What Is Product Sourcing?
Product sourcing, also called global sourcing, is finding and selecting reputable manufacturers and product suppliers. It can involve researching reputable suppliers, contacting them, negotiating prices and terms, and placing orders.
Product sourcing is an integral part of the product development process, and it can help businesses save time and money while ensuring that they get the best products available.
Procuring products to sell is a straightforward process, but finding the right types of products will make or break your business. Product selection is just as crucial as finding reliable manufacturers and suppliers for your products.
The effort must be made to do the proper due diligence and research. Numerous significant factors need to be considered, such as:
An effort must be made to do the proper due diligence and research. Your opinion or preference is not enough to base a decision on that will tie up thousands of dollars in inventory.
What Financial Factors Are Considered When Sourcing Products?
You must determine your expenses, marketing, and costs to get a minimum selling price. Then evaluate the current market conditions to ensure that it will support your sale price.
Add 15% for additional costs that you might have overlooked.
Can your projected sales price still support it? How much do you need to make to cover your expenses and overhead?
Be realistic. If you need to clear 2000$ in profit, how many units do you need to sell to achieve that goal?
What method will you use to launch and market your product to achieve that goal, and what is the cost?
These are all things that need to be considered before you place your order. Do yourself a favor and write it all out.
If you don't know these numbers beforehand, how will you know if the cost of an item is something you can work with?
How Do I Arrive At An Initial Order?
These are just a few variables you need to consider before placing an order for your products. Whether you are a reseller, dropshipping, doing arbitrage, selling handmade products, or creating your products and brand, each method has its pros and cons and certain built-in costs.
The different Amazon business models offer various starting points for any seller. Many sellers set themselves up to struggle and fail by neglecting these vital considerations.
Product selection is key to your success, whether starting a new business or adding additional products to an existing business. The decisions that you make now will have a direct impact on your future success.
Define Your Business And Purpose
Many new sellers rush to get their first product live, and for sale, they rush through or ignore some very important steps while sourcing.
How do you know you got the best price for a product if you are only getting prices from one manufacturer? You don't, which puts you in a position unable to negotiate.
"By failing to prepare, you are preparing to fail "
Benjamin Franklin
There is a lot to do to get this organized and correct. Are you selling niche products where your audience might be smaller but more inclined to purchase? Is it a custom product that will enable you to create a distinct difference between your products and others?
Is there sufficient market demand to support the sales that you think you should be doing? You must consider these things as you think about potential products to carry.
Product Sourcing Success Requires Options And Choices
Part of the product sourcing process is creating options. Do this by finding multiple suppliers or manufacturers for the same product. This is a significant advantage when negotiating price, quality, and production times.
An alternative method of creating additional options is using a sourcing agent or a sourcing system.
Take a moment to consider the following questions. If you agree with some of these questions, creating additional options for yourself by finding suppliers or product-sourcing outlets will benefit you.
- 1Is sourcing products and negotiating the best possible deal difficult?
- 2Does it seem impossible to compete with the low pricing of new foreign sellers?
- 3Do you feel like you have no choice but to accept whatever your manufacturer does?
- 4Are your profits being squeezed by low margins due to competitive pricing or unforeseen expenses?
- 5Do you think this would be easier if you had more and better sourcing options?
Manufacturing Capability Distribution
This product sourcing guide provides options and choices of where to source your products worldwide. During the turmoil of 2020-21, it is apparent that relying on the currently popular methods and product sourcing process may not be reliable moving forward.
At the start of 2020, China accounted for 35% of the world's manufacturing capability but only 16% of total US Imports. That is already shifting downward due to COVID-19 and the never-ending lockdowns in China.
During the COVID pandemic, businesses large and small were caught unprepared by the shutdowns in China and had long forgotten the importance of flexibility and alternative plans.
The entire planet was crippled by our excessive reliance on China as the leading supplier. As a country whose leaders are bent on world domination and have a long history of oppressive, even deadly, control, we find this reliance on China inadequate for our business interests.
As of July 2020, there are 200 countries on Earth. Who and where is the other 65% of manufactured products coming from? That is the real question here. This article will relieve some of your frustrations and provide you with multiple resources to find new and different sources for your products. Our goal is to provide a resource to enable you to find numerous sources for your products.
This will give you flexible options, leverage, and negotiating power with manufacturers. If you venture away from traditional sourcing methods, you should also find that creating unique products becomes more comfortable. You won't be competing with millions of sellers using the same resource.
