The global supply chain is actually quite long and complicated, and it can feel endless for new e-commerce retailers. Trying to learn how to navigate the movement of goods from their point of production to the final consumer sale can be a daunting task, much less figuring out how to become a lucrative cog in the supply and demand machine. While there is plenty of industry-specific variation, the basic movement of goods goes like this: manufacturer makes a product, sells it to a distributor, who resells it in smaller quantities to retailers, where a product will be sold directly to a consumer.
Product sourcing, for all stores, is the name of the game. The final sale price of products determines your profit margins, situates your brand within a particular market niche, and helps carve out a target demographic. There are a few different methods of stocking your virtual shelves with compelling products. You can produce your own products in-house, which is a method with plenty of historical track records, but it can be challenging to scale distribution even if you have the skill sets for this route. You can also find a dropshipping partner (an increasingly popular 21st-century e-commerce model) or buy products wholesale.
Wholesale sourcing is a tried-and-true solution to the constant e-commerce challenges of stocking unique inventory and increasing profit margins. It avoids the pressure of in-house production for business owners while allowing them to remain in control of their products, shipping, and branding. What exactly is wholesale sourcing It's when a retail business buys goods in large quantities from manufacturers or distributors at a low price, stores them (either in warehouses or elsewhere, depending on amount), and then resells them to a consumer.
The differences in wholesale and retail business operations complement one another and allow for a mutually-beneficial flow of goods. Wholesale manufacturers and distributors are B2B companies that have a much lower price per unit than their B2C retail counterparts. While retailers can handle a small number of many different products, wholesale manufacturers and distributors typically handle large quantities of a small subset of specialized goods.
Are you considering the idea of wholesale sourcing Make sure to do your homework before making any major purchases. There's a lot to consider here. A wholesale strategy is grounded in data analysis and understanding of market trends. Start by studying bestselling products on other online marketplaces (Amazon has a hugely helpful best sellers page). Then examine sales data from your store and your competitors, look at global and industry-specific market trends, and narrow down the scope of potential products to source.
Another consideration The operational and logistical challenges that come with buying products wholesale. We highly recommend sorting this one out before you buy anything in bulk. Wholesale sourcing is very different from its newer dropshipping counterpart in that the retailer is responsible for storing and managing inventory once stock is purchased.
There are no rules about how to mark up and resell your wholesale products. You have total freedom and flexibility to play with the numbers and modify your sales tactics to maximize profit. Wholesale products will often come with an MSRP, which is the manufacturer suggested retail price, though many e-commerce platforms don't use this price when reselling.
Some other pricing strategies include bundling certain goods together, pricing above or below the competition, and keystone pricing, which is when a retailer doubles the cost of the wholesale product (unsurprisingly, this is not a super popular method). Plenty of retailers have found success in using the loss-lead pricing strategy, where you discount certain products to get consumers in the door and then keep high markups and cushy profit margins for other complementary or compelling products. Another idea to consider is anchor pricing, which is when you show a consumer that a discount has been applied by displaying both the original and reduced price. A bargain is always compelling for shoppers.
If you own a preexisting retail brand, then you need to tailor your wholesale product addition to the niche and target demographic you've cultivated for yourself. If you're starting from a blank slate and just beginning the development of a brand, you can take your wholesale strategy to whatever industry you'd like. Whatever pricing model you use and adapt through your store should be conducive to the kind of products you're selling, though.
You can consider buying wholesale products directly from a manufacturer, but there's way more risk involved in that process. The success of your e-commerce store depends on a stable relationship with your wholesaler or distributor and well-made goods; it can be harder to vet reliable and trustworthy manufacturers with little experience. Best to leave that up to distributors.
Distributors do the heavy lifting for you on that front, and they can be a much more reliable way of sourcing wholesale products. Distributors are commission-based middlemen who find manufacturers and connect them with retailers looking to source products. They're buying and selling goods only to and from businesses, and it's their role that has made the wholesale sourcing process so seamless for manufacturers and retailers.
In the past, entrepreneurs who decided to integrate wholesale sourcing into their retail business model had to spend hours scouring local suppliers, skimming through phone books, and making phone calls to potential distributors and manufacturers. Luckily now, in the age of the internet and high-quality digital marketplaces, entrepreneurs can expedite the wholesale sourcing process without compromising quality.
As digital marketplaces and the e-commerce industry have grown, the supply chain has evolved to accommodate digital retail platforms. Digital wholesale marketplaces like Alibaba, Spocket, AliExpress, and Salehoo have transformed the role of distributors. These websites find thousands of reliable wholesale manufacturers for e-commerce businesses. Salehoo, for example, has over 8,000 trusted wholesalers for only $67.00 per year. Their business model makes e-commerce sales much more accessible for newcomers and helps experienced digital retailers simplify their operations without asking for a significant financial investment.
This radical progression of the online wholesale sourcing has allowed e-commerce websites to cultivate unique product sets, increase profit margins, and strengthen their brand with none of the inconveniences of traditional wholesale sourcing. The supply chain is much more global now, too. Retail platforms can find and purchase products wholesale from all over the world and further diversify their storefront. Just be careful of import restrictions because some wholesale manufacturers won't ship internationally.
The best place to find cheap wholesale products is through a B2B marketplace. These sites are designed to connect retailers with suppliers and are generally quite easy to browse to find what you are looking for.
A reseller could take the approach of selling popular spice, like garlic powder or onion powder, that has an ultra-high demand and sells out quickly. A reseller could also take the route of selling less common spices that are still commonly used but not popular enough to take up shelf space in a store.
Cough drops are another hot item that can be resold for a profit. There is a wide variety of cough drops, so you can shop around to choose the ones that make the most sense for your reselling business.
You can resell first aid kits that you buy that are already assembled, or you can resell the supplies that would go into a first aid kit. Some of these supplies would include bandaids, alcohol wipes, cotton swabs, gauze, and medical tape.
The clothing and accessory buying experience has changed in recent years. Many people like to buy clothes online to try them out in the comfort of their homes. Aside from the growing demand, the ability to source these items for very little makes clothing a prime item for reselling.
Jewelry, including bracelets, earrings, necklaces, and rings, can be sourced at a very reasonable price. Some jewelry businesses create brands with an elevated touch that allows them to resell these items at a decently higher rate.
Another attractive aspect of reselling jewelry is that it is typically quite light so shipping costs are minimal. Sellers could roll shipping into their pricing or charge a nominal shipping and handling fee. Either way leaves customers feeling like they got a great deal.
Although a lot of electronics are pricy, there are some tech items that you can get for a reasonable wholesale rate. The thing about tech is that it is always evolving, so as long as you stay ahead of the curve, you will have a business.
Although security cameras and systems can be a bit more expensive to source, the wholesale prices are still relatively low when compare to their retail prices. Of course, you assume a great risk when investing in a higher-cost inventory, but there is a demand to be filled.
Beauty products, such as makeup and hair products, are also great options. There are so many products to choose from in this niche, so resellers can opt for an even more specific niche, or they create a one-stop-shop for all things makeup.
Alibaba.com functions as a search engine, so resellers can browse the listings that appear based on their search queries. Search results can be filtered based on a variety of criteria, so you can narrow them down based on your specific preferences.
To make a long story short, I ended up actually losing money on my first wholesale order. Sure, I was able to get almost all of the capital back, but overall it was a massive failure.
Stephen loves helping people turn part-time hours into a full-time income via Amazon FBA. When not reselling or blogging, Stephen enjoys reading with his wife Rebecca, playing games with his kids, serving at his church, and watching baseball. 59ce067264