Episode Transcript:
In this episode of The Business of eCommerce, I talk about how to source products. This is The Business of eCommerce, episode seven. Welcome to The Business of eCommerce, the podcast that helps eCommerce retailers start, launch and grow their eCommerce business. I’m your host, Charles Palleschi. I’m here to share some strategies to help you grow eCommerce business. So first, some housekeeping about this week. So just some updates on what’s been going on on a personal note, my wife actually just gave birth to our second child, a little girl so we’re very excited about that. Last week, I had produced the episode earlier so kind of getting back into it now and just very excited to be back. It’s great to spend some time family and now it’s great being back in the office. So just excited for that.
On a professional update, as you probably know, I’m the founder of Spark Shipping. We tried an update last week. What we’re trying to do is we’ve had a free trial, seven-day trial. We’ve always gone back and forth on is it something that made sense of our customers, for the business? This week, we made the decision to remove the free trial. We’re going to be trying that for a while, see how that goes. What we found there is that a lot of folks, they are most successful when we help them initially, when they talk to us, when we are in the process of onboarding them, that sort of thing. The issue with the free trial is when users are doing that, they tend to sign up, try to get it set up themselves, but if they run into any roadblocks, they may or may not reach out. If they don’t reach out and if we don’t talk to them, they tend to have some issues and usually just kind of cancel within the first seven days.
So we’ve originally started without the trial. We went through a trial. We switched back and forth over time. Right now, this week, we’re trying to do without the trial. Let’s see how that goes. We’ll provide a lot more personal onboarding so we’re excited to see that and try that. Also an update about the podcast, we are in the process right now of booking some guests. No formal announcements yet but we have several folks that we’re talking to about doing some shows in the upcoming weeks, different eCommerce experts that can share some of their experiences. Also, other eCommerce retailers, I think that would be super helpful to have some folks, just to hear from other retailers who have done similar things, have grown their business, scaled their business and kind of see what’s worked for them. I think it would be helpful for some retailers listening just to hear some other folks kind of in their circle. So super excited to get some guests on here and start talking to some subject matter experts.
So if you also have any recommendations, anyone you would like, any topics like that, feel free to reach out. I’m always very available. I’m just very open to hearing any feedback, anything like that. So definitely feel free to share that with me. So jumping right into this week’s topic. I’d like to talk about how to source products. So this is something that we get a lot when folks are just starting off. They may want to start an eCommerce business. They start looking at what products, what should they sell and how to actually get in touch with the right people to actually be able to provide those products and to sell those products in retail. So it’s something that at the beginning it’s very confusing and it’s not very obvious.
There’s a lot of companies out there who kind of show themselves as ways of getting products. Some of these companies you have to actually pay them a subscription to have access to their products. That is not something I’d really recommend. Maybe it’s okay to start but it’s just in the longterm, you want to work with proper manufacturers, distributors, that sort of thing. So how to do this? First step is you have to get started by picking a niche, find what you actually want to do, what kind of products you want to sell. What we hear a lot from folks just starting off is they just find a manufacturer. The manufacturer might have five different lines of products that could be outdoors products, makeup products, and shoes and they decide they’re going to have a store that sells outdoors products, makeup products and shoes.
The issue with that is it’s very hard then to find a manufacturer too because you’re not really in line with anything. So what we always recommend at the beginning is start off by picking a niche. Find something you want to go deep into. Some sort of product type, some sort of category, whatever it is, something that hopefully you have an interest in or find some sort of place online where it’s not being fulfilled. So you have a very specific product category. You know there’s not a lot of folks doing it online and you can provide some value there. So that’s kind of the number one. That’s the first thing you want to do is focusing on what sort of products you really want to be selling and providing.
Once you do that, you know, “Okay, I’m going to sell these types of products,” that’s when your research starts on. You have to start checking out other stores and see who actually manufactures those products. You can do that a number of different ways. The easiest is just start Googling products. You’ll start making a list of who are kind of the top in those product categories. You’ll start seeing other retailers sell them. You’ll start people on the marketplace as like an Amazon, eBay, they’ll be selling those products. So start to get an idea of which products are out there. Make a list, see which products you want to sell.
So I think we talked about this on episode five. You may not be able to get in right away with the vendors that you are looking for. It might start that you need a list of the top 20 products and those top one or two vendors might not be looking for new retailers. So episode five talks about how to stair step vendors, how to start with the most basic vendors, kind of move up the food chain in vendors. So that’s something you probably want to listen to first. But start off with a list of vendors. Get the top 10 products. See who makes them. See the manufacturer. What happens a lot, what you’ll find is one manufacturer has multiple brands they’re actually manufacturing under.
So it might be XYZ Company, no one knows the company’s actual name but they manufacture two or five or 10 different brands under that name. Sometimes their products are similar, same category. Other times, they’re just brands that have nothing to do with one another. But step one is tracking down which companies are actually manufacturing those brands. Once you get a list of the brands, the type of products, you start doing your research online. So now you’ll have a list of here are the companies who actually manufacture the brands for the type of products that you’re looking for in your store.
From there, you’re going to have to just start contacting each manufacturer one by one. Some might have some intro for new retailers, others, not so much. They might be pretty well hidden behind their kind of corporate sites. You might just have to go to the contact us page and start kind of your research from there. It’s not always a very clear cut process but this is something that it takes time and if you’re in retail, if you’re in eCommerce, this is the job. This is one of the things you’ll have to do is really do your research and find out who’s selling products, who can you get in with, because day one, there might be some top three vendors that don’t want to do business with you because you’re just starting and maybe they don’t want to spend their time with newer retailers. We see that a lot.
