How can retail stores source products?

Sourcing product retail stores may seem straightforward, but it entails strategies of product identification, finding a supplier, filling inventory, and selling your products. 

Firstly, are you the manufacturer of your product and looking for the raw materials or are you reselling a ready-made product? Ankorstore will walk you through how to source the right product for your store and product type. Ankorstore will also help you with the steps prior to getting your store up and running to ensure everything runs smoothly.

To build a resilient business, retailers need to learn detailed record keeping and constantly re-examine their retail logistics systems to mitigate risk and see what areas to focus on in their business. Starting a business, especially post-pandemic, entails a lot of risks and involves many factors which ultimately determine whether the business will sink or swim. Choosing Ankorstore as your product sourcing partner or using their other B2B services will help guide you on your entrepreneurial journey, no matter what stage the business is at. Ankorstore will demystify the strategies and provide B2B services for success and provide techniques to create a stable business.

Product sourcing is the process of finding quality and unique products to stock your online or bricks-and-mortar retail store and serves as the foundation of your business. The process involves finding reliable retail suppliers and manufacturers who can provide the products you need at reasonable prices. Product sourcing is more than just looking for quality products at the lowest prices. Retailers need to research suppliers based on criteria such as proximity, availability of products, and price. From there, they will need to calculate their products’ price and acquisition costs. 

Product sourcing is a step-by-step process which includes researching the market to determine what is a viable product to go into business with, deciding on which method to use in order to source unique products for the business, and researching the different ways to actually find and engage a product source store. This involves doing research and finding the most suitable suppliers for the product and business based on their own business-specific criteria and vetting those suppliers using several techniques before agreeing to long-term partnerships with them. 

Choosing a source product store or supplier requires more thought and strategy than merely selecting the supplier with the best price. Here are some things to consider when deciding to do business with a source product store or supplier:

• Company values: the supplier’s values, such as their commitment to production methods with a low environmental footprint, their commitment to diversity in the office, do they have a culture of equality, do their values align or come close to those of your business in ways that are mutually beneficial?
• Communication: are they easy to get in touch with? Are they reactive when you do reach out to them? Do they contact you to find out if you are satisfied or have suggestions? Do they let you know far enough in advance if a problem arises so you can pivot to a contingency? How a source product store communicates with you is crucial as communication is the lubricant for a good working relationship which in turn affects your business.
• Financial strength: do they have positive cash flow and liquidity; can they stay in business in unexpected financially trying times like the economic difficulty being experienced globally following the global pandemic? Supply chain process: do they control their own supply chain process or do they use third parties? This determines their ability to fulfil orders reliably.

Why is sourcing products such an important component of your business? Because your product sourcing strategy determines whether you find unique quality products at prices that will enable you to sell them at considerable profit margins. Depending on what your store sells, you will have multiple suppliers to meet the demands for your various products. However, it is important to have more than one supplier for reasons such as shortage of stock, as many businesses have experienced post pandemic confinement. 

Look for a product to sell and research the market to ensure that it is a product with a high market demand that will sell well. Find a product acquisition method that fits your business model, whether it’s sourcing from wholesalers or working directly with manufacturers that better suit your inventory control. Part of the research entails developing relationships for the purpose of flexible payment terms and delivery arrangements if needs be. The more information at your disposal from your research, the higher the likelihood of finding the right product sourcing method for your source product store. The research phase is where you set up your retail sources selection criteria. The criteria will help you assess and manage product sourcing risks for your retail store in the long run.

The criteria are essentially two lists comprised of pros and cons: 

• The first is a list of things that you are not willing to compromise on
• and the second a list of things which are not ideal, but are suitable for the management of your product sourcing and inventory control. 

Vetting suppliers is an important process because if your suppliers are unreliable or provide products that don’t meet your clients’ expectations or your personal standards, your business’s reputation could be damaged, which obviously will affect your overall profit margin. A good supplier will help take a brand from strength to strength. 

So, what is vetting a supplier? Check to see if a source product store is prone to order delays and whether products‘ quality consistently meets your standards or not. If a supplier has noticeable weaknesses, the retailer could use it as an opportunity to negotiate reduced prices. 

When looking for how to go about product sourcing, one of the main things to look at is product cost. No doubt, the retailer will be comparing supplier prices by gathering quotes from different suppliers for the same products. The quotes should be for the product/s in bulk and over a prolonged period. Also, check to see if they offer a discount.

What is the customer demand for the product? Is the product durable with a long shelf-life, or is it something that customers will purchase regularly? Choosing the right product to go into business for is determined after time spent researching market needs and finding out whether your offering fills a need or meets a high enough customer demand.

Once you’ve decided on how to find vendors, manufacturers and source product stores, it’s time to figure out where to find them. Even if you make your own products, you need raw materials to do so, and those materials need to be sourced from somewhere. 