First, we must review the currently popular methods and why they put you at a disadvantage.
Popular Product Sourcing Methods
The most popular methods currently taught involve a seller browsing through Alibaba.com or Aliexpress.com until they locate items they want to sell.
Using Amazon tools like Helium10 of Jungle Scout, private label sellers run some numbers against current sales of the product until they think they have a winner.
They are told that the software will indicate if they are looking at a profitable product based on factors that may or may not apply to the seller.
Where Do Big Brands Get Products?
Are you curious about where your big brand competitors are sourcing their products?
Check out ImportYeti. It is a search engine that searches 60 million U.S. Customs sea shipment records instantly for free!
This method is flawed right out of the gate. No software can ensure success due to many variables not being considered.
Information such as listing quality, the competitor's traffic sources, or the seller's ability to craft a message that motivates the purchase are outside the software's scope.
Search volume is not always a clear indication of consumer demand. Search volume is relative and is counted using different methods between Google and Amazon. The success of an online business requires extensive research to understand the competitive landscape on and off of the marketplaces.
As online marketplaces get saturated, the need to offer a unique product that stands apart from competitors becomes more critical.
Why Does A Product Need To Standout?
Would you rather be one of many selling the same product as everyone else on a listing, or would you want to sell to people who want it and are willing to pay extra for a higher value? This is the approach followed by successful sellers seeking products that become sustainable, long-term successes.
The ability to stand out and separate from the competitors is extremely important. But the ability to set yourself apart with features your user values and wants is more important. This is not hard to do, but it needs to be dealt with and tested before production, not after receiving your first 5k shipment.
The easiest way to set this up is through proper research, testing, and decision-making before launch.
Why Should Someone Buy Your Product?
You must understand your unique selling proposition and easily communicate that to your potential buyers. Take FedEx as an example.
They created the tagline "When it absolutely, positively must be there overnight" and then did an excellent job promoting it.
As a newcomer in a highly competitive market, they defeated the largest company in the sector despite having higher prices.
When you sell the same product as everyone else, you have to compete on price, a position you do not want to be in unless you have a way of setting yourself apart. Setting yourself apart instead of offering deep discounts to build your business is a better path.
The amount spent on discounting and competing with the same product is far more than the amount you will spend when you have a unique product.
Setting your product as the new standard means you have no competition. They have to raise their performance to compete with you. That strategy is for a different article.
Finding Suppliers And Manufacturers
This product-sourcing resource will focus on finding domestic and international manufacturers and suppliers for your business. Whether you are looking for manufacturers, dropshipping suppliers, or wholesale suppliers, you should be able to find what you need to source your product idea and find high-quality products.
Most new sellers approach it with the wrong mindset.
They learn to use the same resource as millions of other sellers choose the same mass-produced items as everyone else. They do not consider China is a culturally diverse country with a traditional sharing economy and expect business to be conducted following western principles.
Don't make the mistake of assuming that they will conduct business following western etiquette. You are expected to conduct business in their country and behave according to their customs. Sellers do not realize how it makes them stand out as amateurs, which immediately puts them at a disadvantage.
Sellers need to do their homework before doing business across cultural lines with anyone. Supplier relationship management and the bond you develop with your suppliers are critical to your success.
New sellers will benefit significantly from the preparation. Their lack of experience will also benefit significantly from finding multiple suppliers for each product. This will lessen some of the sting and mistakes usually made by a new seller and puts any seller in a better-negotiating position.
Why Should I Have Multiple Sources For Products?
Multiple suppliers keep you from being at the mercy of a single supplier dictating the terms. Your priority is to get the products consumers want. maintain a level of quality and keep costs down. The best first step is having more than one supplier providing the same product.
This is an excellent position to be in because having multiple suppliers can provide benefits, including:
---The ability to negotiate prices from a better place. Lower costs mean additional profits. No supplier can hold you hostage and force you to accept their terms if you have created flexible options. You can compare what they told you, including costs and availability of raw materials. They will often blame someone else for their pricing, citing the cost of raw materials, etc... This will enable you to stay one step ahead of them.
---A more stable supply chain. If a supplier cannot get the necessary materials for the product, it can cause delays, increased logistics costs, or worse. Multiple suppliers create a situation where you should never run out. Think of it as an insurance policy and a way to take some of the stress out of procurement.
