Having a fresh and appealing product selection is one of the pillars of retail success. You can’t attract customers with dated or uninspired merchandise, so it’s important to constantly stay abreast of the latest product trends and be on the lookout for merchandise or suppliers that can help you keep up.
But how exactly should you source your products?
Well, that’s what we’ll tackle in this post. Below, we’ve outlined the different product sourcing methods in retail, along with key tips and resources to help you find the right manufacturers, suppliers, or materials for your inventory.
Let’s dive in.
How do you decide what products to sell?
Before we talk about product sourcing, let’s first discuss how to figure out what to sell. Suppliers or manufacturers are essential, but you also need to make sure that you’re sourcing products that people actually want.
The easiest ways to accomplish is to talk to your customers, listen to your staff, and look into your retail analytics.
That’s what Cat Socrates, a beautiful design shop in Singapore, is doing. According to owner Hellen Jiang, Cat Socrates has a lot of regular customers, so keeping their product assortment fresh is a must. “We’re always trying to find new brands and items, and we look at sales reports to determine the quantity and type of goods,” she said. On top of that, “we listen to feedback from our customers.”
Also note that your sales staff and associates may not be your only sources for customer insights. If you have different departments (ex: marketing, ecommerce, customer service, etc.) you need to collect information from them as well.
As Kurt Kendall, partner at Kurt Salmon’s Retail and Consumer Products Group wrote, “Many retailers possess a treasure trove of customer insight, but it’s too often siloed within departments.” That’s why he recommends that merchants gather data across all their departments. Your marketing team, for instance, can help you, “understand buying patterns and common item combinations,” while those in charge of ecommerce and web analytics “can provide an understanding of what items consumers search for, items they consider instead and which products receive minimal attention.”
Once you’ve gathered enough customer data and have gleaned insights into the types of products or brands you should be stocking more of, you’ll be able to go out there with more confidence and find the right merchandise and vendors for your store.
How do you source products for retail?
Retailers typically have three main options when it comes to sourcing products. Some merchants work directly with manufacturers, while others buy from wholesalers. There are also a number of retailers who make their products themselves.
Let’s explore the distinctions between these methods.
Work directly with manufacturers
For many retailers, working directly with the manufacturers (like factories) is ideal because it eliminates middlemen like wholesalers. However, establishing that working relationship isn’t always easy.
It’s not uncommon for a manufacturer to require minimum order quantities (MOQs), depending on the product. What’s more, many manufacturers would rather work with retailers who place bigger orders with them, committing to purchases of hundreds or even thousands of units. This means that if you’re new to the game and don’t have a massive budget, working with manufacturers might not be so simple.
Then there’s the issue of actually dealing with manufacturers. Working with manufacturers means you’re in charge of sending specifications and ironing out details like warehouse imports. All that can be time-consuming and can prevent you from focusing on your retail business.
And that brings us to our next point, which is to…
Work with wholesalers
A wholesaler is a firm (or sometimes an individual) who purchases large quantities of goods from manufacturers. They store those items and then sell them to retailers just like you.
Wholesalers can take care of all the stress that comes with importing and warehousing the items. You don’t need to travel anywhere, and there are no shipping customs to deal with. All you need to do is place your orders.
Make your own products
It’s rare for medium to large businesses to make their own products, as it’s hard to keep up with demand. But it’s totally doable if you’re in the right niche and have a small team behind you who can meet demand while producing high-quality products.
If you decide to create your own products, you will first need to work out where to source your materials (craft stores and flea markets are great places to look), and you’ll also need to work out how long it takes to make each item.
Need to hire a team to help you? Be sure to determine your labor costs so that you don’t run up a huge bill without realizing it.
Where do you find suppliers, manufacturers, and other vendors?
So, you know what you want to sell and have a general idea of how you should source it. Now it’s time to talk about where to find those product sources. What resources should you tap into to find the best manufacturers, wholesalers, or vendors?
Let’s take a look at some of your options…
Expos, buying shows, and other industry events offer numerous opportunities to learn about upcoming trends in your industry. More importantly, they enable you to get essential face time with manufacturers, wholesalers, suppliers and their merchandise, so you can see and touch materials or products firsthand.
