Product Sourcing For Online Business
Product sourcing is one of the most exciting aspects of business but it’s not without challenges. Think of it as treasure hunting. Sourcing includes some of the most important facets of business such as research, relationship building, negotiation, quality control, and more. Having a great idea is not enough to succeed in business. Your idea is the starting point for finding the source for your product.
You have several options. You could build the product yourself or hire a manufacturer to build large quantities for your; you could buy it from a wholesale company, or have a drop shipper ship it for you, you could import it from overseas. There are many possibilities, and your goal is to find the right solution for you.
The real power in sourcing is buying smart. Your customers expect to get a good deal buying from you and so should you when sourcing for your business. One of the most important strategic decisions you make has to be about buying low. If you overpay for your products, you’ll price yourself out of the market. Nothing will hurt you sales more than a high price.
People shopping online will seldom purchase on the first site they visit. Expect them to shop around before making a purchase. If you are more expensive than your competitors, your sales will suffer. Just like your customers, research before you buy. Find out how much similar products sell for online. Don’t compare apples to oranges, and study online pricing rather than brick-and-mortar pricing. A product that sells for a couple of dollars online could easily sell for .95 in a mall shop.
Before you make your buying decision, be sure to determine what margins you need to succeed. Once you have done your homework, you can begin sourcing your products.
Practical Example: If you plan to start your business from your home, look for small products. The less space you need for storing your inventory, the more money you save on warehousing. There is nothing wrong with storing your inventory in your home until you can afford to rent a warehouse.