going the DIY route for your products. Plenty of people create their own products to sell online and there is a market for these items, as is evidenced by the popularity of Etsy. However, there are pitfalls and things to think about with the DIY product sourcing method.
For example, how much money will you have to put into each item, as well as how much time?
Are you really going to be profitable if this is the option you choose? What about storing your materials and how will you set a timeline for your customers when they order custom items?
Unless you have a very specialized talent or youâ€™re more interested in making items that being hugely profitable, itâ€™s probably better to source your products from somewhere else.
Manufacturers and Wholesalers
The most common way to source products to sell online is through manufacturers or wholesalers. YouÂ might work with a manufacturer to create your own product. You could also take an existing productÂ and brand it with your business. Wholesalers provide bulk orders of items that you can then mark upÂ and resell for a profit.
There are advantages to going the route of manufacturers and wholesalers. First, you can develop or source unique products that can differentiate you from the competition. You have a fair amount of control over your brand and things like shipping time as well because youâ€™re the one shipping items out.
There are also downsides. You will have to store your inventory, and youâ€™re going to have to pay forÂ items up front with no guarantee theyâ€™ll sell. This is going to require a financial investment that someÂ new online business owners arenâ€™t equipped to take on.
If you are going to go with a manufacturer or wholesale, keep a few things in mind. First, you need to do your research and read reviews before you send money to anyone. There are a lot of great companies out there, but also a lot particularly from overseas that donâ€™t have high-quality items.
If youâ€™ve ordered products from overseas, you should also count on the fact that itâ€™s going to take weeks or even longer for your items to arrive in the states.
If you find a manufacturer or wholesaler youâ€™d like to work with, request samples before you agree to anything.
Dropshipping is a very popular way to source products. Sites like Shopify offer third-party integrations with dropshipping suppliers. These companies will often serve as a link between manufacturers, wholesalers or designers, and people who will sell their products on their own website.
With dropshipping, you choose the items you want to offer on your site. You then create product descriptions and everything else potential buyers will need to know about the products. If someone makes a purchase from you, you order the product from the dropshpper, and you pay them.
Youâ€™re usually charging a fairly significant markup on your own site, so the difference between what the customer pays you and what you pay for the item is your profit.
A lot of dropshippers donâ€™t require you to have your hands on the products youâ€™re selling at all. When you place an order, you can give them the customerâ€™s information, and theyâ€™ll ship it directly to that person.
There are pitfalls that come with dropshipping like any other method of sourcing products. One of the biggest is that you have no control over your customerâ€™s experience. You arenâ€™t the one controlling shipping, and you canâ€™t do quality control because you donâ€™t even see the products in most cases.
These arenâ€™t the only product sourcing approaches or strategies, but they are some of the biggest usedÂ by many online businesses, and they can give you a starting point.