Top 4 Tips for Choosing a Product Sourcing Company

Posted on Jul 15, 2016 | 0 comments | Connect with Nancy Smith on Google

Top 4 Tips for Choosing a Product Sourcing Company

Are you in the planning stage for your retail business? Whether you plan to set up a brick-and-mortar shop or simply run an online retail site, you’re going to have to get your products from somewhere. You could set up your own factory where your company can manufacture its own products, but that would entail a considerable amount of time, effort, and money. After all, you’ll basically be setting up two major operations—a manufacturing plant and a retail shop.

Perhaps you’d like to try the business solution that many modern businesses have come to appreciate and are now using to smoothen their operations and maximize their profits. We are talking about products sourcing. Simply put, this is the process of getting your products wholesale from someone else. Of course, you will have to make sure the products you get are of excellent quality and that you get them at a good price so you can earn good profit.

The key to successfully sourcing products is finding the right product suppliers and in most cases, the key to finding the right suppliers lies in hiring a reliable product sourcing company. They are the ones who can get you in touch with suppliers who can best serve your preferences and needs. Here are a few tips on how to make sure you have the right partner in product sourcing:

1. Don’t buy into long lists.

Product sourcing has become such a popular business solution that many people have taken advantage, and not always in a good way. The number of companies offering sourcing assistance, for example, has grown so much that it can be a bit overwhelming for you to choose just one. One of the best ways to cull the ones who are just out to rip you off from those that are legitimate sourcing agents is to observe their approach.

Do they send you persuasive sales pitches, together with a long list of potential suppliers, trying to convince you to work with them? Do they send you an email with nothing but a short introduction and then a long list of suppliers in PDF format? Do they talk about a 24/7 member’s forum and any other perks that seem too good to be true? If you answered YES to any of these questions as regards a particular sourcing company, it would be best to scratch that company off your list of prospective sourcing partners.

What you need to look for is a company that gives you a concise explanation of who they are and what they do and then offers quick background info on the various sourcing options they are currently working on. If a company places too much emphasis on drop shipping (as many sourcing companies currently do), stay away from that outfit. Drop shipping may be a good option for some, but it isn’t ideal for everyone and you can’t be sure it is ideal for you. You need to study your options to begin with, rather than focusing on a single sourcing method.

Try to stay away from sourcing companies that focus too much on drop shipping.

Try to stay away from sourcing companies that focus too much on drop shipping.

And here’s the most important thing to remember when weighing whether to further consider a sourcing agent or scratch it off your list: If their offer seems too good to be true, it most probably is.

2. Look for a sourcing agent that helps you save time.

Regardless of what kind of business you’re running or what industry you belong to, time will always be one of your most precious commodities. Therefore, you should always do your best to find business solutions that not only help you save money and maximize profit, but also help you save a considerable amount of time. After all, time saved also translates into money saved in the long run.

When you choose a product sourcing company, therefore, it is a good idea to go with one that provides you with an easy way to check for product availability from several suppliers within seconds or a few minutes. You shouldn’t have to go through the hassle of contacting the agent to ask about the availability of a particular product only to be given a list of companies who might have the product, in which case you’ll have to contact each company to ask about product availability and pricing.

Instead of wasting your time that way, go with a sourcing agent who provides you with a tool that makes inventory checking fast and easy. At the very least, the agent should be the one to check for product availability on your behalf and simply inform you as to which suppliers have the product and which one has the best price and payment terms. That is, after all, one of the things you’re paying them for.

3. Choose an experienced company.

As mentioned earlier, the popularity of product sourcing—both within local and international markets—have led to the proliferation of sourcing companies. Many of these companies are actually fly-by-night operations. If you are serious about establishing a successful retail business, then you’d do well to steer clear of such organizations.

What you need to do instead is look for a sourcing agent who has been in the industry for a good number of years. If they have been in the sourcing industry since its early days, then they just might be the ideal sourcing partner for you. They’ve seen how the industry grew and were there to experience its growing pains. They have withstood the test of time and are in the best position to have learned the ins and outs of the industry.

As a general rule, it is best to go with a company that has been around for at least five years, especially if you plan to source your products from a country that has a completely different language and culture from yours. Their years of experience would mean they are already familiar with the language, culture, and laws of the country from which you plan to source your products. You are therefore assured that your transactions with foreign suppliers will all go smoothly.

Note that when we say you need to choose an experienced sourcing partner, we aren’t just talking about the length of time they’ve been in business. Although longevity is indeed a good indication of reliability, that’s not all you should be looking for. You also need to check what kind of experience they have. It would be best if they’ve worked with businesses similar to yours before, as that would mean they have a fairly good idea of what you need and how your needs can best be met.

4. Find a company that offers a variety of options.

Even if you’re a relative newbie in the retail and sourcing industries, you probably have a good idea as regards the concepts of wholesale and drop shipping. If you don’t, then here’s a quick explanation for you: Wholesale sourcing simply means buying products in large quantities and then selling them individually. Drop shipping is a sourcing model where people order from you, you order from the supplier, and the supplier sends the goods directly to the person who ordered from you.

The reason why many sourcing agents focus on these two models is that they are the most popular and perhaps the most convenient. Drop shipping, for example, is highly convenient, since you only place an order when a customer asks for a particular item and you won’t even have to concern yourself with shipping, since the supplier is in charge of that. But if you expect to make a huge margin with this sourcing model, think again. It may not really be worth your time.

There are several other sourcing options, and a good sourcing agent should be able to present these options to you as well. They should guide you in choosing the sourcing model that is best suited to your preferences and needs instead of insisting on the model they’re using with their other clients. You could, for example, import your products from China-based manufacturers. There are many good manufacturers in China that actually offer high-quality products, and there are also a good number of reliable sourcing agents who work with these suppliers.

Regardless of what sourcing model you choose in the end, what’s important is for you to hire a sourcing company that offers a variety of options. Always remember that what works for others may not necessarily work for you, so don’t allow anyone to limit your options.

Take your time in screening prospective sourcing partners.

Remember that the time and effort you spend in finding a reliable sourcing agent is well worth the benefits you get in the end.

Do some online research, ask your family, friends, and colleagues for recommendations, check out this company or talk to people with background in the sourcing industry.

The planning and preparation stage of operating a business is perhaps the most crucial stage because it lays the foundation of your business operations. Getting the right people to work for you and with your outfit is very important, as it could spell the difference between a wasted opportunity and resounding success.

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