Product Sourcing in 2023: Where Do Businesses Buy Products?
Where Do Businesses Buy Their Products?

In the days of widespread internet access and a thriving e-commerce industry, retailers have more options than ever when it comes to finding stock to sell in their shops. Traditional methods of finding suppliers and setting up a supply chain are still very much a viable option, but there are other methods available now as well, some of which are better suited to e-commerce retailers or small businesses. So what are these options? Where do businesses buy their products?

Five Sources That Businesses Buy Their Products From

There are two sources of merchandise that people are most familiar with: manufacturers and wholesalers. Many companies either buy their stock directly from a manufacturer or go through a wholesaler instead. But these aren’t the only options available. Other sources include companies like dropshippers, importers, and independent suppliers.

Manufacturers

Getting products directly from the manufacturer has its advantages. A shorter supply chain means fewer opportunities for something to go wrong, fewer overhead costs, and fewer markups on the price of the product. Buying directly from the manufacturer can often yield the lowest prices, but not always. Manufacturers will typically give bulk discounts, but the minimum order size for those discounts may be too high for some retailers, especially for smaller businesses. If a company isn’t able to make bulk purchases, ordering directly from a manufacturer may not provide the best value.

There are other reasons to get products directly from a manufacturer, however. Aside from buying a company’s ready-made products, retailers can also order custom products made to their specifications. These private label goods allow retailers a great deal of control over features, quality, and price, and provide the opportunity to sell something unique and stand out from the competition.

Sourcing products straight from manufacturers has its own risks and downsides as well. For example, manufacturers often offer just one type of product or a set of related products. If your shop sells a variety of products, you may need to locate and negotiate with many different suppliers, all with different terms, order minimums, and lead times, in order to obtain the stock you need.

Lead times are another potential challenge. Working with a manufacturer, especially if they’re making a customer product for your business, can mean a gap of months between placing an order and receiving the product, as the manufacturer may only produce the product after an order has been placed for it rather than keeping stock on hand and ready to ship. This makes it more challenging to keep your stock levels optimal and avoid running out of a product before a restock arrives.

In addition, a manufacturer may require its customers to have a proven sales record and established reputation before it agrees to do business, which can be challenging for new or small businesses. The company may also require customers to go through an intermediary rather than selling directly to retailers.

Wholesalers

While wholesalers will add a level of markup to product prices, this is at least partially offset by the prices that wholesalers can get from manufacturers. Since wholesalers operate in bulk quantities, they can make much larger orders than a typical retailer and therefore obtain better prices from the manufacturer.

Wholesalers also provide the benefit of a wider variety of goods than manufacturers will generally offer, so retailers don’t need to transact with as many different companies in order to stock their stores. This means lower shipping costs when many different products can be packaged together and delivered in one shipment rather than several, and it may also mean faster shipping times if you’re ordering from a wholesaler with a warehouse near you, rather than a manufacturer that may only have one location. The fact that wholesalers will have stock on hand also improves turnaround times.

Dropshippers

Dropshippers are a type of supplier that will fulfill orders on behalf of retailers. The retailer maintains a digital storefront but never has to store inventory or ship it to customers. This also means that the retailer doesn’t need to wait for the merchandise to arrive at their location or pay to ship it there.

Profit margins are smaller when buying from dropshippers rather than wholesalers, but the retailer also saves money by not needing to handle and store the products, reducing overhead. With a substantial increase in e-commerce during the pandemic, dropshipping has become a more popular choice for online retailers. It makes it easier for small businesses to operate, with some people choosing to run their retail company from their own home without the need for a storefront or storage facility. It’s also advantageous for selling large goods such as furniture that are expensive to store and ship.

Dropshipping is not without drawbacks of its own, however. Since the retailer is outsourcing fulfillment to another company, they have less visibility into or control over that aspect of their business. This can make it more difficult to help customers with shipping issues or to improve the shipping process. It also means that unless you request a sample of the products you’re selling, you won’t actually see them in person, which makes it harder to determine quality. The nature of dropshipping means that it doesn’t work well for brick-and-mortar stores.

Importers

Importers are similar to wholesalers, buying goods from one country and selling them in another. Buying from an importer can provide access to a wider variety of goods that may not be available in your country and could be more difficult or expensive to purchase directly from an international manufacturer.

In terms of drawbacks, ordering from an importer can involve long lead times, which are harder to plan around. While some importers will have goods stored in your country, often you’ll have to wait for your order to be shipped from overseas, which could end up taking several months. You may also need to place large orders to make the shipping and handling costs worthwhile.

Independent Suppliers

Independent suppliers, such as artisans who make crafts by hand, are another potential source of products for retailers. These goods appeal to consumers looking for something unique or wanting to support local small businesses. However, the nature of their work and size of their business often means that independent suppliers operate on a small scale, which can lead to long turnaround times and limited order quantities, as well as higher prices.

