Manufacturers
Dropshipping is arguably the best for ecommerce beginners—it’s simple, quick to set up, and doesn’t take a lot of upfront investment. But if you’re more of a pro or you want something more unique for your business, going with a manufacturer might be your best bet.
Source: Pexels
How does it work?
When you decide to work with manufacturers, you typically have two options. First, you can sell products from the manufacturer’s standard stock, but request certain customizations, like your brand logo. These are called private label products.
Alternatively, you can order a completely custom-made product line based on your own specifications. In this case, the process of setting up your business online will be a bit longer.
Usually, entrepreneurs who choose this route create product designs, prototypes, and order test batches from several suppliers before making their final decision on which supplier to work with.
Source: Pexels
Pros and cons
Arguably, the biggest advantage of this business model is that you’ll have much more control over the finished product. You’ll be a part of the production process, especially if you work with local manufacturers. You’ll have the chance to see your own products before selling and make sure product quality is up to your standards.
Source: Pexels
However, it’s a longer process that requires way more upfront investment. Plus, many manufacturers require a minimum order quantity, so your business model won’t be very flexible and you run the risk of getting stuck with excess stock if it doesn’t sell. In addition, since you’ll keep your own inventory and manage shipping yourself, it’ll most likely mean higher retail prices for your products to keep up with all the extra costs.
Our conclusion? This way of sourcing products should be the go-to method for experienced sellers who are looking to scale their already existing online businesses, not ecommerce newbies.
Wholesalers
Simple product sourcing, large profit margins, and quick selling—that’s what you’ll get when you buy from wholesale suppliers. But is there a downside? Let’s take a look at how you can source products to sell from wholesalers and what are the pros and cons of this type of product sourcing.
Source: Pexels
How does it work?
Wholesale product sourcing is when you buy products in bulk from a third-party wholesaler and sell them online at a higher retail price. For example, when you’re just starting your business, you buy t-shirts in bulk from a wholesaler, store them in your garage or a spare room, and sell them for a higher retail price.
The good thing about wholesale product sourcing is that the more you buy, the less you pay per unit. This means you can easily sell your products at a higher profit margin, making wholesale sourcing great if you’re looking for very profitable products.
You can find wholesale suppliers on online marketplaces like Alibaba or Creoate, which connect suppliers with sellers all over the world. Remember, you don’t just have to choose one.
Source: Alibaba
As your business grows and you want to offer more product categories, you can work with multiple suppliers or have backup suppliers to make sure things are always running smoothly.
Pros and cons
As we mentioned above, wholesale product sourcing can be extremely profitable because you can set retail prices with better profit margins for you. Plus, sourcing products through wholesalers is not a complicated, lengthy process, but rather something you can set up quickly.
However, it can be a pretty risky venture. First, you’ll have to make sure your supplier is genuinely reliable and can provide sufficiently high product quality. Without that, your store won’t take off.
Source: Pexels
Second, while wholesale product sourcing offers higher profit margins on your items, it also requires a lot of upfront investment—what happens when your products don’t sell? You’ll be stuck with dead stock (and out that money).
Lastly, since you won’t be the only one buying items from this wholesaler, how can you make sure your products stand out? If you don’t get involved in customization, your business will disappear in all the ecommerce noise.
DIY
Now if you want to offer truly niche products and ensure there’s nobody else in your target market quite like you, DIY is the way to go. But is DIY for everyone? Let’s go over what kind of sellers are most likely to succeed with DIY and what advantages and setbacks you should expect if you’re selling handmade items.
Source: Pexels
How does it work?
This is one of the most straightforward, self-explanatory ways to source products. As the name suggests, instead of working with a third-party manufacturer, you do it all yourself.
Whether it’s a small shop where you sell, for example, handmade toys or candles, or a larger operation where you print or sew your own garments, when you source products through DIY, every part of the business is up to you.
Source: Pexels
Pros and cons
Having that much control can have its advantages and disadvantages. You’ll be responsible for everything—production, order fulfillment, shipping, returns, customer service, and more. The good news is that you’ll be able to ensure everything is up to your standards and you can find ways to cut costs where necessary.
