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 online 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 needs. 

 

What is product sourcing?

product sourcing warehouse

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 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.

 

How to do your product sourcing homework

While product sourcing may seem as simple as doing a quick Google search for wholesale distributors, there are many options to sift through. It is easy to get stuck in the research phase if you are not careful. Knowing the right questions to ask from the beginning will help you narrow down your search quickly.

 

8 essential product sourcing questions

  1. What is the total cost? Be sure it lines up with your target bottom line.
  2. Is there a minimum order quantity?
  3. Will you be able to sample the products free of charge if you do not keep them?
  4. What are the payment terms? Some wholesalers require you to pay for items up front while others charge you after they are delivered. Some offer a store credit limit so you can buy now and pay later.
  5. What is the timeline for creating, fulfilling and shipping orders? If the wholesaler is out of the country, it may take much longer.
  6. What is the return policy? Some wholesalers offer a refund or store credit on items you do not sell.
  7. Is liability insurance offered for faulty items?
  8. Does the product sourcing company have reputable customer service?


Beware of product sourcing scams

product sourcing scam

If you find a company that seemingly checks all of your desired boxes, you want to ensure they are legitimate before proceeding. There are many product sourcing 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.

Product sourcing scams take on several forms. Here are some common strategies scammers use.

  • They implement strategies to boost their search engine rankings so they can 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.

There are a few ways to protect yourself from wholesaler scams. Here are three avenues you can take to ensure reliable product sourcing.

  1. Hire a professional research team

    While a financial investment is required, hiring a professional research team can help you sift through the endless product sourcing 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.
  2. Visit trade shows in person

    Many product sourcing 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 additional products that makes sense for your business.
  3. Work with a well-established brand

    Whether shopping for yourself or for a product sourcing wholesaler, online customer reviews can be a priceless resource. Even if they are buried, be sure to read what any negative reviews have to say. Look up the company on the Better Business Bureau’s website and see if there have been any complaints made against them.


Two popular product sourcing options

Alibaba product sourcing

The Alibaba Group is a world-renowned wholesale giant. Because of its solid reputation, working with them for product sourcing is a pretty safe bet.

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.

 

What is dropshipping?

dropshipping product sourcing

The option for dropshipping is one major difference between Alibaba and AliExpress.

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.They ship the shoes to the customer on your behalf, and you make a $20 profit.

Alibaba does not offer dropshipping services. That’s because its customer base consists of larger businesses that have warehouses to store bulk shipments. However, many AliExpress sellers offer dropshipping services, which makes it an appealing resource for start-ups and small businesses. 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.

 

Additional product sourcing signs to look for

Regardless of which option you decide to go with for product sourcing, 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.