Everything You Need To Know About Product Sourcing For Your Business

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As a retail buyer, sourcing the consumer packaged goods (CPG) products to stock your shelves is integral to the success of your store. Without the right products, you won’t have customers – and without customers, you won’t have a business. This makes it essential that buyers understand where they are sourcing their products from and how that ultimately affects their brand.

In this article, we’ll break down what product sourcing is, explore its benefits and challenges, and walk through how you can successfully source products for your ecommerce brand.

What is product sourcing?

Common challenges when sourcing products

Despite the key role it plays in your ecommerce operations, the product sourcing process often presents a number of challenges. Here are some of the biggest challenges that you might face when sourcing products.

Unreliable suppliers

It’s not enough to find a supplier that offers the products you want to sell; it’s also crucial that they can consistently deliver the right products in the right quantities at the right time while maintaining quality standards. Too often, brands find a supplier but end up experiencing performance issues further down the line, leading to delays, shortages, and quality issues.

Cost management challenges

Negotiating a reasonable price with suppliers can be tough, as you still have to strike the right balance between product quality and cost savings. Moreover, prices are susceptible to change with fluctuations in tariffs, raw material costs, transportation costs, and exchange rates.

Quality control issues

Maintaining quality standards across multiple suppliers is another major challenge, especially if you work with unreliable suppliers. You need to identify defects and other quality issues early on in the supply chain and proactively resolve them before they affect the end customer, which only gets more complex with every additional supplier you use. Additionally, implementing effective quality control measures may require in-depth expertise and significant resources.

Supply chain disruptions

Labor shortages, geopolitical disturbances, unexpected bottlenecks, and natural disasters can result in disruptions that affect your product sourcing. These may create shortages and delays, preventing you from getting the products you need at the right time.

Where can I source products from?

Finding the right supplier for your business can be hard. The number of suppliers worldwide boggles the mind – and for retailers, there is no single supplier who can provide every single product you’ll need to stock your shelves and meet the needs and wants of consumers.

You will also need to meet your own business needs, whether it’s managing a small business, an online store, or even an online marketplace. It makes sense then, when looking for multiple product suppliers, to check multiple avenues to source those suppliers and products.

Online

It seems that these days, everything starts online – and product sourcing is no exception. 

When looking online for places to source products for your retail business, there are two options: supplier websites, and online supplier platforms.

While any business worth its salt these days has an online presence, it’s time-consuming and utterly laborious to try and find the right product for your business simply by searching websites. A single product search can turn up thousands of results.

However, the launch of platforms that streamline product sourcing makes the process easier for buyers and suppliers alike. Using a platform like RangeMe, for example, retailers can log on and enter specific search criteria around the type of new product they are searching for. With more than 200,000 brands in the system, the results they get are the ones that most closely match their needs, and in many cases have been verified by RangeMe so retailers know that these suppliers have the capabilities to meet the retailer’s needs from the start.

Trade shows

While trade show attendance has been on the decline in recent years, these events remain a viable and important source for new product research and acquisition for buyers. Trade shows give buyers the opportunity to obtain immediate information, see the product firsthand, and build a relationship with suppliers. 

Trade shows also provide retail buyers with the opportunity to get a heads up on the latest trends, so they can be sure to stock up on the hottest products of the present and future.

Manufacturers

Manufacturers produce goods themselves, so sourcing products directly from them allows you to cut out the middlemen. This typically allows you to get a good deal on pricing, especially with the bulk discounts that they may offer. 

Although it may require a higher initial investment, working directly with the manufacturers gives you better control over quality and customization. Online directories and trade shows are some of the best ways to get connected with manufacturers.  

Wholesalers

Wholesalers purchase large quantities of products from manufacturers and then resell them to retailers. In this case, they take advantage of the manufacturer’s bulk discounts, enabling them to offer products at a lower price per unit. They can also fulfill large orders, ensuring consistent inventory availability. Many wholesalers have established logistics networks, which can streamline the sourcing process.

DIY

Alternatively, you can go for a DIY approach, which may involve combining multiple sourcing options to achieve the ideal fit. You may choose to:

• Work with multiple suppliers.
• Partner with local artisans.
• Source from online marketplaces.
• Buy directly from manufacturers.
• Find wholesale partners for different products.

The goal is to find the sourcing combination that meets your unique business needs. This approach is great for businesses selling a wide variety of products or dealing in very specific ecommerce niches. It’s also vital for building a more resilient supply chain, as it allows you to diversify your sources and provide safety in the case of disruptions.