---When you have multiple suppliers, quality control becomes much more straightforward. You can also compare the quality of both suppliers and negotiate to increase the quality to match.
At the absolute very least, always have multiple product supplier options when first negotiating with suppliers. It puts you in a position of leverage and makes the supplier rise to your concerns and more readily meet your expectations. Suppliers get complacent when they know you have nowhere else to go.
How Do I Find Suppliers & Manufacturers?
Africa
Africa Imports - is a US-based company offering the largest selection of African and Afrocentric products at wholesale prices. They offer African clothing, jewelry, accessories, oils, soaps, personal care products, fabrics, musical instruments, and African art. Africa Imports
Arab
Arabo - Arab & the Middle East search engine & directory.
Asia
Times Directories - Industry directory in Asia. There are a lot of smaller countries in Asia that manufacture products. Many do it at a much lower labor expense than in China. This has been the case for over three years now. Use this directory to find suppliers in multiple Asian countries.
Brazil
Dragon Sourcing - Brazil's sourcing has expanded its position as a competitive sourcing destination over the years. The rising interest can be attributed to several key country dimensions, including a long period of political stability and economic growth, lower labor costs, economies of scale generated by the size of its large domestic market, shorter lead times, and transportation costs to the US which are much cheaper when compared to Asian countries.
China
Alibaba - Alibaba is the most popular product sourcing website used by Amazon sellers. The chances of creating a truly unique product using Alibaba is not very easy because of the number of people using it and because China is a sharing economy. Protect yourself from fake intermediaries. Make sure any supplier you contact has Gold, Assessed, and Trade Assurance badges.
AliExpess - AliExpress(owned by Alibaba) is the eBay of China. It enables you to purchase smaller amounts directly from Chinese sellers. Aliexpress is also a drop-shipping platform. Like Alibaba, the quality and reputation of the seller and product can be questionable.
DHGate - DHgate has an online payment system that pays the seller once the buyer has received the goods. Escrow systems benefit foreign buyers. Generally has smaller MOQs (Minimum order quantities), but sometimes it is at a higher price.
1688 - Also owned by Alibaba, 1688 is in Chinese for Chinese buyers. It is an excellent place to do additional research but understand product quality guidelines are lower in China; often, the price and product are inferior.
Doba - Doba has several similarities to Alibaba but is focused explicitly on dropshipping. Doba is unique in allowing drop shippers to stock your store with products. You place an order using your buyer's shipping address when an order comes in. Doba handles the payments and transactions but gives you the difference between the cost and the sale price.
Czech Republic
Czech Trade - Operated by the National trade promotion agency of the Ministry of Industry and Trade. Click on Head Office, then on Czech Exporters Directory, and you will find a database searchable by product category, or use this shortcut link to the search page:
Estonia
Estonia Exports - Product search does not nominate any category headings for you, so you have to enter any category that might interest you. Patience is needed. It will probably be more comfortable to email the Chamber of Commerce at [email protected] and ask for a print copy of the 154-page export directory.
Europe
Zentrada - Zentrada is a wholesale and buyer network featuring the EU-wide availability of consumer goods. They have offices throughout Europe and are Europe's leading platform in B2B wholesale transactions for consumer goods.
France
UBI France - A French government site. They have a lot to learn about making a site user-friendly, but if you persevere, you can find some outstanding products, many of which will be unique to you if you choose to import them.
Global
Jungle Scout (supplier database) - This was built for FBA sellers. It is also a helpful tool to reverse engineer other products to find out where they are coming from. Jungle scout has many different tools and is a paid tool. The link above will get you a 50% discount.
Global Sources - Global Sources has built a trustworthy B2B wholesaler product sourcing platform and has been a significant player for the last 49 years. Their primary business model enables the world to access Asian products through trade shows, marketplaces, apps, and magazines. They regularly organize multiple sourcing shows in various niches and can strengthen your strategic sourcing.
Mfg - MFG is a marketplace that makes it easy for buyers of custom parts to discover manufacturers quickly. MFG simplifies finding a manufacturing partner by offering sourcing professionals the most detailed database of custom manufacturing facilities in the US and globally.
Export Bureau - Global Manufacturers Export Directory
Sourcify - Sourcify connects you with manufacturers and suppliers through their global manufacturing platform. They maintain offices in China, Vietnam, India, Pakistan, and America, partnering with influencers who want to boost their brand.
