Inventory sourcing can be challenging for small businesses. It requires plenty of time and patience. Small business owners must persevere though to achieve success.
Fortunately, there are a variety of ways to source inventory, and not all of them require a big investment.
What is product inventory sourcing?
Product inventory sourcing may sound like a complex term, but it merely refers to the process businesses use to get the inventory they need. The process can include price checking, quality comparison, fulfillment, and more. As you source inventory, look for value and service, not just the cheapest price. Afterall, the partner you select will be responsible for getting you the inventory you need when you need it.
Types of product sourcing
There are several types of product sourcing method options, here are just a few.
- Dropshipping: Dropshipping is an inventory sourcing method used by many ecommerce businesses. It allows businesses to provide inventory to their customers without needing to store it or pay for it upfront. The business simply advertises certain merchandise for sale on their website without stocking it. Once it’s ordered, they alert the wholesaler or manufacturer that is selling the stock. The supplier sends it directly to the customer and the retailer makes a profit.
- Wholesalers: Wholesalers sell products in bulk at discount rates. Retailers buy in bulk from wholesalers and then sell products individually with a mark-up to earn a profit. Retailers will typically work with various wholesalers to access a wide range of products and ensure they always have inventory on hand.
- Manufacturers: Manufacturers are similar to wholesalers in that they sell items in bulk allowing retailers to mark them up and make a profit. However, manufacturers offer an advantage over wholesalers in that they give retailers the option to customize the items they want. The retailer can make special requests to manufacturers including improving the design, adding features, or showcasing the brand. It comes at an added expense, but it may be worth it to get the specialized products that set your brand apart.
- DIY Products: Many businesses sell artisan products that can be purchased directly from the creator. This creates a smaller supply chain that gives companies more control over the purchasing process. It also means your inventory will be more unique.
- Clearance Sales: You may come across a company that is selling items at low prices to get rid of their stock for next season. You may be able to buy these products and sell them at your store for full price to make a profit. If you go this route, make sure the items you are buying are not being discounted because they are not selling well. And if they are seasonal, see to it that they will still be in demand the following year.
How small businesses benefit from product sourcing
Small businesses require inventory to keep their companies afloat. Product sourcing ensures they will always have products to sell so they can generate revenue. But, it’s not all about the money. Stocking quality inventory and being able to fulfill orders will improve customer satisfaction too. Product sourcing gives business owners control over what their company is delivering.
Product sourcing tips for small business
If you’re just starting out, it may be difficult to determine which manufacturers and wholesalers you should be partnering with. It may also be easy to fall prey to cheap prices, only to be disappointed by quality, fulfillment, and other important variables. Here are some tips that will help you make the right decisions when product sourcing.
- Do your research: It’s important to do some research before choosing suppliers. The first step involves looking at the products the suppliers are offering. Are the products high quality? Do they sell well? Customer reviews and social media will provide valuable insight on these matters. You should also look at other companies that are selling the products you are considering stocking. Are they offering discounts on them? This could be a sign that the products are not moving. You must also consider your target audience? Do you feel the products the supplier is selling are suited to your target audience? These factors will help you figure out the demand for the product so you can decide whether they are worth investing in.
- Perform outreach to suppliers: Next, you will want to contact the supplier directly to learn more about their company. Here are some questions to consider asking them:
- How fast can you ship out products?
- Will I be assigned a private rep for my account?
- What is your return policy like?
- Can I sell back items if they don’t sell?
- Which products sell the best?
The answers they provide will be a good indication of whether they are a company you would like to work with.
- Test your supplier: It’s advisable to ask for a sample product from the supplier. This will give you an idea of what it’s like working with them before you spend a lot of money buying in bulk. Your test should consider two factors: the quality of both the product and service. The product should be durable and well-designed. It should also be an item you think your customer will like. When considering the service, think about things like punctuality in delivery, communication, courtesy, and price point. If you were happy with the product and service, this may be the green light to move forward.
- Shop around: Shopping around will provide different benefits. For one, it will allow you to determine which supplier is best suited for your business needs. You can count on this company to be your main supplier. You will also find other suppliers which will give you a larger pool to work with. It’s important for companies to have various suppliers in their network so they can access different inventory. It also means they have other suppliers to rely on if their main supplier runs out of stock.
- Trial run orders: Ordering a sample will give you some idea of the service you can expect. But a trial run is an even better indication. Find out if the company is willing to provide you with a limited number of the items you want to sell. You may have to pay a higher rate since you are purchasing small quantities, but it will be better than having to spend a lot of money on a product or service you are not happy with.
How partnering with Kickfurther can help
Once you’ve found the suppliers you want to work with, start ramping up sales. With the right partners and efforts, your business will hopefully attract more business than you can keep up with. If you find yourself struggling with cash flow, consider inventory funding.
Kickfurther is the world’s first online inventory funding platform that enables small businesses to access funds that they are unable to acquire through traditional sources. For companies that sell physical products or non-perishable consumables and have revenue between $150k to $15mm over the last 12 months, Kickfurther can help. We connect brands to a community of backers who help fund inventory on consignment and give brands flexibility to pay that back as they receive cash from sales.
Kickfurther can help startups and small businesses fund millions of dollars of inventory at costs up to 30% lower cost than the competition. With more than $100 million in inventory funded to date, Kickfurther can help you get funded within a day or even minutes to hours.
Product souring is a must if you’re a product-based business. Maintaining as much control over quality of products and services is critical for success and customer service. As your business grows, you may need to rely on investors and other sources to help grow your business. For affordable inventory funding that allows you to maintain full ownership of your business, turn to Kickfurther.
Interested in getting funded at Kickfurther? Here are 3 easy steps to get started:
#1. Create a free business account
#2. Complete the online application
#3. Review a potential deal with one of our account reps & get funded in minutes