There are a lot of huge retailer events out there whose main purpose is to connect buyers with suppliers. For example, there’s ASDLV in Las Vegas, the largest and most diverse general buying show in the US which brings together suppliers from categories like fashion accessories, health and beauty, toys, gift & home, and more. There’s also MAGIC, the most comprehensive buying show for apparel, footwear, and accessories, and New York Now for home and lifestyle retailers.
There’s a show for just about every category, so if you’re looking for something more specific, you won’t have any trouble finding one to attend. Do a search on Google or use websites like Events in America (a trade show and conference directory in North America) and the Trade Show News Network (for global events). You can also ask other retailers and suppliers about the industry events they attend.
At the events
What should you do on the expo or show floor? Here are some best practices…
Take notes – Harriet Vaight, owner of design shop Chirpy said that she was able to figure out what to sell and make the most out of craft fairs and design events by taking detailed notes about the suppliers and products she encountered.
“I collected the names of people whose work I liked, then put them in a spreadsheet. I listed their wholesale information, trade prices, retail prices, and minimum order quantities,” she shared. “From there I worked out which products had the best value.”
Follow Harriet’s lead the next time you attend an event. Get organized and take notes when you’re there so you can go back home with a clear idea of which products and suppliers are worth pursuing.
Walk the whole show first – Keep this in mind especially when you’re attending large events. It may be tempting to pounce on the first great products or suppliers you see, but it’s best to wait until you’ve explored the whole function before filling out any purchase orders. Give yourself the opportunity to see what everyone has to offer, then get back to the ones that are a good fit.
Take advantage of show deals – Some vendors give out special offers for event attendees, so keep an eye out for these promos. If you don’t see any at the booth, ask anyway, and see if you can still take advantage of them after the event.
2. Trade Publications
Don’t have the time or budget to attend events? Try specialty or trade magazines instead. Like trade shows, industry publications are great sources for product ideas and supplier information.
Their content could give you insights on the products others are selling – and who’s supplying them. What’s more, a lot of vendors advertise on trade publications, so perusing them could put some noteworthy suppliers in your radar.
And like events, there are trade magazines for just about any industry, so if you’re not subscribed to any publications yet, you may want to check out TradePub.com or Forum Publishing and see if you can get your hands on relevant publications.
3. Industry Associations
Most trade associations provide networking and directory services to help you connect with vendors. And in some cases, you don’t even have to be a member of an organization to take advantage of certain benefits.
For instance, some associations will let you attend their events for prices that are a bit higher than their members’ rates, and other groups – such as the American Apparel & Footwear Association – let users access their online supplier directory for free.
And if you can’t find what you need there, you can always turn to good ‘ol Google to search for organizations in your field.
4. Online Directories
ThomasNet.com and Alibaba.com are two online directories you can head to when looking for products and suppliers. (There are many others, of course, but we suggest you start with these two because you don’t want to overwhelm yourself by browsing too many marketplaces.)
Both of these sites give you access to thousands of supplier profiles and offer search and browsing features so you can easily zero in on the products or vendors you need. The main difference is that ThomasNet focuses on suppliers in the US and in Canada, while Alibaba can direct you to suppliers in other countries.
Tips for using online supplier directories
Do your due diligence – Be sure to research all potential suppliers before doing business with them. Check their website, run your basic web search, and ask for samples (even if you have to pay) as well as references. Be on alert for red flags like vendors who don’t have a phone number or suppliers who don’t have custom domains for their email address.
Also, note that both ThomasNet and Alibaba provide tools and features to help you evaluate suppliers. ThomasNet, for example, lets you download company certifications and registrations, while Alibaba has Gold Suppliers,which are vendors who have passed the site’s tests and certification checks.
Be detailed and thorough when communicating – Keep this in mind especially when dealing with suppliers in countries where English isn’t the first language. Communicate with them in easy to understand language, be very detailed with what you need from them, and if necessary, have them repeat what you said back to you to verify that they understood.
Already know how to source great products? Learn how to manage your merchandise with ease by reading Vend’s Complete Guide to Retail Inventory Management. This handy resource offers advice and action steps to help you:
- Set up your products and inventory system correctly
- Get the right people and processes in place so you can stay on top of stock
- Figure out which of issues are causing shrink in your business so you can prevent them
Part of retail success means never being complacent with your existing products or vendors. Strive to gain (or keep) a competitive edge by constantly looking for ideas and suppliers that can keep your merchandise fresh and inspired. So get out there, and start bringing great new products into your store!
About Francesca Nicasio
Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.