Your success with any retail endeavor is dependent upon supplying customers with goods built from quality, desirable materials, and obtaining them from reliable suppliers at the best possible price. There are various routes available when sourcing your retail merchandise—you can work directly with a manufacturer, buy through a wholesaler, or build your product yourself.
Your choice of supplier and supplying method depends on how much you are willing to spend upfront and what exactly you intend to sell, and this could very well change over the course of your business’s lifespan.
Even if you are not building a new product from scratch, it could be most affordable to work directly with a manufacturer, as this is when the product is at its cheapest point. You also have greater control over product quality, price, and branding when working with a manufacturer, as they have the capability and willingness to make changes when desired. However, shaping your product with a manufacturer inevitably takes time and can be expensive, especially when it comes to personalizing the product with logos or specialized materials, and requesting and waiting to receive test orders.
Working with wholesalers offers a quicker and more reliable way to get started in sourcing your retail inventory, as they are typically selling products that have been well vetted by the market. Wholesalers have experience in fulfilling large orders on a timely basis with which a manufacturer may not be able to compete. There are additional benefits, such as saving on the upfront cost of storing your goods, as wholesalers can hold your product in their warehouses until orders need to be fulfilled. A helpful directory of Asian wholesalers sorted by product type is available on the Global Sources website.
However, when wholesalers get ahold of a product from a manufacturer, they mark up the price. A product can end up being in the hands of multiple wholesalers, and the price inevitably increases with every transfer of ownership. Beware of wholesalers that may not be honest about the totality of how it’s product has changed hands, and some may operate under the pretense that products have come straight from a manufacturer.
If you choose wholesalers to source your products, you will typically need to sell much more before making a profit. You will also deal with much more competition as you sell products that can be bought elsewhere, as major brands will attract more attention than you merely because of their namesake and reputation for reliability.
Once you have started making sales, take a look at what you have already done to guide future sourcing decisions. Depending upon the scope and scale of your organization, there are a copious amount of data that can be gathered between departments, from those in customer service to those in marketing. How big is your audience? What brands do customers ask for, and to what price point are they responding? What else could they be buying from you? Consider the answers to these questions as you plan expenses.
If you have an online store, utilize one of the many available tools for web analytics to figure out what customers are browsing, and what they aren’t. Google Analytics is a free tool to start identifying the underlying patterns in your sales and web traffic, and no prior experience is needed to set it up.
Consult your metrics before you make significant changes to your production plans or individual products—are you heading in the right direction based on customer demand? It is especially crucial for burgeoning startups to pay attention to metrics as they keep track of their goals and make pivotal decisions in their business model. Perhaps all signs indicate that you can start offering more products to your customers, or that more unique, personalized goods are desired.
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