Once you have narrowed down on your niche, the next step would be finding the right products. Product sourcing is the process of finding and acquiring products to sell to customers for profit. Basically, there are 3 main product sourcing strategies:
1. Dropshipping
In dropshipping, you don’t hold inventory or handle shipping. Instead, you partner with a dropshipping supplier who takes care of storing and shipping products for you. You could easily connect with dropshipping suppliers through a platform like Modalyst or Zendrop.
Pros:
Requires minimal startup costs.
Eliminates the need for inventory management
Permits product range agility based on market trends and customer preferences
Allows testing of products without financial risk, ideal for market research
Cons:
Profit margins in dropshipping tend to be lower due to supplier fees
Low barrier to entry results in high competition among sellers
Limited control over product quality and shipping times
Branding can be challenging when selling generic products.
Wholesale product sourcing refers to purchasing goods in bulk quantities directly from a manufacturer, marketplace, or distributor. Alibaba, AliExpress, Etsy etc are popular wholesale marketplaces.
Pros:
Offers better profit margins, especially with bulk discounts
Provides more control over inventory and product selection
Some wholesalers offer private labeling, allowing for brand development
Selling established products can provide a sense of reliability
Cons:
Requires significant upfront investment in inventory
Necessitates storage space for products
Tougher inventory management at scale
Risk of being stuck with unsold inventor
3. Manufacturers
Create product designs and prototypes, and then evaluate manufacturers and order test batches before you select a supplier.
Pros:
Allows the creation of unique, custom products
Offers the highest profit potential when successful
Provides complete control over product design and quality
Helps in building a distinctive brand identity
Cons:
Involves the highest upfront costs and is time-consuming
Managing supplier relationships can be complex, especially with overseas manufacturers
Often requires high minimum order quantities
Typically involves longer lead times, affecting agility to market demands
Requires expertise in product development and manufacturing processes
How do you choose now?
Each strategy offers different levels of control, risk, and profit potential. The best choice depends on your experience, resources, and business goals. Here’s how we think you could be making a choice:
Dropshipping: Best for beginners or quick expansion with minimal risk
Wholesalers: Suitable for experienced sellers with some capital, seeking higher margins
Manufacturers: Ideal for experienced sellers with unique ideas, capital, and willingness to tackle complex challenges
