How to source products for your shopping site

Without suppliers you have no idea what you will be paying for your products. Consequently you will not know how much profit you can make — or if indeed you can make any profit at all. Proper planning becomes pretty much impossible.

To move from having an idea to create an Internet store to actually running your own online business you have to take a number of steps. One of the most important steps is to find reliable suppliers for your products.

Without suppliers you have no idea what you will be paying for your products. Consequently you will not know how much profit you can make — or if indeed you can make any profit at all. Proper planning becomes pretty much impossible.

To move from having an idea to create an Internet store to actually running your own online business you have to take a number of steps. One of the most important steps is to find reliable suppliers for your products.

Beware of pretend suppliers

Running an online store is a real business. Yet for one reason or another, a large number of people believe that merely 'opening' an online store will make them rich and independent. Consequently they are always looking for easy ways to open an online shop and to source their products.

This of course is well known to fraudsters — who are ready to milk the get-rich-quick dreamers for all they are worth.

One of the most common services by fraudsters is to act as pretend supplier: a company which claims to be a manufacturers or a wholesaler, when in fact it is much further down the food chain — and sometimes at the end of it. Fraudsters will make many claims when in fact they simply cut into the shop owner’s margins — in some cases sell the products to them more expensively than other shop owners sell them to consumers.

This of course would be impossible, if the prospective store owners had done their homework.

By trying to take shortcuts when looking for suppliers, the get-rich-quicksters not only shoot themselves in the foot — sometimes they kill their whole business before it has even started.

Trusted partner

Your supplier must be your trusted partner — not a shifty fly-by-night con-artist trying to empty your wallet.

If you have read “What to sell online in your store?” you know how to find products to sell in your online shop. The question now is how you can get these products without falling victim to a scam.

Before you can do this though, you must register your business officially. This is usually an easy process — and normally doesn’t cost much.

It is however an extremely important step. Once your business is registered, you have an officially registered business name and registration or tax file number (this differs from country to country). With these registration details you can now contact wholesalers and distributors.

Reputable distributors, wholesalers and manufacturers will ONLY deal with you, if you are a registered trader or put the other way round: Anyone willing to sell you wholesale goods without verifying that you are a registered trader is most likely not reputable and probably not offering you wholesale prices.

Wholesale lots

Unfortunately a business registration will still not open all the doors. Much will depend also on the quantity of products you plan to purchase when opening your online store. Many manufacturers and wholesalers will only sell goods in wholesale lots — meaning they will not open boxes to sell you smaller quantities. You either take the box or you don’t.

This of course makes perfect sense for a wholesaler, as the work involved in selling the complete box is less than the work involved in splitting it up. There is more money to be made and less work involved — certainly not a very difficult decision to be made.

It is not just about the money, though. The decision to only sell wholesale lots also protects you as shop owner. Why should anyone buy products from you, if they could buy directly from the wholesaler?

Another method to protect shop owners is a minimum order value. It too makes it harder for end users to purchase from wholesalers and distributors.

As most end users only buy small quantities and are not registered as traders, they can’t buy from real wholesalers. Without this protection there would be no place for you in the food chain.

Smell a scammer

So how do you smell a scammer? They won’t ask for your business registration details or tax file number and they will sell goods to you in end-user quantities at inflated prices — leaving you no or only a small profit margin to play with (i.e. if you can find the product on the Internet for the same price or even less, you know the supplier stinks!). Additionally thy might ask you for monthly fees to provide you with lists of products and prices. No reputable wholesaler does that.

Armed with this knowledge you can now start looking for real suppliers. To do this, simply start at the top. Look at the packaging of the product to find out who the manufacturer is. Then simply pick up the phone and call the manufacturer. Request the sales department and ask them who the distributor for the product in your region is.

Once you know the distributor, you can contact them to see if they are willing to sell to you, and what conditions apply. Sometimes they will, sometimes they won’t and sometimes they will refer you to another distributor further down the food chain who may be more suited to deal with you, depending on your size.

It really is as simple as that, if you want to set up a real online business venture. Once you know a distributor, they will also be able to provide you with other products or know of other distributors who can help you.

Trade shows

Another way to find real distributors is to go to trade shows which are closed to the general public. Visit craft markets, where you will find countless small manufacturers, who might be willing to work with you to find a wider audience. Talk to the sales people and find out who the manufacturer is. It might be the person you are talking to.

Regardless of what size company you deal with, it never hurts to verify the legitimacy of a supplier by calling the manufacturer of the product, if you are unsure.

Drop Shipping

So how do you start an on online business, if you don’t have enough money to invest heavily in your own dream? You start with less profit. At least that is the promise of drop shipping.

Instead of you warehousing products, you simply forward an order to your drop shipper, and they will ship the product for you to the customer. All you have to do is create your shop, fill it with products the drop shipper supports, and market your website.

Sounds too good to be true? Most of the time it is.

A number of companies with lists of drop shippers charge you monthly fees to provide you with access to the product lists and prices. Many prospective shop owners who have gone down that track have found that the products turned out to be more expensive than consumer prices already available on the Internet.

To find real drop shippers who are trustworthy, follow the same path as described above — but ask for drop shippers (remember that drop shipping is established mainly in the US). Real drop shippers will require you to supply business registration details, as they are still wholesalers and sell to businesses only.

Client references

Ask the drop shipper for client references and order a product from one of their resellers through a friend, to see how well the system works. After all — if you use drop shipping, you don’t have to stock the product and you don’t have to ship it. But the customer will still hold you responsible for the whole process.

Always keep in mind when establishing your supplier network that you should actually talk to the people you will work with. Your reputation, your income and your ability to grow your business depends on their support.

Shopping cart software such as ShopFactory can make it easy to build your store. But no software can replace you as the real driver behind your own online business success.