Includes information on 2021-22 global shipping issues, additional practical steps to protect IP in China, new information on retail packaging, and more. Complete step-by-step instructions on how to identify unique winning products, validate customer demand, ensure profitability, design and engineer your product, identify factories, negotiate effectively, manage shipping & logistics, and generate sales across all channels from independent retailers to chains and big box stores.
Supply Wheel - A marketplace for 10,000 global manufacturers to help sellers with their manufacturing needs. One of the few sourcing resources includes food and beverage and US supplement manufacturers.
Closeout Fortune Dollar Days - Another US-based wholesale and closeout seller. They have a complete online catalog and offer drop shipping.
All Time Trading - All Time Trading is an NYC-based wholesaler with warehouses around the country. They are online wholesalers for everyday general merchandise, apparel closeout deals, and seasonal bulk products. We make it easy to find anything you're looking for on our website.
Greece
Export Gate Greece - You must register before using the product search.
India
Trade India - Trade India is a full-service sourcing portal for Manufacturers in India with global abilities. They have over 2200 categories, so the selection is excellent.
Please share this post so others can also get access to this valuable resource!
IndiaMART - IndiaMART is an online B2B marketplace connecting suppliers with buyers. They provide a platform for Small & Medium Enterprises (SMEs), large enterprises, and individuals. This is geared more towards Sellers in India
Indiasourcing.net - India Sourcing Network is a platform that provides e-commerce sellers and importers with everything they need to source private-label products from India. The platform features vetted manufacturers that are export-experienced and a curated list of service providers such as sourcing agencies, freight forwarders, QC companies, and more.
They offer educational resources about India sourcing best practices, including free guides, webinars, live virtual workshops, and a free collaborative Facebook community featuring subject experts and experienced sellers.
Jim Trade - Jim Trade facilitates global trade, focusing on India by providing information to international buyers and integrated marketing services. Jim Trade delivers complete and up-to-date information on Indian products and suppliers for buyers.
Ethical Sourcing - Ethical Sourcing is an end-to-end development and sourcing company.
Italy
Italy Exports - Kitchenware, Housewares, Hardware, Tools, Food, and Giftware
Malaysia
Malaysia Trade - Click on For Foreign Buyers. Then you can search for products by clicking on Malaysia Products Directory in the menu in the page's left-hand column. It is also worth looking at the Malaysia Export Exhibition Centre (MEEC) at the bottom of that menu. There are 500 permanent exhibitors at the Centre.
Mexico - Latin America
Product sourcing in Mexico and Latin America is very underrated and often overlooked. When I started eCommerce, everything was still Hecho En Mexico. The drug wars pushed manufacturing to Asia fast. Now manufacturing is coming back, and it will be much more significant. Labor in Mexico is cheaper than in China.
Latin America offers textiles with bright, rich colors, coffee beans, and other regional items that sell very well. The shipping expense increase won't be out of control for products coming from Mexico or Latin America, like from Asia in 2020-22. Sourcing products here should be pretty appealing to more sellers as they realize that China is a terrible option at the moment.
The Central American Group - The Central American Group provides the environmentally friendly manufacturing infrastructure required to run a successful manufacturing operation.
Exporta has built the largest Supplier network focused on manufacturers from Latin America. You will find producers from Colombia, Peru, Ecuador, Argentina, and Mexico in our supplier network. This includes local suppliers, industrial-sized manufacturers, and small & medium businesses.
Mexico Supply Chain Summit - A unique opportunity for leading manufacturers in Mexico and potential sellers to meet and identify new business opportunities.
Mextend - We are manufacturers' representatives and sales agents for the packaging, plastics, food, industrial, and consumer goods industry for the Mexican market
MRO Sourcing - SDI manages the purchasing process for both the products and services purchased from Mexican suppliers, as well as the products that require procurement
Naps International - Naps helps businesses source products and raw materials for manufacture in Mexico.
SIXM Sourcing - Sourcing and procurement for Mexico and Latin America
Latin Sourcing - Central America / Latin America Manufacturing, Import & Export, Sourcing.
Nepal
YellowPages Nepal - Nepal's business directory.
South Korea
EC21 - A Korean B2B marketplace, EC21 has over 2 million member companies, & 7 million products in its database. EC21 was created to connect international buyers to Korean companies. While Korea is still its primary focus, you can use EC21 to find a supplier in other countries. EC21 is the largest resource for locating Korean Manufacturers in the world.
