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Product sourcing basics

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The SmallBusiness.com WIKI Guide to Product sourcing basics is a collaborative project created by users of the SmallBusiness.com WIKI. It provides an overview of basics related to this topic. Find more guides at The SmallBusiness.com WIKI Guides Hub.

If you’re starting a retail business and looking for products to sell, you’ll need to find reliable wholesale suppliers. This is called product sourcing.


Sourcing wholesale products can be challenging, and there are certainly lots of pitfalls that business owners need to look out for. This serves as a guide with some helpful tips for finding the right wholesale product sources for your business.


1. Decide what you’re going to sell.

There are many ways to go about this. You want to choose products that are going to sell well, but that the market isn’t completely flooded with. In that case, you would need to be ultra-competitive in order to get sales. Perhaps you make your own items to sell (like handmade jewelry or crafts), or you want to sell fashion accessories or clothing.

To determine what kind of items are selling well, you’ll need to look at trends. If you’re opening up a physical store in your area, you’ll need to do some research into local trends. If online selling is your game, then your potential for sales will increase exponentially. You can use one or more of the many online tools available to check out selling trends. eBay Seller Tools, for instance, are very robust and easy to use and allow you see product trends over a period time.

2. Choose your supplier type.

Depending on what kind of business you’re starting (online vs. brick and mortar), you’ll need to decide on the type of wholesale supplier you want to use. Here are the types to consider:

Manufacturers: Most times buying direct means a high minimum order. Usually manufacturers will have smaller retailers buy their product through one of their local distributors. You can find this information either on the manufacturer's website or by contacting them directly.

Distributors: Usually distributors tend to carry a large variety of products in a certain category (say pet products) from several manufacturers. Their prices are slightly higher than buying direct, but minimum quantities are usually low and you have the convenience of purchasing products from different manufacturers on one purchase order.

Liquidators: If you are flexible about your product needs, this is a fantastic way to get a real break on price. Many times you can purchase a bulk load of product for up to 75% off the original wholesale price. Consider your purchases carefully because once a product is sold out it's usually gone for good.

Importers: If you plan to sell specialty products from another country, you’ll likely have to go through an importer to get them.

Drop Shippers: If you have an online business, drop shipping is one of the best ways to supply products for your business without worrying about manufacturing processes or warehousing costs. Drop shippers are basically distributors in that they buy from manufacturers or other distributors, but they will ship orders directly to your customers for you, as orders are placed.

3. Where to look.

The most common place to look is online. You can use general search engines like Google and Yahoo, or you can use wholesale-specific search engines like goWholesale.com, ThomasNet.com, or KellySearch.com. There are also trade lead sites like Alibaba and Global Sources, which allow you find suppliers all over the world. However you can also check print publications (such as The Closeout News and Retailers Forum), print directories and attend trade shows (where vendors get together to showcase and demonstrate their products).

4. Do Your Research!

This cannot be stressed enough. There are many scams, fakes and just plain bad businesses to watch out for. There are a ton of resources available for free, so use them! The first place you can check is the supplier’s website. Check out all of their policies (returns, damages, backorders), and make sure they have their contact information and physical address posted on their site (not just a contact form – this is a big red flag). Your best source of information is the supplier themselves – call or email them and ask questions about their products, policies, and terms. You may even be able to ask them for customer references.

Don’t forget to use online forums They are a great place to get references and ask questions, but beware of members who are simply trying to self promote. You can also check your suppliers out through the Better Business Bureau, Hoover’s Online, and even the FBI.

5. Contact the vendor and place your order.

Many vendors have online payment systems set up, but beware of suppliers who aren’t giving you true wholesale pricing. Real wholesale suppliers normally deal with businesses only (not the general public) and require tax IDs to do business. You can also set up payment terms and arrange credit with your suppliers, so make sure to ask them what kind of options they can offer you.

6. If all goes well, develop and maintain a positive relationship with the wholesale supplier.

You can have more than one suppliers, especially if you sell a wide range of products. This can be beneficial, because you’ll have more product options, possibly better prices, and lower risk in case something happens with one or more of your other suppliers.

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