Overseas or Domestic?

Before getting too far into your supplier search, you need to decide whether you want to source your products from within your own country or internationally (or both). Each option has its advantages and disadvantages.

Domestic Suppliers

Domestic suppliers can be easier to work with in a few different ways. Their location means shipping product from them to you will likely be much faster and less expensive, and you probably won’t have to worry about a language barrier. If you have to deal with different time zones, it will be a difference of only a few hours, which isn’t very hard to work around. Domestically made products are also a selling point for consumers: many people prefer to buy locally made goods when possible.

There are of course downsides as well. Domestically sourced products tend to be considerably more expensive to produce. There is also typically less variety in available products in one country compared to what’s available in the rest of the world.

Overseas Suppliers

Ordering from overseas suppliers therefore provides lower costs and a wider variety of merchandise, but comes with challenges that ordering domestically does not. The time, language, and cultural differences can make it difficult to connect and negotiate with suppliers, and it’s harder to visit a manufacturing site in person. Goods will take longer to arrive from an international location, and will be subject to duties and taxes. They also face greater risk of damage or loss.

While some overseas manufacturers absolutely produce high-quality products, not all do, and general consumer perception is that those products are lower quality. Electing to work with overseas suppliers therefore can come with the impression of your product being inferior regardless of the reality.

There are ways to mitigate some of the challenges and risks of working with overseas suppliers, however. For example, by hiring a manufacturing manager who is located near your suppliers, you’ll have someone who understands the language and culture and who can negotiate, place orders, and inspect products on your behalf, making the whole process smoother.

Where Do Businesses Find Suppliers?

Once you’ve figured out what type of supplier you want to buy your product from, you still need to find and connect with companies that can provide the items you’re looking for. The internet is always a helpful place to start, for both general research and for specific platforms and sites that collect lists of suppliers, facilitate business connections, or sell products directly. But there are a number of other ways to connect with suppliers as well.

Internet Searches

The most straightforward way to get started is to run some searches on the type of supplier you’re looking for. This won’t give you a curated list, and you’ll probably need to sift through ads and look past the first couple pages of search results to find a good number of options, but it gives you a starting point.

Try expanding your search beyond just Google. Other search engines such as Bing, Yahoo, and DuckDuckGo may find you smaller manufacturers that have a hard time ranking with Google but are relevant to your needs. If you’re looking for overseas partners, consider trying the search engines that are popular in the region where you’re hoping to find a supplier, such as Baidu in China.

Online Marketplaces

There are a number of online marketplaces where you can find and order from manufacturers, wholesalers, and other suppliers from around the world. It’s always possible to run into scams, low quality merchandise, bad deals, or other issues on any given platform, but the risk is higher if you’re buying in bulk, so try to verify any supplier you plan to do business with.

Some platforms, like Alibaba, have designations they’ll give to businesses that have been verified as legitimate or at least paid to become a member, so aim for companies that have some kind of external verification. Once you’ve found a company that looks like a good fit for your needs, you can also search outside the marketplace to find reviews, testimonials, social media posts, or other sources of information on the quality of goods and services that the company provides.

Examples of manufacturer and wholesaler marketplaces:

  • Alibaba
  • AliExpress
  • Doba
  • Faire
  • Global Sources
  • IndiaMART
  • Super Delivery
  • Tundra

Supplier Directories

There are many different supplier directories available online featuring businesses from around the world, including manufacturers, wholesalers, dropshippers, and more. Finding one that specializes in the type of supplier you want to work with can help you target your search more effectively.

Some popular directories include:

  • Kompass
  • Made-in-China.com
  • Maker’s Row
  • SaleHoo
  • Sourcify
  • ThomasNet
  • Wholesale Central
  • Wholesale Network
  • Worldwide Brands

Trade Shows

The internet is far from the only way to connect with suppliers. Local and international trade shows provide you an opportunity to see products in person and talk with company representatives about any questions or needs you might have. Trade shows bring together a large number of suppliers that operate within a particular industry, giving you a chance to browse many different options to see what best suits your business.

Where Else Do Businesses Buy Their Products?

We’ve seen a few of the main options, but there are many other ways to source products for your business. Online auction sites such as eBay can be a source of wholesale lots, for example, and artisanal marketplaces like Etsy are also home to businesses willing to sell in bulk. Even crowdfunding sites can be a source of unique goods from small businesses, though be aware that crowdfunding always carries a risk of delays, projects that fail to fund, and companies that fail to deliver for one reason or another.

Keep an eye out for industry associations and trade publications — these B2B organizations will also help you find suppliers in your industry. Networking is a valuable tool as well, as you may find you know someone who has a line on just the type of product you’re looking for, or at least knows how you can find it.

If all of that still feels a bit overwhelming, BizVibe can help you condense the supplier selection process into one simple platform. Search for suppliers across industries and from around the world, make connections, request proposals, and more, all on BizVibe.

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