Taiwan
Taiwan Trade - Product sourcing list from Taiwan
Turkey
Turkish Makers - Turkish manufacturers have a fresh approach to design and innovation. That is nice because it is possible to find products or styles not available elsewhere. Click on the category, then on a subcategory. The listings are bland, but it is worth being patient and checking out most of them.
When you click on a supplier's name, there will usually be very little information. The company advertisement link only shows a JPG picture, which can be informative. In addition to an image featuring one or more of their products, sometimes it reveals a website name or email address.
UK
MX Wholesale - MX Wholesale is a massive wholesaler supplier of consumer merchandise in the UK.
The Wholesaler - The Wholesaler UK is an online directory for retailers looking for stock to resell. Each category contains hundreds of verified genuine wholesale suppliers that hold stock in the UK in quantities suitable for purchase to resell.
USA
Makers Row - This is a membership-based directory of US-based manufacturers. There are approximately 1500 listed. I've had experience finding manufacturers there and experience with clients listed as manufacturers. Makers row started focused on the fashion industry but has since expanded. Many resources are available to help you learn how to negotiate and deal with manufacturers on Makers Row.
Kole Imports - Kole Imports is a US-based import and closeout wholesaler. They also offer FBA prep services and are entirely TOS. Prices are meager, and you can order small quantities as well. You can often get reasonable prices on liquidation merchandise and use it for bundling or to set your listing apart.
Mfg - MFG is a marketplace that makes it easy for buyers of custom parts to discover manufacturers quickly. MFG simplifies finding a manufacturing partner by offering sourcing professionals the most detailed database of custom manufacturing facilities in the US and globally.
Sourcing USA - They focus exclusively on U.S. manufacturing. We listened when product developers told us they were struggling to find domestic manufacturers.
Thomasnet - Another great source of US manufacturers. The Thomas Register of American Manufacturers, now ThomasNet, is an online platform for supplier discovery and product sourcing in the US and Canada. Thomasnet has come a long way and upped its game in the last few years. Lots of tools, guides, and advice are available onsite.
Suppliers Data - This US-based company has over 3000 US-based companies willing to drop ship for you. It is not saturated with sellers yet. They have a $19. monthly fee, but I'd consider signing up for a month to see what they offer and whether you can supplement your product offering without increasing your overhead. Drop shipping is viable, provided you use viable companies that aren't on a 3-week delivery model.
Vietnam
Cosmo Sourcing - Cosmo Sourcing is an American-owned company with American management that ensures stricter standards are applied for all inspections and the products abide by Western standards and certifications.
AGS Global - AGS is a sourcing agency based in Ho Chi Minh City, Vietnam. They are product-sourcing agents who assist their clients in locating, selecting, and negotiating the best rates for the selected products.
Seditex - Seditex offers a full range of sourcing services to its clients. They have been in business since 1989 with offices in Vietnam, Cambodia, and Myanmar.
Vietnam Sourcing - Vietnam Sourcing provides a one-stop solution and specializes in sourcing metal, rubber, and plastic components. In addition. They can also help with toys, furniture, and cable products.
Customs Import Records - Global
Do you have a difficult time finding suppliers in the country of your choice? The list below includes Import/Export companies that maintain databases based on Port documents. This is a fantastic way to find suppliers or verify that a supplier is established based on the company's volume of records. Working backward, you can follow the supply chain back to the manufacturer.
Importyeti - Find any company suppliers FREE - Search 70 million U.S. customs sea shipment records instantly.
Port Examiner - Free records search
Panjiva - Paid search, use google to search site:panjiva.com+ "productcategory" This will search for Panjiva's paid section and provide you with information without paying the high membership fee.
Import Genius - Paid
52WMB - Paid
Using this method, you will look at the bill of lading for shipments. You will be looking for suppliers in different countries. When you find ones of interest, look at the bill of lading summary and see that they have had multiple exports in your product category.
For example, for dog supplies, I would choose to contact a factory that has had 20+ different export instances over one with only 3.
PRO TIP: Are you frustrated and having difficulty finding a product or a place to start? Sometimes, a small win is what you need to get going. Here is a quick, easy, painless way to start fast. Go to your local 99 cents store. Pick a niche. Buy 5 of each of the different items that they carry. List them for 4.99 each. Watch them closely. Set up essential PPC. The ones that sell the fastest, buy more and consider sourcing them in bulk. The ones that don't sell can run out and be done.