But you have to get in with some vendors in that product category. So find somebody who is willing to work with new eCommerce retailers and just contact them. How to contact them? Sometimes they’ll have a eCommerce for retailers, emails at newretailers@xyzvendors.com. Other times, it’s just a contact us page. If it’s kind of more broad and you’re just kind of filling in information like that, you don’t want to get started with letting them necessarily know you’re a new retailer. Just let them know you’re interested in carrying their products and what’s the process look like of becoming a retailer of their products.
If you start using words like you want to do drop shipping, you’re a new retailer, they might not take you so seriously. So just let them know you’re a retailer. You’re interested in carrying their products. Keep it short. Keep it to the point. Then typically, they’ll put you on contact with the right person there and start letting you know, “Here’s our process.” They might ask what other retailers that you’re working with. They might ask approximate monthly sales. Those are all normal questions. I always recommend you should be honest upfront because if you’re not, they will also find out in a month anyway when you’re not selling products when you first start carrying them. So just be upfront. Some vendors want to do business with new retailers, others don’t. So to start, you just need to find the ones that will work for you and that are a good fit.
From there, once you do add their products, start selling them, and you’ll be to, same thing we talked about in episode five, stair step up from the newer entry level vendors to more exclusive vendors that don’t necessarily take everyone on but you got to get started somewhere. So once you get in contact with them, they will send you a kind of new vendor, a new retail welcome packet. They’ll [inaudible 00:10:19] pricing at that point but you’ll need to kind of go through some paperwork before you have access to anything like that. So just know this is kind of a long process. It’s not something like day one, you’ll email them, you’ll get pricing, you’ll be signed up. This is a relationship so you’re going to need to work on building a relationship with each one of these vendors. You might have an account rep there, that sort of thing.
For kind of the more entry level vendors, sometimes they just provide a portal. It’s very hands-off. You don’t have really kind of that same one on one. But you get started somewhere so if that’s the case you’re able to get started, log on and start actually listing their products and showing those to your users. So that’s something when you’re looking for products, just kind of the basic groundwork, that’s something you’re going to have to do. I’d expect it is a process and it takes time. It’s not something that’s going to happen overnight. It’s not something that will just be a list and some automatic thing.
What we see a lot is new retailers are looking for a kind of a push button solution. They kind of want some sort of service to go on there, grab all the products, dump them onto the site and they just start selling them. Selling them on Amazon, that sort of thing. That’s actually something I will personally not recommend and there are folks that do sell … They do have services like that but there’s a downsize to that, right? If it’s easy for you then it’s going to be easy for every other retailer. If it’s easy for every retailer, the only thing you are going to be able to compete on is price. So those services that kind of offer a one stop shop of [inaudible 00:11:53] 500,000 products from all these different retailers, hit a button, dump them onto Amazon and pay us our monthly fee.
It sounds great in theory but realize that a lot of other retailers are going to do the exact same thing and if it’s that easy for you, they’re going to do it and it’s going to drive prices down. If you start actually doing your research for those products on Amazon, once you calculate in what you have to pay, what you pay for the products and then you’re going to have to pay Amazon a relatively steep fee, even credit card processing fees if you’re selling them on your own site, things like that. They’re going to eat into your profits so quick that the margins will be so razor thin. So this is something where you don’t want to rush it. You don’t want to go on and find something that grabs all the products and just spits them onto your site. You really want to take your time here.
Find actual proper either manufacturers or distributors and you’re going to really have to build relationships. So this isn’t something that happens overnight. There are services like that. I don’t completely recommend, they’re not the worst thing in the world but at the same thing, just understand, if you’re using a service and it takes you five minutes to get signed up with a service, pay them $100 and start listing products on every marketplace in the world, a lot of people are going to do the same thing. If everyone’s doing the same thing, there’s not too much value you can add there. That’s why, that’s kind of the lowest of the food chain. If you have to start off there, that’s what you do.
But from there, once you get started somewhere, you want to very quickly start moving up the food chain and getting with some more exclusive vendors. Because vendors that actually provide products that not every retailer can get their hands on and that you need to really show that you are in business, [inaudible 00:13:47] to get more exclusive and you’re not competing with just everyone out there. You start to get better pricing. You start to have an account rep at the manufacturer so if there’s an issue, if you have to handle returns, they usually provide a much better service than kind of the done for you vendor that is an eCommerce store in a box.
So just something to think about. If you need to start off there, they’re not worst thing in the world but just understand that you want to quickly kind of move up from there. So that’s just my two cents on that. So I hope that helps on sourcing products. If you have any questions, definitely reach out. I’m happy to answer them. There’s comments or leave a review on iTunes. That always helps us, that’s fantastic. Jump on our email list. We send out a notification every week when there’s a new podcast. You can reach me directly at charles@businessofeCommerce.fm or on Twitter @charlespl.
We’re looking forward in a few weeks to bring on some guests. If you have any idea on anything you’d like to hear, any specific topics, definitely let me know. We’re thinking both subject matter experts and then also other retailers, maybe a blend of both, seeing what you could learn and kind of general things to help the eCommerce store from specific experts but also other retailers and hear their experiences, how they started, how they’ve grown their business. I think that could also be very helpful, having some experiences like that. So any feedback, feel free to reach out. I’d love to hear from you. Until next week. I’m Charles with The Business of eCommerce. Talk to you soon.
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