3 Main Product Sourcing Strategies for Retail Business

                                        

Whether you are starting a retail business or looking to add some new items to your shelves, product sourcing plays an important part in your supply chain. 
 
Before your product sourcing, you’d better choose a good method that works for you, evaluate different product sourcing strategies, and then select a supplier to work with. 
 
What is product sourcing?
 
Product sourcing is the act of finding the products you want to sell. Businesses can source products from dropshipping suppliers, wholesales, and manufacturers, and then resell them. 
 
Product sourcing strategies
 
The starting point of sourcing products is to decide which kind of supplier you want to partner with. Generally, there are three main product sourcing strategies. 

1. Dropshipping suppliers 
 
Dropshipping is a business model in which a retailer does not purchase the products from the supplier, but ships the products to the customers directly. 
 
The key strength of dropshipping is that retailers do not need to buy inventory upfront and the products are offered at a higher price. However, profit margins are relatively as retailers have to pay the dropshipping suppliers to produce, store, and ship products to their customers. 
 
If you are just starting your business or would like to expand an existing business quickly, finding dropshipping suppliers is a good option. This product sourcing strategy will allow you to elevate your business skills before risking capital buying upfront inventory. 


2. Wholesalers
 
Wholesalers are brands that sell goods in bulk to both online and offline retailers. The main objective of wholesalers is to sell the products to retailers in small batches with MOQs. 
 
The key strength of wholesale is that retailers will get a low cost per unit. As a result, the more the retailers invest upfront, the larger their profit margins will be. 
 
If you have rich experience running a business and have some capital to invest, consider finding wholesalers. You can enjoy higher profit margins and build a brand with personal labeling opportunities. 


3. Manufacturers
 
Manufacturing is the most challenging way to source products for a retail business. 
 
Generally, retailers will start with product designs. Then, they will evaluate manufacturers and order test batches before they select the suppliers. 
 
It is also a way to go if retailers have an original product idea and want to create unique things to stand out from competitors. 
 
If you are a start-up, pay attention to your budget. If you are an experienced retailer with unique product ideas and money to invest, consider sourcing products to sell from manufacturers.