Private Sourcing Agents
If you're inexperienced, having trouble, or short on time, sourcing agents may be the right solution. Sourcing agents should be sourcing experts and can expedite the sourcing of products or suppliers from a specific market. Sourcing agents are not the same as private label services.
Clearly explain your product and requirements to your agent. They will search for the desired location for manufacturers that can fill your needs. Once they have found suppliers, they will contact you with their results. If it is a foreign country, they will know the language and help you navigate the laws and rules of the land.
Once you have chosen reliable suppliers, the agent can help you negotiate the specific details of your needs. The sourcing agent can also ensure the safe delivery of the prepared product by all standards.
A sourcing agent can expedite the sourcing process when you are unable to go somewhere and do the legwork yourself
It is essential that you not just close your eyes and choose the first agent that you find. I would seek recommendations from people I know in the industry and don't be afraid to ask the agent many questions about their experience and contacts.
AGS Vietnam - Almenide Global Sourcing (AGS) is a leading sourcing agency based in Ho Chi Minh City, Vietnam. They work as product sourcing agents who help their clients find, select, and bargain their products.
Cosmo Sourcing - Cosmo Sourcing is an American-owned company with American management that ensures stricter standards are applied for all inspections and the products abide by Western standards and certifications.
Dragon Sourcing - Dragon sourcing is a procurement service provider that helps clients import goods and services from expanding, low-cost, and developing markets like Brazil, China, India, Turkey, Mexico, and Vietnam.
Kaizen Sourcing - We are a Sourcing Company based in China and help you source products only from the actual manufacturers
Latin Sourcing - Central America / Latin America Manufacturing, Import & Export, Sourcing.
MRO Sourcing - SDI manages the purchasing process for both the products and services purchased from Mexican suppliers, as well as the products that require procurement
SIXM Sourcing - Sourcing and procurement for Mexico and Latin America
Vietnam B2B Direct - Vietnam B2B Direct is the perfect solution for your sourcing needs of products and manufacturers in Vietnam.
Vietnam Makers - They are a marketing company that represents Vietnamese manufacturers
Are Tradeshows A Good Place To Source Products Or Suppliers?
Here is a method that works very well and helps weed out the crappy manufacturers. The best trade shows occur in Germany. They are not cheap to exhibit at either. A manufacturer that displays at a German trade show is investing in appearing, eliminating many questionable manufacturers.
So how does that benefit you as an American seller? Search Google for your category + "german tradeshow." Locate several of the trade shows that are relevant in Germany. Navigate to the show's website and search the exhibitor list for your product type. This is an excellent source for worldwide manufacturers.
10Times is also an excellent search engine that can be used to source trade shows around the world
Using the information gathered, sometimes it includes contact info, sometimes it doesn't. You can reach out to different manufacturers.
At Ecommerce Optimizer, we have been selling and involved with Amazon sellers for over 20 years. Check out our complete Dominate Amazon Products Series of articles for additional Amazon tips and strategy. It includes our very popular article showcasing how to Sell On Amazon Europe.
We have a background with traditional websites and a variety of marketplaces worldwide. Check out our Sell On Walmart article. Or maybe you are ready for a different kind of platform made up entirely of your target audience using our list of Niche Marketplaces. In addition, we also have our FREE Pinterest Traffic Domination Workshop, as well as several other workshops.
We focus on helping sellers diversify and grow. This strategy reduces your dependence on any 1 platform while exponentially growing the available audience. Most clients choose the 1 on 1 Coaching and Consulting with our Founder Joe Reichsfeld. Let us help you make 2022 your best year ever!
Is Drop Shipping In 2023 Still Worth It?
Yes, it is. It can be tricky, but the low entry bar and the minimal upfront expenses make it easy to get into eCommerce.
With drop shipping, you, as the seller, would list an item for sale on your site but not carry an actual inventory. When the item sells, you process the order and send a request to the supplier. The supplier then ships the package using only your packing slips and all identifying information that only refers to your business. The package is sent directly to the buyer.
There is a right and wrong way to go about drop shipping. The wrong way is to deal with suppliers in far-off places with extremely long delivery cycles with no direct relationship. We live in an instant gratification world.
Almost anything can be found somewhere online and received within several days if you are willing to pay the additional cost of rapid shipping. Sites with 3 to 4 weeks delivery times significantly reduce their potential audience size due to shipping times. Still, this can be a very successful business model.
