Ultimate Guide To Sourcing Products For Your Retail Or Online Store
Posted on October 2, 2019
If you are planning to open a retail or online store, you need to decide where you plan to acquire your merchandise. What kind of products do you plan to sell, and where will you get them? How do you get merchandise for a retail store?
Only a small fraction of retailers actually make the products that they sell in their online and brick and mortar shops. Some acquire their goods from independent producers and direct from manufacturers, but the rest source their products from wholesalers. Wholesalers are a brilliant source of products, supporting your business so that you can grow and evolve to the next level.
While sourcing products for your retail or online store can feel daunting or mysterious when you first get started, learning about wholesale will help your business succeed.
What Is Product Sourcing?
Product sourcing is the process of researching, finding and then buying the merchandise that you plan to sell in your business. Many UK retailers source from both international and domestic sources.
While you might be tempted to start sourcing your products before you have fully established your business, don’t make this mistake. You should register your company, ensure that you have your business documentation organised, and have a business plan firmly in place before you start to source and buy your stock.
Some people source from wholesale suppliers, while others go straight to the manufacturer. It really depends on what you sell, and on your business niche.
Sourcing Your Products From The Manufacturer
As a new business, sourcing your product directly from the manufacturer can be challenging. Manufacturers usually don’t want to deal with small players, and so you have to commit to selling a minimum order. They want to see that you will be able to meet this same demand in the future, which means that you will have to generate reliably large sales. You need a lot of capital, and a lot of storage space for your stock.
Sourcing Your Products From Wholesale Suppliers
Most businesses find it much easier to source their product from wholesale suppliers, especially when they are first getting starting. If you are looking a steady supply of product, this is how to get inventory for a retail store, both online and storefront. Wholesale suppliers can give you the peace of mind, low prices, and volume that you need without a massive amount of capital.
Why Do A Lot Of Retailers / Online Stores Use Wholesalers?
Working with a wholesaler allows retailers and online stores alike to gain access to top quality products at discounted prices. While you might not have a high enough demand or enough storage space to order the large volume needed to work directly from manufacturers, wholesale gives you access to the products you need to grow your business.
They undertake the time-consuming and difficult task of locating manufacturers, assessing their products, communicating with them (often in a foreign language), placing orders, and doing quality control. They do this with hundreds or thousands of companies, meaning that they can send you products from a multitude of sources in one order.
For instance, if a wholesaler sells wholesale party supplies, they are likely working with and dealing with thousands of suppliers to bring you one catalogue of goods to choose from. Many retailers find that they simply don’t have the time, money, or connections to do this labourious and time consuming groundwork. Instead, working with a wholesaler makes a lot more sense.
Working with wholesalers offers you:
- Brand awareness – Access to high quality and on trend products, and a multitude of brands in one place
- Large shipments - Efficient shipping in large quantities, rather than piecemeal from different suppliers
- Dropshipping – Dropshipping enables you to sell product without actually having it in your possession – the wholesaler can deliver it for you when it’s been sold
- Easy accounting – Make payments simple by only needing to pay one supplier instead of dozens or hundreds
While some retailers and online sellers baulk at the idea of paying for a ‘middle man’ between themselves and the actual manufacturers of their stock, this is a necessary cost of doing business. Until you reach the level where you can interact directly with large-scale manufacturers in foreign countries and meet their minimum order requirements, it makes sense to work with wholesalers.
What Is Wholesale?
Before we delve into the rest of the topic, we have to answer the question ‘what does wholesale mean?’ Wholesale items are goods that a supplier buys in large quantities and then sells on to smaller businesses that then sell them on in their own online or storefront retail stores. Wholesalers act as middlemen, purchasing the goods from a distributor or manufacturer and then selling them to a retailer who then sells them to the public.
Wholesale goods suppliers stay abreast on trending and popular products so that they can source the right merchandise that their buyers want. Working with a reliable wholesaler can enable you to find the products you need easily, affordably, and quickly.
How Can You Check Your Wholesaler Is Trustworthy?
If you are looking for a wholesaler with which to do business, you need to ensure that they are legitimate before you send them a single penny. Sadly, there are some wholesalers out there that exist only to scam their customers, promising more than they can (or even plan) to deliver.
While some wholesale companies out there are purely a front for a criminal endeavour, and they do not ever plan on making good on the promises they make to customers, others are legitimate organisations that simply have bad business practices. They over promise and under deliver, sending lower quality products than they sold, delaying shipments for long periods of time, and taking ages to send refunds and reimbursements.
If a wholesale business is legitimate, there will be plenty of information and evidence that you can easily verify. Follow this guidance to check if your wholesaler is trustworthy.
- Address – If the wholesale business is located close to where you live, drive or walk past its posted address to look for a sign, masthead, or reception area. Legitimate businesses are often located in business parks, office spaces, or industrial areas. If the business is home-based, you know that you will be dealing with a small team.
- Phone number – Look into the phone number that you have been provided. Even if it is an international phone number, you should be able to find out if it is a landline or a mobile. Ideally, you want to see a landline – a mobile is not a red flag in and of itself, but it could indicate that this is not a real business. Call the number; someone should answer with a professional greeting that includes the company name.
- Website and social media – Any trustworthy business will have a strong social media and website presence. You should also search for key employees on LinkedIn. Ideally, their website and social media accounts are regularly updated; if you can only see a flurry of activity from a few years ago, this is a red flag.
- Reviews and feedback – Check Google, Trustpilot, web forums, and even Reddit to find reviews and feedback about the wholesale companies that you plan to work with.
- Official checks – If you still have doubts about the trustworthiness of the business, you should advance to the next level of checks. If the wholesaler is UK based you can look into Companies House, The Financial Services Register, and Experian Business Credit Reports.
Finally, you should always trust your own ‘gut instinct’ and intuition. If something feels suspicious, strange, or just somehow ‘off,’ then it probably is. No matter what company you choose to work with, make a few small test orders when you first work with a new wholesaler. This will give you a chance to assess their accuracy, quality, delivery, and customer service.
Things You Should Keep In Mind When Placing Orders
Now that you have the information you need to choose the right wholesaler, there are some additional things to consider when placing your orders.
Pricing is the most obvious deciding factor, but you should also keep the following things in mind:
- How much do you need? – When you are purchasing wholesale, it is easy to get carried away. It is better to sell out than to be saddled with heaps of extra, unsold merchandise. Over time, you will find the ‘sweet spot’ and learn exactly how much you can sell.
- Storage space – Storage and organisation are key. Ensure that you have a storage room so that you can keep track of your inventory.
- Upcoming events and holidays – You need to order your seasonal merchandise months in advance, so be sure that you plan for holidays and upcoming events.
- Trends – While you want to stay on top of trends, you don’t want to end up lagging behind with a storeroom full of fidget spinners!
Sourcing Products Is A Key Part Of Your Success
Whether you work with wholesalers or obtain your inventory directly from manufacturers, sourcing your products is a key part of your success. Jumping into your online or retail store without understanding the importance of product sourcing is a huge mistake – research your niche market extensively.