Sourcing

Sourcing

As with any retail business, your e-commerce business requires a source for the products and services you offer. The ideal source for you depends on several factors such as warehousing assets, brands, manufacturers, etc.

Types of Sources

  • Personal Services. You provide professional services, such as consultation or writing. Obviously, your inventory is yourself, and limited to the number of hours you have available to provide.
  • Memberships. You may be offering services available only to members. Such memberships are generally unlimited in terms of inventory.
  • Homemade Products. While “homemade” may sound like it diminishes the quality and professional design of your own products, it is used to describe products of your own creation. Product availability depends on your ability to manufacture, inventory and ship your items.
  • Manufacturer. Manufacturers usually use distributors to inventory and sell their products to resellers, such as yourself. Most manufacturers – particularly large ones – are not interested in managing the relationships with hundreds and thousands of resellers; dealing with distributors is much easier. Small manufacturers may indeed sell directly to resellers, but few, if any, will ever consider offering dropshipping services.
  • Wholesale Distributor. For hard goods, distributors represent your most likely source for buying products wholesale to resell to your customers. More and more will offer “light bulk” purchases: small quantities of products for resell.
  • Dropshipping Distributor. More and more Wholesale Distributors are finding that to assist online resellers, providing dropshipping services is becoming a key value-added service. In true dropshipping, after you receive an online order, you place an order with the distributor; the distributor, in turn, fulfills the order and ships it to your customer usually with your company’s name on the label (called “blind dropshipping”).
  • Dropshipping Middleman. These companies are your last resort! There are many companies that promise to provide you with thousands of products, handling all the dropshipping, order tracking, etc. Some even will “give” you a Web site to use to promote the products in their catalog. The problem is that these companies are actually middlemen between you and the actual Dropshipping Distributor. The additional mark-up usually eliminates your own ability to earn a profit. You will also be competing with thousands of other retailers selling the same products at the same low margins. It is much, much better to find your own true Dropshipping Distributors.
  • Advertising & Affiliate Sales. If your site is a membership site (and some product sites), you can monetize your site by displaying advertising or offering product referrals to other sites. Google Adsense is one very common way of earning money by allowing Google to display related ads on the pages of your Web site. Every time someone clicks on an ad, you earn money. Likewise, signing up with an affiliate program, such as Commission Junction, gives you access to ads from top brands like Hotels.com, Priceline, and thousands more. By displaying these ads, you earn commissions on sales that result when your site visitors click these ads and subsequently make purchases. Of course, your success in generating income from these avenues depends on the amount and quality of the traffic you generate to your Web site.

Leave a Reply