PRO TIP: This article will be a work in progress. As we find additional or better resources, they will be added and/or replaced. I would bookmark it as a resource(Control+D) because it will only get better with time.
A Better Method?
A better model for a drop shipping business is finding suppliers with inventory that can quickly deliver where you need it. You must develop a relationship with your suppliers. Hence, they understand the necessary sense of urgency and can meet the shipping standards you need.
There are still millions of products with poor representation on the Internet. I find it very easy to find local companies willing to drop ship and do whatever it takes to meet the needed performance standards. Anyone reading this can do some research and find companies within 100 miles of their location(probably much closer) with poor representation on the Internet that would be willing to dropship.
The challenge comes from making enough effort to find suppliers to work with whom you can make a suitable amount of profit yourself. More oversized ticket items like jewelry, certain electronics, and art, TVs offer the seller the chance to make a much more substantial amount, making dropshipping more attractive for those products.
Marketing Drop Shipped Products
A significant benefit of the lack of inventory and the burden involved is that it frees you up to focus on marketing, engagement, and customer service. You are an order processor, but creating and maintaining the listings is on you as marketing and driving traffic to the listings.
Some dropshipping suppliers will go as far as coop(contribute $) the marketing expenses with you because they understand that every sale you make benefits them. Always ask a supplier to contribute to the marketing expenses through reduced prices or a set % issued to you separately.
I've seen larger sellers create massive catalogs and require the supplier to contribute to be listed. One company I am aware of charges suppliers $2500 yearly to appear in the catalog.
The fees cover the entire production and printing of the catalog, and suppliers willingly contribute because of the sales orders received year after year. Catalog sales are a dying endeavor but still thrive in some categories.
I have sold several million dollars of jewelry through my own web business, and that was 100% dropship with an agreement where I split the sales price 50-50 with the maker.
Most people who say it is impossible either haven't tried it or didn't take the time to ensure they had the proper agreements.
Can I Drop Ship Using Amazon?
Dropshipping on one of the marketplaces can be precarious because shipper mistakes can cost you your account. Ask any Amazon mentors, and they will tell you to stay away from it with a ten-foot pole.
The mentors fail to tell you that dropshipping is alive and flourishing all day long on Amazon.
Every day vendors dropship items for Amazon orders directly from their warehouses. Manufacturers dropship for resellers all day long as well. The difference is that all of these are US-based shipments originating in the US, and the relationships between companies are pretty solid.
They fail to mention drop shipping because they cannot teach it at scale for their business model.
Drop shipping on Amazon is not the right choice for most sellers because sellers tend to think on too grand of a scale and would get entangled with overseas suppliers where they are at the supplier's mercy. Buyers are generally unwilling to wait for 2 to 4 weeks to deliver a product.
Amazon Requirements
Amazon does not restrict it and has the following requirements.
Examples of dropshipping that is not permitted:
Is drop shipping on Amazon easy? Not always. Having the proper agreements and supplier relationships is critical. Is drop shipping on Amazon worth it? If and only you can get things set up correctly to ensure success. Would I recommend drop shipping to a new seller? Not unless they already have experience with this elsewhere that, includes eCommerce.
Can I Drop Ship Using Shopify?
Drop shipping is an entirely different business model. Drop shipping on Shopify is easily done since it is your site and store. Two different business models can be followed on Shopify. The first is using Shopify apps created by dropshipping services that pre-vet potential suppliers for you. This makes setting up a dropshipping business via Shopify an exercise that can be up and running within hours.
Listed below are numerous Shopify apps that are used to source and add drop-ship items to your store quickly:
There are many different business models and fulfillment methods available
SuppliersData - this company is US based, has over 3000 US based companies willing to drop ship for you. It is not saturated with sellers yet. They have a $19. monthly fee, but I'd consider signing up for a month to see what they have to offer and whether or not you can supplement your product offering without increasing your overhead. Drop shipping is viable provided you use viable companies that aren't on a 3 week delivery model.
A benefit of using the system is that it puts millions of products at your fingertips with companies that have been pre-vetted. A con is that it puts you right back to get the same products like millions of other sellers and have very little chance of being unique.
A different method that I prefer is the method I mentioned earlier under the heading A Better Method. Does that make it a better approach? No, it doesn't. It is human nature that we prefer things that we are familiar with. I have had great success with sourcing dropship products locally and setting up significant agreements, so of course, I prefer this method.