Six steps to successful product sourcing

Sourcing new products can seem overwhelming — it’s rarely as simple as just finding a great product and putting it in your stores. But there are steps that retailers can take to make the process flow smoothly.

Here’s a six-part walkthrough of how to start sourcing your products.

1. Research your product

First and foremost, retailers need to understand the product. Market research is essential to success; sourcing products without the necessary research is asking for failure. The research should be well-rounded, and can include:

• Store data – What are the numbers telling you from specific stores? Is there enough interest to drive sales and growth in your retail stores overall, or would certain products work better for certain stores?
• Consumer demand – What are your consumers asking for? What are they talking about on social media? What are their concerns in surveys? What kind of feedback are you getting through different channels? What topics engage them most? How does what they are saying actually compare to what they are purchasing?
• Trends – What’s trending in the product category, and which companies seem to be addressing these trends? Are these trends crossing over into any other categories?

With this information, ecommerce merchants can make more informed decisions when it comes time to initiate contact with suppliers. The more you know about the product you want, the better the result will be.

2. Contact any potential suppliers

Before contacting suppliers, know exactly what it is you, as the buyer, need. In addition to doing research as mentioned above, consider what you want out of this initial contact with the supplier. Are you looking for information? For samples? Specific products? Knowing and being upfront about your needs will help the process go smoothly.

This step is also where buyers put their contacts from trade shows to use, reaching out to suppliers they’ve met or been in contact with. It’s also a time when they can engage on platforms like RangeMe, as it streamlines the process so buyers can research products and easily reach out to suppliers all in one place.

3. Ask for samples

Would you test drive a car without buying it? Probably not. As an ecommerce seller, you shouldn’t put a product in your store without sampling it. When contacting suppliers, part of the ask should be for samples so you can get feedback from team members, view the product up close and personal, and see how the supplier handles this first transaction before you decide on whether to include it in your product mix. Asking for samples is an important part of your sourcing strategy and a good way to test the quality of products.

4. Choose a supplier to trial-run an order

Once you find a product that shows potential, order a trial run for that product. This can mean asking for a certain number of units to be trialed across a retail chain, or it can mean a product is being tested in only certain stores. A seller may choose to only trial certain products from the supplier’s overall lineup, rather than the lineup in its entirety.

Make sure to set parameters and key performance indicators around the trial run, including how long the trial will run, sales ratios, and consumer feedback, for example.

5. Evaluate supplier

Whether or not you choose to move forward with a supplier and form a more long-term relationship depends heavily on how the supplier performs during a trial run. Having the parameters mentioned above will help you better evaluate suppliers when the trial run ends. Did the product meet the expected goals? Did it overperform or underperform? How was it received in the stores?

In addition to these questions, you need to ask questions about the relationship with the supplier. Were they timely and clear in their communications? Did shipments arrive on time and with the proper products and counts? Were the products intact when they arrived at the store? Was the quoted cost on point?

These details can make or break a buyer-supplier relationship. If you choose not to pursue a relationship with a supplier, honest, constructive feedback can be helpful to understand why the relationship isn’t moving forward.

6. Keep other supplier options

Businesses merge, or disband completely, supplies can be difficult to get, or sometimes, product quality goes down. These things are to be expected from suppliers in the wide world of CPG, where trends and products can change as often as the wind. When a consumer expects to always see a product on the shelf and suddenly isn’t, it can be a huge blow, shaking consumer trust in the retailer.

It is therefore essential for retailers to keep their supplier options open. Having more than one supplier for a product ensures that not only is the retailer getting what they need, but consumers are as well.

Benefits of having multiple sources for your products

When sourcing products, retailers don’t want to be at the mercy of a single supplier dictating the terms. Retailers are most concerned with getting the products, their consumers want, on the shelf, and to do that could mean partnering with a sourcing agent to identify more than one supplier providing certain products.

And that’s not necessarily a bad thing. A multiple-supplier sourcing strategy can provide:

• Better prices – When more than one supplier is in the mix, there is an opportunity to bring costs down on products.
• Insurance for supplies – If one supplier has an issue getting the necessary parts or ingredients for their product, it can cause a trickle-down effect of product delays, increased logistics costs, or more. But with more than one supplier on a product to pick up the slack, retailers are at a lower risk of running out of stock for said product.
• Quality control – When there is more than one supplier for a product source, retailers can easily and quickly compare the quality of the two (or more) products to ensure that both are still meeting the specs set forth from the beginning.

