Since the early days of eBay auctions and Amazon.com, modern eCommerce has become more accessible for customers and entrepreneurs. With a little research, time and effort, many one-click shoppers have realized the opportunity to launch online stores of their own.
The electronic economy continues to pick up, and everyone is benefitting. Customers relish in the convenience of shopping for great deals without leaving the house. Free shipping is becoming more common, and wait times are shrinking.
Wholesalers are also enjoying a digital heyday as entrepreneurs search for the best product sourcing company to meet their online business needs.
What is product sourcing?
If you are considering starting an eCommerce store, one of the first and most important decisions you will make is where you will buy your inventory. In the industry, this process is known as product sourcing.
Finding dependable wholesale vendors that offer quality and affordable items requires strategic product sourcing research. When it is well thought out, profit margins expand – which gives your business the opportunity to flourish.
Why you have to do your homework
Whether you operate a brick-and-mortar or online store, buying products below the market value and reselling them at a higher price is the name of the game.
While obtaining products may seem as simple as doing a quick Google search for wholesale distributors, there are many scammers on the prowl looking to take advantage of business owners. Because new eCommerce stores are popping up every day, search engines draw in a treasure trove of unsuspecting victims.
You may wonder why scam artists target eCommerce professionals who are looking to purchase inventory. Here are a few reasons:
- They use strategies to boost their search engine rankings in order to intercept business from real wholesalers. Buying from these sources comes at a higher price, and profits suffer as a result.
- They sell sub-par products for far more than they are worth, making it nearly impossible for you to resale them for a profit. If you move forward with selling them, you risk tarnishing your reputation as an online retailer.
- They sell fake wholesale distributor lists as a way to obtain your information so they can sell it to online marketers.
Unfortunately, these con artists are good at what they do, and their websites often look legitimate enough to make many people fall for them.
How to protect yourself from online wholesaler scams
In the world of eCommerce, making the right product sourcing decisions can have a profound impact on your business. Conversely, making the wrong ones can do the same. Magento stores and other online business owners are facing this challenge more often as options in the marketplace continue to grow.
Here are three avenues you can take to ensure reliable product sourcing.
Hire a professional research team
While a financial investment is required, hiring a professional research team can help you sift through the endless online wholesale options and weed out the bad guys. They do the homework for you and provide a directory of trusted wholesalers. However, adequate research is important when working with these firms as well. Be sure the firm has positive reviews before entering into a business relationship.
Visit trade shows in person
Many wholesalers are not searchable online because they capture substantial business through traditional methods. However, you can often find them hunting for leads at trade shows. As an additional perk, visiting trade shows may help you find a product that makes sense for your business.
Work with a well-established brand
If you take your online enterprise seriously, the stakes are too high to trust a wholesaler you don’t know much about. When it comes to sourcing a product, the Alibaba Group is a world-renowned wholesale giant. Because of its solid reputation, working with them is a pretty safe bet. They are even willing to assume responsibility for online predators, according to ShipStation.
“To help businesses see which suppliers are most reliable, Alibaba.com created Trade Assurance, which is free order protection for all orders placed and paid for on-platform. Suppliers can choose to opt into Trade Assurance, which guarantees that:
- Products are created based on the buyer’s specifications;
- Orders are shipped from the manufacturer by the date agreed upon;
- Payments are safe and protected.”
Even though the Alibaba Group is willing to assume the responsibility for scammers on its platforms, there are still pros and cons to consider with its two supplier options.
Alibaba vs. AliExpress
Alibaba and AliExpress are wholesale inventory suppliers that fall under the Alibaba Group umbrella. There are a few basic differences between the two, and this comprehensive guide can help give you a deeper understanding.
Alibaba is a supplier that caters solely to B2B transactions. Through Alibaba, businesses purchase large quantities of products directly from manufacturers at wholesale prices. For these reasons, Alibaba is not the best choice if you are running a small operation.
AliExpress allows all buyers to make purchases from manufacturers and resellers. While the prices are slightly higher, there are no minimum order requirements. Many small and home-based businesses find AliExpress to be an ideal product sourcing option.
The option for dropshipping is also a major difference between Alibaba and AliExpress.
What is dropshipping?
Dropshipping allows you to sell items online without ever seeing or touching them. Therefore, you are essentially only responsible for marketing the products. With dropshipping, you find what you want to sell from a supplier and put it up for sale in your online store. You set the retail price and keep the profit.
For example, you may purchase a pair of shoes for $10 and list them for $30. Once a customer places their order, you alert the supplier, who ships the shoes to the customer on your behalf. In this scenario, you would make a $20 profit.
While dropshipping eliminates the responsibility of maintaining your own inventory, business owners must still be selective about the products they offer to be successful. Business 2 Community offers some advice in its ultimate dropshipping guide.
“Firstly, steer clear of any type of product that could provide difficult to advertise. Facebook, for instance, prohibits the ads that feature adult toys and e-cigarettes. Lack of opportunities to market your dropshipping product will, obviously, lead to fewer sales – so stick to family-friendly goods!”
Alibaba does not offer dropshipping services. That’s because its customer base consists of larger businesses that have warehouses to store bulk shipments.
Many AliExpress sellers offer dropshipping services, which makes it an appealing resource for start-ups and small businesses.
Additional signs to look for
Regardless of which option you decide to go with for sourcing products, watch out for these top product sourcing scam strategies. Always use common sense. While cheap wholesale products for resale are every eCommerce professional’s dream, be leary if wholesale prices seem too good to be true.
Location matters as well. If the wholesaler is overseas, take into consideration the time it will take to get products to their intended location. Long waits, as well as high costs for expedited shipping, can drive customers away.
Product descriptions can also be an indication of a wholesale supplier’s legitimacy. If they have taken the time to provide a detailed portrayal of the product, take it as a positive sign.