How Do Current Events affect Sourcing Products?
In particular, during the recent COVID pandemic, millions of businesses closed with no sales. I know of multiple sellers who established relationships with these businesses with a simple phone call and were able to get agreements and products online.
One way to get better pricing from small mom-and-pop retailers is to offer them a cut of the profits. This gives them more skin in the game and makes their ability to ship on time and expectations more critical.
When I set out to write this article, the goal was to provide you with a list of sourcing solutions that could source from more than just China. Multiple options and choices give you much more leverage if used correctly. If you are nothing more than a buyer to your supplier, and they know you have no other options, it is human nature not to give you the best deal they can.
Things To Consider
Additional items sellers often overlook are raw materials and capability. A manufacturer that deals with steel products may be unable to do the injection molding for your product. It may be best to source that elsewhere and have it shipped for assembly. Additionally, they might not be able to get a reasonable price on the raw materials for things they rarely use.
Product cost should be your most significant expense. Acknowledge that and make whatever extra effort is needed to ensure you get the best value and quality for the right price. Spending a little extra on manufacturing or inspections may save thousands of dollars. It is worth every bit of extra effort. Don't be cheap about quality control.
We often see sellers that back themselves against the wall. Rather than throw in the towel on a product before ordering and restarting the process, they ignore substantial red flags and proceed, only to regret it later. Don't be that seller.
We've all been there. We have all thought we had a great product at some point, only to realize at the last minute that the numbers don't work out. It is better to be embarrassed and lose the time and a small amount of money invested than to move forward with an order you are not sure will work.
Business is business; you must look out for your own. Don't worry about anything others think. Do what is right for your business.
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My Experience with Sourcing Products
When I expanded my first retail eCommerce business, I added a brick-and-mortar showroom because I was selling custom southwest furniture and art and figured if I was going to stockpile any of it, I mind as well have a public showroom to increase sales. That was my first mistake, but that is for a different article.
I realized quickly that I could also sell the cheaper catalog furniture all day long from my store. I would buy a type of pine wood in South America, have it shipped to Indonesia, where the dining room table and chairs would be made, and then shipped here to the US.
I could have that done for far less than just the cost of the raw wood alone here in the US. The quality of the imported lumber couldn't touch the old-growth Ponderosa Pine that we used for custom projects. That was fine for the non-custom orders, but the custom ones had to be made here.
We often see many sellers not doing their due diligence and taking shortcuts, such as not spending the time researching if they are even getting the best price. They run with the first and only manufacturer they come across, leaving them at a considerable disadvantage with little to no leverage.
Custom Southwest Dining Room Set
Conclusion: Sourcing Products Worldwide Is Not An Impossible Task
Creating this article reminded me that there are many incredible, exotic products in different areas worldwide. Take Honduras, for example. The colorful textiles they are known for will make many muted colors we see every day seem very dull. Their exports of unfinished textiles increased 1600% last year alone and made up a large portion of their total exports.
Sometimes it makes sense to source raw materials from the country of origin. That doesn't always mean the final product should come from that same country. This is one example where a sourcing agent can be of great value in coordinating the procurement and movement of raw materials while ensuring that you can get your product to market.
Regardless of the product sourcing method, the bottom line with any supplier, manufacturer, or business you work with is developing good relationships, particularly in situations where cultural differences exist. Think about it. How does it make you feel when someone takes a personal interest? Or when someone takes the time to understand how their actions affect your business?
Extend that courtesy to your suppliers and manufacturers. That will make you stand apart from most others. If you have a good relationship, take it one step further. Ask them what materials are the easiest for them to work with or what they already have in-house. Then come up with products that use those materials but also have demand and an audience for sales.
Any effort that a reliable supplier sees you take to work with them and make things easier is usually met with better pricing or other concessions, not always, but often.
There are thousands of manufacturers; many are international sellers who want the work. In late 2022 and 2023, much of the world will be in a recession. Times are different than in the past, and you may find manufacturers unwilling to work with you regarding costs are more than willing to now.
This list should give you a nice set of options for sourcing and ordering products in bulk. Plus, a better understanding of how the puzzle parts fit together. If you made it this far, thank you for taking the time to read this and stay with me through it. Did I miss any links or site? If so, let me know
Affiliate Disclosure: As an Amazon Associate I earn from qualifying purchases. I get commissions for purchases made through the book links in this post.
