In this post, David Teasdale, General Manager of Dishwashers Direct, discusses a few tips to help businesses with sourcing products. When setting up a business there are many factors to consider, such as the seller, location, timing, budget and more.
My first piece of advice is to never stop sourcing. It might feel great to fulfil orders and be busy, but you mustn’t stop actively searching for the best products. Your competitors will notice, and more often than not, try to emulate any success. Be aware that they will source the same products any way they can, including buying from you and looking for the manufacturer’s mark.
The industry is competitive and fast moving, so you should always look for new suppliers and products, successful businesses don’t stand still.
Next tip is to do your research. Look at the marketplace, what you can realistically buy in bulk, and what is on offer. Always think of your customers, as a seemingly great product at a great price might be difficult to shift, and not the right fit for your buyers. Alternatively, other businesses may have a better source, or be working to lower profit margins. Research it.
Don’t forget to source correctly. Where are your competitors looking? Don’t just look at the products they sell. Try and find where are they sourcing from? Are they putting multiple products (or parts) together, or adding value another way?
From experience, some brands would rather work with fewer sellers. That’s good because they’re working with sellers who will try to stick to their prices. When you buy stock, in theory, you can do whatever you want with that stock. I would always think about long-term opportunities and keep the brand sweet. Let’s say your struggling for sales, and you panic and drop the price to break a bit of the market, there’s little chance that you’ll get repeat business from the brand.
Everyone wants to sell branded products, but the most popular brands are highly competitive and often tightly controlled by the manufacturer. Also, margins may be much slimmer than you expect.
But, keep in mind the lesser known brands, as they are often keen to find reliable retailers. They probably won’t appreciate it if you just want to sell their products as cheaply as possible, but that’s not the only way to sell successfully. If your store complements their brand, and you show enthusiasm towards their brand, there could be a great deal to be done.
Get visibility, whether that’s through an effective website, or attending a trade show. The offline world still matters. The internet is now superb for selling, as consumers are now happy to buy without touching the product, but the human touch can still be important when dealing with manufacturers. Many suppliers bring their products, and their people, to the many trade shows that take place across the world every year.
The concept of economies of scale is taught early in many business courses. Simply put, dealing with larger quantities should reduce costs, because fixed expenses such as warehousing and staffing are spread out more thinly. For manufacturers and suppliers, it is usually cheaper for them to sell large quantities than small quantities – and they will often pass some of that saving on.
Sourcing products is one of the most important aspects of a business. You need to view it as building long-term mutually beneficial relationships. Don’t try to become your supplier’s biggest customer, but focus on becoming their favourite customer.
Make sure your supplier knows their stuff. Ask them some in-depth questions about the different product lines, about the end users, about the manufacturers. If they can’t talk for hours and hours about their products, or don’t demonstrate real passion, you may want to go elsewhere. It shows a level of expertise and means they know their niche well. In turn, when selling, having a really knowledgeable employee is a great way to add value to your products.
Don’t put all your eggs in one basket and make sure you have a backup plan. Always keep in mind that a supplier could quite easily go out of business. It does happen, and more often it can have a knock-on effect. Make sure you have a plan B and a plan C. Even if it’s just identifying an alternative supplier, and letting them know you exist. This can provide some level of security if the worst was to happen to an existing supplier.