Product Sourcing: A Beginner’s Guide

If your e-commerce business was a recipe, your products would be the secret ingredient. This is because, while there are other brands out there who provide similar offerings to yours, only you can provide the specific “flavor” of products that you do. This unique product offering is ultimately dependent on where you source your products.

Whether you’re new to e-commerce or considering expanding your product offerings, product sourcing is a difficult decision. There are many viable options, and many businesses source from a combination of these. So, how do you find the right ones for your brand?

Below, we detail the four main types of product sourcing and the pros and cons of each. Read on with your business in mind, and hopefully, by the end of this article, you will have a better understanding of what options are right for you.

Types of Product Sourcing

Self-Produced

Self-Produced items are products that are personally made by the business owner. Some examples of this include handmade jewelry, original art, and home-baked goods.

On the surface, self-produced items seem to circumvent the need to source products. However, while the final products themselves do not require sourcing, the items used to construct them do. For example, if you’re selling handmade jewelry, you will still need to find a way to source beads, clasps, and other items required to continuously produce your products.

Pros

Self-Produced items are guaranteed to be original. Business owners also have the final stamp of approval on all products, allowing full quality control over products sold.

Cons

You will still need to source the items needed to make your products. Self-Produced products are also time-consuming to create. To compensate for this, handmade products tend to have a higher price tag.

Drop Shipping

Drop Shipping allows businesses to sell items that they do not own themselves. This is because the items will remain in the drop shipper’s warehouse until they are ordered by your customer. Once a customer makes a purchase, their items are directly transported to them via plane. Using this method, items can be shipped from places like China directly to customers in the US in as little as 3–5 days.

Additionally, thanks to companies like AliExpress and Oberlo, drop shipping has become readily available to anyone wanting to source their products this way. To learn more about drop shipping, check out our blog post, Drop Shipping: Is It The Right Choice?

Pros

Drop Shipping allows sellers the freedom of not having to store items onsite before the customer makes a purchase. Due to this sourcing method’s low startup costs and broad product offerings, it also offers business owners scalability with their brand.

Cons

Ever since the start of the COVID-19 pandemic, drop shipping’s quick turnaround time is no longer guaranteed. Additionally, these products allow little customization and quality control.

Wholesale

Wholesale companies purchase large quantities of items directly from a manufacturer, then turn around and sell those items to a business owner. Once the business purchases these items, they are sent to the business, and the business owner will then store these items onsite until a purchase is made.

Sourcing websites like Alibaba can help business owners locate specific items on a number of wholesale websites. These platforms are great for comparison shopping between multiple wholesalers.

Pros

Wholesale allows a business to acquire a large number of unique products without having to spend time creating those products. You can also receive a large number of these items for a discounted rate, as most wholesalers require bulk purchases.

Cons

Because wholesalers often require bulk purchases, you will have to put down more money upfront to obtain your products. These products are also readily available for anyone to purchase online, so your items might not be as unique as you’d like them to be.

Manufacturer

The alternative to wholesale is buying items directly from a manufacturer. Similar to wholesale, manufacturers will bulk sell their products directly to you. The business owner will then store these items onsite until a purchase is made.

By working with a manufacturer, you can source an original, high-quality product in large quantities. Some examples of products that are ripe for a manufacturer include board games, graphic t-shirts, and cosmetics.

Pros

Dealing directly with a manufacturer is the best option for customizing and mass-producing your products. Having a large stock of these items can also help you to scale your brand.

Cons

Even though manufacturers provide more customization, picking an unreliable manufacturer could result in quality control issues. Additionally, bulk-order requirements can be difficult for small business owners who are low on funds.

Which Type of Product Sourcing is Right For Me?

In looking at these product sourcing methods, consider what your dealbreakers are. What are you willing to risk when it comes to your time, funds, and product originality? Figuring this is the key to deciding which methods are right for you.

With Q4 right around the corner, now is the time to ensure your inventory is organized and stocked. If you’re struggling to keep up with your own inventory shortages, Soapbox can provide a helping hand. Our software syncs across all of your storefronts to make sure that you are notified anytime inventory is running low on any platform.

To learn about this and many other features available on our software, you can create a free account here.