A wholesale business model is based on purchasing new products at a cheap price that people need, use, or want, and reselling these items for more than cost. Your profit is the difference between the price you paid and the price you sold for.
The mantra is simple and dummy-proof - buy low, sell high.
The purpose of sourcing is to find products at wholesale price that you can resell at retail price.
Whether you have an eCommerce site or a physical retail business, you need a steady, reliable source of inventory. Otherwise, you're going to end up disappointing your customers through lack of product variety, back orders, and more.
Here are some avenues to source products for your business:
1. Trade shows
There are trade shows for a variety of different industries, including textiles, apparel, home furnishing, electronics, beauty, health and nutrition, outdoor sports, so on and so forth.
Not only are they good opportunities for networking with potential suppliers, they're also a place to spot upcoming trends. For instance, the China Sourcing Fair is organized by product type and attracts thousands of exhibitors and participants every year.
Attending a trade show gives you precious face-to-face time with your future suppliers, giving you the chance to show that you mean business. Show that you’re not just any consumer, but someone who knows the ins and outs of the business. Take the time to establish relationships and even negotiate terms.
Vendors would also expect you to be well versed in the wholesale environment (Ain’t nobody has time to waste!). Understandably, suppliers are unwilling to spend much time with newbies or customers who don’t know the ins and outs of the industry.
In addition, you get to compare prices and quality of products showcased and demonstrated by different suppliers at a one convenient venue.
2. Trade magazines
Trade magazines can be an inexpensive way to scour for companies that might offer the products you’re looking for. Shortlist a few suppliers that you’d like to correspond with, and find out whether they’ll be participating at any upcoming trade shows you can attend.
3. Trade organizations
Trade organizations or industry associations related to the products you’re interested in are another potential source of valuable contacts. These organizations usually aim to match up buyers and sellers with their extensive network and access to manufacturers from other countries.
4. Online databases
If it’s not convenient for you to attend a trade show, start doing your research online. There are many companies online now and many have uploaded their catalogs online. Of course, this does not replace seeing the actual items in front of you, but it’s a close second. If you find the products you’re looking for, order a sample to review.
You can use general search engines like Google, or you can use wholesale-specific search engines such as Alibaba and Global Sources. These places will allow you to find suppliers and products from all over the world. Simply type in your product and country of origin and you will be shocked at the sheer amount of overseas suppliers.
5. Local sourcing
You can also look at companies that are regional. For example, retail stores that are very successful in one geographic area and not selling anywhere else. Start by contracting someone at the company or store and asking them whether they might want to sell their products in your hometown.
If something is successful in one area, you’ll find that often times the company will want to expand but just don’t have the resources to do it.
In B2B situations, you’ll likely want to deal with at least two suppliers, possibly three. It’s a good idea to have backup suppliers in case something ever falls through with one of your regulars.
Alternatively, it might not be necessary for you to source for products yourself – you can contract a full-service company that could source for you. Additionally, these full-service companies will help you negotiate minimum quantities, terms of payment, and make sure that the product received is exactly what was ordered.
Most of the time however, you wouldn’t want to send someone else to do it. You’d want to personally ensure that the quality is up to standard, and that you've chosen the very best that the market has to offer.