Deciding which products to sell is only half the battle. Finding the right suppliers and/or manufacturers can be just as if not more difficult. Even if you think you have identified the perfect product, there’s no guarantee you’ll find a supplier who can meet your budget, specifications and timeline.   

In this lesson you’ll learn:

  1. How traditional commerce (buying and selling) works
  2. How to source products directly from manufactures/producers

 

 

How traditional (old fashion) commerce works 

how supply chain works

 

  1. The manufacturer sells products to a distributor in large quantities. For example, a shoe manufacturer will make a 1,000 pairs of shoes and then sell them to a distributor for $10 each.
  2. The distributor (also known as a wholesaler) will break up the supply of shoes into smaller lots and sell them to individual retailers for a price higher than what was paid to the manufacturer. Example, the wholesaler will buy 1000 pairs of shoes for $20/pair and sell them in lots of 100 to different shoe stores for $30/pair.
  3. The shoe store will then sell individual pairs of shoes for $50 to customers like you and me.

How the new commerce supply chain works

While the manufacturing and distribution model is still practiced by many businesses, its impact on how retailers operate and how customers shop is rapidly evolving. Today, thanks to the internet and changes in manufacturing technologies, a shoe store can easily locate a shoe manufacturer and negotiate favorable terms in order to completely cut out the middleman.

How supply chain works in 21st century

While the need for distributors will always exist, their role has been significantly reduced and, as a result, they’re forced to offer more competitive pricing and work with smaller retailers. This of course benefits smaller businesses who may not be able to work directly with a manufacturer and need the services of a middleman who is willing to sell products to us in smaller quantities at a reasonable price.

 

Where to find manufacturers and distributors

Alibaba.com is the world’s largest B2B eCommerce website. If a product is made overseas, you’ll find its manufacturer on Alibaba.

Tips for buying products on Alibaba:

  • Alibaba is based in China, therefore, the consumer protection laws and regulations that apply in Europe and North America don’t apply to Alibaba.
  • Negotiate! Whatever price the supplier offers, cut it in half and use that as a basis to begin negotiations. For example, if the supplier tells you the unit price for a product is $20, then offer them $10 and meet somewhere in the middle.
  • Most suppliers on Alibaba are manufacturers and wholesalers, meaning you’ll need to buy products in bulk. But before you do that, make sure to order a few samples so that you can actually see what you’re buying and test the product’s quality.
  • Importing products from China means you may need to pay duty and other import taxes. Make sure to take all this into account when calculating the true cost of a product.
  • Good communication is key to ensuring both you and the supplier work well together.  Most manufacturers hire sales reps who will be your single point of contact, but remember that for most of these people, English is a second or third  language, so there may be a few communication gaps. Be sure to keep a history of all your conversations with your sales reps, and keep copies of all invoices and important emails.

Ebay and Amazon. An excellent source to find B2C suppliers. A lot of sellers on eBay are drop shippers, but you can still approach them about buying products wholesale.

Trade shows and magazines are filled with businesses who are looking for new distributors.

Thomasnet.com: A directory of over 100,000  American-based manufacturers.

Google.com: Obvious but often overlooked. Just search for “ [item] manufacturer”  or
“wholesalers”. Example: “ping pong ball manufacturers” 

What you need to source products

You don’t need a business, you don’t need credit and you don’t need a warehouse or an office to purchase products. All you need is a PayPal account. That’s it. If you’re willing to pay, suppliers are always willing to sell.  This is always the rule of commerce.

If you’re sourcing products through Alibaba (from China) then all the suppliers there have a PayPal account. They don’t care if you’re a big business with hundreds of employees or if you’re working out of your garage. As long as you’re willing to pay them, they’re happy to sell stuff to you. This applies across businesses both foreign and domestic.

Conclusion

The old fashion of way sourcing products is quickly being replaced by eliminating the middleman. thanks to sites like Alibaba.com, you can source just about ANYTHING directly from the original manufacturer. Don’t let lack of experience or anything else get in the way. In business, the only thing that matters is cash. If you have it, people (suppliers) want it.

 

 

Next: Ordering-from-alibaba