How ShipBob supports your ecommerce business post-sourcing

Product sourcing doesn’t stop once the product is sourced — maintaining the quality and integrity of the product is essential, as is strengthening your relationship with the supplier.

To truly succeed in ecommerce, brands will need to look further down the supply chain and find a partner that will help them store, pick, pack, and ship the products that they’ve worked so hard to source.

As a leading fulfillment provider, ShipBob provides inventory storage, order fulfillment, and shipping solutions for ecommerce brands. Here are just some of the ways that ShipBob optimizes logistics for thousands of businesses like yours. 

Efficient inventory placement with ShipBob’s Inventory Placement Program

Worried about where to store the products you’ve sourced? ShipBob’s Inventory Placement Program takes the guesswork out of inventory placement. The program uses a proprietary algorithm that determines the optimal distribution strategy based on historical demand patterns and sales performance, recommending how much inventory to send to each fulfillment center to effectively meet customer demand.

On top of this, the IPP ensures that you don’t have to distribute the inventory yourself. You just need to send your entire inventory to one ShipBob hub, where our team will then distribute it according to optimal recommendations.

“On top of cost savings and fast shipping, we’ve been able to take a more hands-off approach to fulfillment and inventory distribution. We don’t have to be super involved in the day-to-day details and coordination, which is very helpful for our team. IPP works overwhelmingly well. It’s efficient, seamless, and super automated. When you combine that with the fast, personal customer support ShipBob provides us with, it allows us to have full confidence that things are running well.”

Lizzie Vance, Sales Director at P.F. Candle Co. 

Distributed inventory for global and national shipping

ShipBob’s expansive global fulfillment network also ensures that you can distribute your inventory for efficient shipping. You can take advantage of key ShipBob locations to strategically store your inventory and ship out orders from the most convenient locations.

This means that orders will be shipped out from the fulfillment center closest ot the order’s end destination, allowing you to reduce transit time and shipping costs – even for international orders. This helps you achieve faster shipping while enjoying greater cost savings to boost your bottom line. You can even offer expedited shipping options like 2-Day Express Shipping to most customers, allowing you to enhance the customer experience.

“Right now we’re currently leveraging three of ShipBob’s fulfillment centers, including two in different regions of the US from our warehouse and one in the UK. Shipping to UK customers from a facility within the UK saves us $6 per shipment on average, which is huge! England is a big market for us, so those per-order cost-savings really add up, and our international customers are getting a much faster and less expensive delivery thanks to ShipBob’s global presence.

Distributing inventory across the world with ShipBob also drastically cut our transit times. When we were only shipping from our Miami, FL warehouse, it would take us 25 days to deliver an order to a customer in the EU, while using ShipBob’s UK fulfillment center, it takes only 3 days. That’s an 88% reduction in shipping time for those international customers!”

Rachel Tannenholz, President of Aroma360 

Real-time inventory management and tech integration

Sourcing products is only half the job done. Once you receive the products, it’s up to you to manage the inventory and ensure that you always have sufficient stock to meet customer demand. That’s where ShipBob’s real-time inventory management tools come into play, giving you visibility into your inventory movement and stock levels at all times.

The platform integrates with your ecommerce stores and marketplaces, automatically updating inventory data based on orders and returns. This gives you real-time inventory visibility to inform your decisions. You can see how much stock you have, which items are running out, and when to replenish your inventory. As such, you can maintain optimal stock availability and prevent issues with stockouts and overstocking.

This level of visibility is particularly important for high-demand products, as you’ll need to constantly replenish your stock to meet customer demand without risking warehouse congestion. It allows for timely and data-backed replenishments to optimize your strategy.

“ShipBob’s reporting is very robust and meets all of our needs. We get visibility into receiving, order volume, SKU availability – everything from inbounds and inventory transactions to individual order statuses (whether it’s on hold, in processing, an exception order, and other detailed descriptions).

All this data is real-time, meaning that we’re always seeing the most accurate, up-to-date information. Having this real-time data is crucial for my team, so the fact that there’s not hours of lag time waiting for data to update is huge.”

Ryan Steffenson, Senior Manager, Channel Operations at Tonies 

For more information on how ShipBob can streamline your inventory management, fulfillment, and shipping, click the button below to get in touch.

Product sourcing FAQs

Below are answers to the most common questions about product sourcing.

This article originally appeared on ShipBob and is available here for further discovery.