What is Product Sourcing and How to Source Your Product?
As a retail buyer, a good product sourcing strategy to stock your shelves is critical to your store’s success. With suppliers large and small ready and waiting to get their products on shelves and online stores, it can be overwhelming for buyers.
Buyers must understand where they are sourcing their products and how this ultimately affects their business.
So, here’s what you need to know about product sourcing.
What Does It Mean to Source a Product?
Product sourcing means the process of finding suppliers, buying inventory from them, and then reselling. Common product sourcing methods include: Finding a manufacturer for custom products or purchasing third-party goods from a wholesale supplier directly.
Where to Source Products?
Finding the right suppliers for your product can be a challenge. The number of suppliers worldwide is incredible. For retailers, no single supplier can provide every product you need on your shelves and meet the needs of your consumers.
So, when looking at multiple product suppliers, it makes sense to check multiple avenues to source those suppliers and products.
It seems like these days, everything starts online. Product sourcing is no exception. There are two options when looking for a place to source products for your retail business online.
While any business worth its salt has an online presence these days, trying to find the right products for your business by searching websites alone is time-consuming and labor-intensive. Thousands of results can be found for a single product search:
Online Supplier Platforms
- Maker’s Row
- Council of Manufacturing Associations Member Organizations
Online Apps for Product Sourcing
Whether you’re running your first or fifth ecommerce business, explore the following 12 apps to source products for ecommerce store:
Attend Trade Shows
Although trade show attendance has been declining in recent years, they remain a viable and important source for buyers to research and source new products. Trade shows give buyers the opportunity to get immediate information, see products firsthand, and build relationships with suppliers. Trade shows also allow retail buyers to learn about the latest trends, so they can be sure their shelves are filled with current and future hot products.
Hire Product Souring Agent
A product sourcing agent will find manufacturers to build products for you, including researching appropriate manufacturers, prices, costs, negotiations, and finding the best price for the products you want to sell.
It is worth noting that it may take up to 1 to 2 months from the initial communication to the final order with a product sourcing company.
6 Strategic Product Sourcing Steps
Sourcing new products can seem overwhelming – it’s not as simple as just finding a great product and putting it in your store. But there are product sourcing methods retailers can take to make the process run smoothly. In this post, we simplify the 7 step strategic sourcing process into 6 easy understanding steps.
1. Research Your Product
First, retailers need to understand the product. Market research is critical to success; sourcing products without the necessary research is asking for failure.
2. Contact Any Potential Supplier
Before contacting a supplier, know exactly what you, as a buyer, need. Yes, part of this is doing research on the product, as described above. But the other part is knowing what you want from the initial contact with the supplier. Are you looking for information? Samples? A specific product? Knowing this and understanding your needs ahead of time will help the process run smoothly.
This step is also where buyers use their contact information from trade shows to reach out to suppliers they’ve met or had contact with.
3. Request a Sample
Would you test drive a car without buying it? No. As a retail buyer, you wouldn’t put a product in your store without a sample. Part of the request when contacting a supplier should be for a sample so you can get feedback from team members, see the product up close and personal, and see how the supplier handles the first transaction portfolio before you decide whether to include it in your offering. Requesting samples is an important part of your sourcing strategy and a great way to test the quality of your products.
4. Select Suppliers for Trial Orders
Once a retail buyer finds a product with potential, order a trial run. This may mean that the buyer requests to try a certain number of products in the retail chain, or it may mean that the product is only tested in certain stores. The buyer may choose to try only certain products from the supplier’s overall lineup rather than the entire lineup.
Buyers should set parameters and KPIs around the trial run, including how long the trial runs for, sales ratios, and consumer feedback.
5. Evaluate the Supplier
Whether a buyer chooses to work with a supplier and build a longer-term relationship depends heavily on how the supplier performs during the trial run. Having the above parameters will help the retail buyer better evaluate the supplier at the end of the trial run. Did the product meet expectations? Did it perform well or underperform? How was it received in the store?
In addition to these questions, retail buyers need to ask questions about the relationship with the supplier. Was their communication timely and clear? Did the goods arrive on time and with the correct products and quantities? Where was the product intact when it arrived in the store? Was the price quoted accurately?
These details can make or break the relationship between buyer and seller. If the buyer chooses not to have a relationship with the supplier, honest, constructive feedback helps to understand why the relationship is not moving forward.
6. Keep Other Supplier Options Open
Businesses merge or dissolve altogether, supplies may be difficult to obtain, or sometimes the product quality declines. Therefore, retailers need to keep their supplier selection open.
This isn’t necessarily a bad thing. Think about it. A multi-supplier situation can offer.
- Better prices.
When more than one supplier is in the mix, there is an opportunity to reduce production costs.
- Material Insurance.
If one supplier has problems getting the necessary parts or ingredients for their product, there can be a trickle-down effect of product delays, increased logistics costs, etc. However, since there is more than one supplier for a product, a retailer should never be without that product.
- Quality Control.
When products are sourced from multiple suppliers, retailers can easily and quickly compare the quality of two (or more) products to ensure that both still meet the specifications set forth from the beginning.
How to Know when Source for a New Supplier?
As your business grows, you may outgrow your suppliers. Your business needs may change during its formative years, which may result in the need for faster shipping times, greater order capacity, or better product selection. When this happens, evaluating your fit with the right size supplier is important.
As we mentioned before, part of choosing a supplier is considering the size of orders they can provide. So if customer demand increases and you need larger product orders, you can turn to manufacturers, wholesalers, and importers – who may be better able to meet that demand than independent suppliers (who are typically smaller).
Another situation that may lead you to change suppliers is the desire to manufacture or customize new products. Suppose you have established strong brand loyalty or identified promising original products. In that case, the next step may be to move from off-the-shelf items to custom products or even private-label items.
But, sourcing products from overseas is another thing. Purchasing from overseas will involve more professional knowledge. You need to learn:
- Protect the intellectual property rights.
- Control product quality.
- Ensure the safety of funds.
- Shipping goods safely.
And these processes will be repeated every time you place an order. You can read this product sourcing examples post as reference.
Product Sourcing Conclusion
Product sourcing is not always a simple, straightforward process, and even when a retail buyer finds a great supplier and builds a strong relationship, the work doesn’t end there.
Product sourcing doesn’t stop when the product is purchased – maintaining the quality and integrity of the product is critical, as well as strengthening the relationship with the supplier.
Buyers should always be mindful of developing new supplier relationships and keep in mind the essential steps that will lead them to success. If you need product sourcing service, please just let us know.