Plus, DIY opens up a whole new world of possibilities. It doesn’t just mean selling ready-made products; you can also sell DIY kits, allowing people to create their own works of art. Here’s an example from the Etsy shop AnnaHandmadeDIY. You can purchase a bead embroidery kit containing all the necessary beads and instructions to create lovely original designs.
Source: AnnaHandmadeDIY on Etsy
Simply follow the instructions, and embroider your picture. Selling DIY kits is a great way to capitalize on something you’re good at and help others to improve their skills or express themselves creatively. Here’s what the finished product looks like.
Source: AnnaHandmadeDIY on Etsy
Keep in mind, though, the workload can quickly get pretty overwhelming pretty quickly. If your business takes off and you start making profits, you’ll most likely have to consider hiring extra staff to help you deal with all the orders.
So handmade and DIY is best when you aren’t super interested in scaling and it’s more of a side project that isn’t going to swallow up all of your time.
Marketplaces
You may think of online marketplaces as platforms where you sell products, but they are also platforms where you can source products (like eBay, Etsy, Alibaba, or AliExpress). These platforms allow you to find suppliers or manufacturers to source products at lower, often wholesale prices, for reselling. Here, you’re the buyer looking to procure stock. These marketplaces can also be used to source products that are a little more niche, like, vintage, handmade, or artisanal products.
Here’s everything you need to know when you’re planning to source products from online marketplaces.
Source: eBay
How does it work?
Among other things, marketplaces are often a good fit for business ventures that focus on vintage and artisanal items. For example, let’s say you’re planning on selling vintage or antique books, like TwoForJoyBooks on Etsy.
Source: TwoForJoyBooks on Etsy
One way to find a product to sell is to scour any vintage and antique shop in your local vicinity. But another way is to find specialized marketplaces online. So, if you’re planning to sell books, search for used book marketplaces like Abe Books or Thrift Books. Source products from there and later resell them on your shop.
In essence, that’s how these marketplaces work: you’re discovering and purchasing unique or niche products in smaller quantities and selling them in your online store.
Pros and cons
One of the major pros for sourcing products in online marketplaces is the possibility of finding truly one-of-a-kind objects. To make your products stand out even more, you can go one step further and customize them. For example, here’s how Etsy seller Sabotage900 does it: they source vintage decor and add edgy images to the items to make them extra original.
Source: Sabotage900 on Etsy
Marketplaces are also convenient and usually allow for small orders, so you don’t have to worry about keeping too much inventory.
However, remember that product prices on marketplaces will vary. Oftentimes, items can cost much more than on wholesale platforms, plus marketplaces will charge fees and extra transactions.
Another thing to be mindful of is the quality of your products, especially if you’re looking for vintage items. There’s a certain unpredictability there—you’ll never know if the sellers are truthful about the product condition until you receive the actual item.
Trade shows
If you’re really serious about product sourcing, you can also find your products offline—at a trade show. Let’s go over how these shows work and how they might be good for your business.
How does it work?
Trade shows are events that are designed to connect distributors and suppliers with brands. As a business owner, going to trade shows is a good way to see products up close and evaluate their quality before ordering samples.
Normally, trade shows are held in major cities and take place over the course of a few days. However, if you’re not located near a large city, don’t fret—there are many local, smaller trade shows happening all over. Do your research and you might just find a local trade show that works for you.
Source: Pexels
Pros and cons
Trade shows are an interesting way to connect with suppliers. They give you the chance to see products up close, but also to make connections and build relationships in person with third-party suppliers.
Another significant advantage is that, at a trade show, you have access to a ton of suppliers in the same place. This means you can use trade shows not only to find a product to sell but to get new exciting ideas for product categories you could try out in your store.
However, a major downside is that these shows aren’t very accessible for beginners or people living in certain areas. Many suppliers want to work with big brands, not ecommerce newbies, so if you’re just starting out, you might find it all somewhat intimidating.
In our view, a trade show is a good option if you’re already running an established business and have some experience.
