You’ve finally found it — the perfect ecommerce product to have all your shoppers’ pulling their credit cards out. But before you buy out the suppliers’ warehouse and start planning your next vacation, you have to ask yourself… is the product really as good as you think?
In our guide on product sourcing best practices for the eight most common ecommerce business models, we went into detail on how to find products for each method, but we only touched upon what you do when you actually find a product you like. So, to close out our series, this article covers how to make sure you’re acquiring your next best-seller — not an expensive dust collector for your warehouse.
Below is our checklist of five points to consider before adding a new product to your inventory, the ultimate finale for product sourcing. After that, we outline some final advice that applies to all product sourcing, regardless of the method.
Product Sourcing Checklist: 5 Questions for New Products
Anyone that’s ever bought jewelry from a street cart knows not all that glitters is gold. Before you add a new product to your inventory, ask yourself these five questions:
1. Is there demand?
First and foremost, does anyone actually want the product? This question largely depends on how well you know your market — even if products are veritably in demand, are they in demand for your type of customer? Rather than guessing, look to your sales analytics to find this answer.
If it’s still unclear, you can try testing the water by selling a few sample products before ordering them in bulk. You can even gauge interest by asking your customers in a survey, newsletter, or on social media.
2. Is it profitable?
Based on the best deal you can get from the supplier, how much product would you have to sell to make enough profit? Would your customers be willing to pay that price? Be as meticulous as you can, factoring in shipping costs and state sales tax. Don’t forget to check your competition (see tip #4) to see if your price is competitive. You may need to break out the calculator for this one. Here are a few pricing strategies that may work for you.
3. Is the supplier reliable?
The relationship between seller and supplier varies depending on the business model. Dropshippers must work hand-and-hand with suppliers throughout the sales process, while liquidation buyers only meet theirs once. But no matter what, you want to make sure the supplier is reputable and reliable before signing any checks. If you’re suspicious, look up their past clients or check for any egregious complaints online.
4. Is there competition?
It’s not enough to sell a product that everyone wants if they can find it elsewhere and for a better deal. Always evaluate the landscape before venturing into a new area — do your own product searches, as a customer would, to see what you find.
Although your competitors’ prices are extremely important, don’t forget to check bonuses, policies, and extra features too. Do they offer free shipping? Do they sell the product in a different color than you? The more you know about the market you’re entering, the better you can carve out a place for yourself.
5. Why should shoppers buy from you instead of the competition?
Last, what makes you better than the competitors selling the same product? Often, undercutting their price is enough, especially on Amazon where prices are listed one after another. But in a neck-and-neck feud, you can also improve your policies, i.e., offer free shipping or free returns. If you can’t think of a compelling reason consumers should buy from you, they won’t either.
Product Sourcing Advice that’s Always Applicable
Don’t Be Rash
Being quick on the draw is sometimes necessary in product sourcing, especially if you’re claiming a limited supply of products. But unless you act responsibly, you’re going to wind up with a warehouse full of expired, defective, or otherwise undesirable merchandise. Try to evaluate each step of the process and if something seems fishy, trust your instincts.
Have a Plan B
Don’t put all your eggs in one basket, as they say. Often merchants tie their success to one product source, and when that source dries up, they’re stranded. The good news is that you don’t have to stick with only one method of product sourcing, so if there’s a problem with one supplier you’re not caught off guard.
Stay Ahead of the Curve
Ecommerce follows trends, so if you can predict the next trend, you have a head-start over your competitors. Stay close with your community, typically on social media, to see what products they’re interested in and how their tastes change. It’s not always about actual products, but also product features. You can also keep an eye on forward-thinking competitors to make sure they don’t get a leg up on you.
Effective ecommerce isn’t just about offering the best products and having a snazzy website. Product sourcing plays an enormous role — the better deal you get on your inventory, the more favorable your markup. So, successfully running an online store starts with successfully sourcing your products. Once you have your product supply chain in place, our inventory management software can help with all the rest.