Tips where retailers can source products: 

• A good place to look for suppliers is at trade shows. Trade shows often have suppliers with the actual products on their stands for customers to test. This helps you get a feel for the quality but also make contacts and network with the sellers. It’s also a great way to do market research on a particular product and the industry in general.
• Directories are a good starting place for getting ballpark ideas and figures for what’s out there concerning the products you want to source. 
• Recommendations from others in the field or people you know are a good way to go as they will offer insight into personal experience with the source product store employees, products, and customer experience. Local business groups like the chamber of commerce would have contact information on supplier]. 
• There are also software programs and sourcing marketplaces that let you find specific suppliers using filters to zero in on very specific suppliers and weeding out potentially incompatible ones.  

Wholesalers are large firms that make purchases of products in mass quantities and then sell them to retailers such as yours. Sourcing products through wholesalers means you are buying third-party goods from the wholesale supplier and reselling them for profit. This includes online platforms or e-commerce sites and websites from which to purchase goods from suppliers at a wholesale price. The benefit of this form of wholesaler is that they offer access to a wide range of potential business partners. The benefit of using a wholesaler is that wholesalers are the ones who deal with the hassle that comes with importing, shipping customs and storing the products. Your sole responsibility will be placing your order and paying for it. Most wholesalers have customer loyalty programs through which you could potentially save a lot on product costs as well as give you access to discounts on certain products at specified times throughout the year.

One of the drawbacks of sourcing from wholesalers is that ordering in bulk means you purchase at a lower cost per unit. Another problem with this type of sourcing is there isn’t much product differentiation. Your business’s unique selling position will be determined by product price and your business’ branding and product stories.

Doing things yourself from start to finish sounds simple enough, right? You are in control of everything from start to finish, so there are no complications, or so you would think. Going the DIY route can make a lot of sense by removing the reliance on third parties to make your products because you only source the raw materials and then manufacture the product yourself.

It is, however, not without its challenges. It is, of course, doable. You will need to know where and how to source your product’s raw materials. Sometimes, if it’s a very successful product or product line, it can be hard to keep up with demand. Figure out how long it takes to make the product and, if need be, hire people to enable you to meet the supply and demand. Be sure not to incur a higher production cost in the form of labour costs. Also, make sure that additional production labour doesn’t lead to low-quality products. Making unique products in-house also means you will need to take storage space, warehousing and the subsequent cost into account.

Manufacturers are often factories, whether small or large and working directly with them has its pros and cons. They are focused on manufacturing and their focus results in them preferring to work with large scale wholesalers – but we’ll get to that later.

Some of the advantages include you being in control of product specifications and details. Working directly with manufacturers also means having a direct relationship with the producer and cutting out middlemen, which potentially means spending less on product costs. It also means being able to receive some flexibility in terms of payment schedules etc.

You will need to meticulously manage every aspect of the product conception and design. You will need to make and test several prototypes until they meet and pass quality control checks with the manufacturer. The downsides to working directly with manufacturers are the fact that being in control of the production process is time-consuming and detracts from the time allocated for your actual business. The production of the prototypes is costly. Working relationships can be fraught with miscommunication, clashing personalities and modus operandi of all parties involved, all of which can lead to complications which could impact your business. Often manufacturers have minimum order quantities (MOQs) as a prerequisite for doing business, depending on the product. It’s not uncommon for manufacturers to prefer working with wholesalers over retailers because wholesalers commit to much larger orders. 

How can retailers partner with manufacturers?

• The first is a Private label, where the manufacturer makes products for your business only under your private label. 
• The second way is what is called a White label, where the manufacturer makes generic products that it sells to many different retailers. They are better for larger customer segments. 

Dropshipping is when you sell products from a supplier that stores the products and transports them to the customer for you. It is a very appealing method because there are no frills involved on your part. Your sole responsibility is to list the unique products from the supplier in your store as long as they are in the supplier’s stock. Once a customer selects a product from your store, the supplier is notified, and they take it from there. Like working directly with the manufacturer, there are no middlemen. It is both a product sourcing method and an order fulfillment technique. 

How do retailers start dropshipping?

• Work directly with a supplier that offers drop shipping services and register for the program,
• Use an app that connects you to a sourcing marketplace. 

These apps offer literally millions of products for your business to sell, minus the stress of managing inventory, shipping and packaging.

After having found the most profitable wholesalers for your product and business, what comes next? Keep looking for the best sources, and there’s always room to do better, especially in the continuously evolving marketplace. Customers should have the impression that your stock is interminable due to your impeccable inventory management skills.

Do some research on your competitors and how they go about sourcing products to get ideas on where to start. Find the gems which will end up saving you time, money, and energy. 

How can you find out the competition’s product sourcing methods? Start by asking around, but a more experienced sleuth would go as far as to email their customer support service and get the answers about where and how they source their products directly from the horse’s mouth. 

Ideally, your product sourcing methods are an adapted version of the general sourcing methods specific to your product and business model. If the method works well, don’t rock the boat.

The importance of market research has already been mentioned and is an ongoing process. You need to research not only the changing market trends but your changing customer habits to inform you of product demand. A part of any retail success comes from updating existing products and vendors. This gives your business a competitive edge through a constant inflow of new ideas and suppliers that can keep the sourced products fresh and inspired. 

Use local manufacturers because overseas product sources mean smaller profit margins for the product due to all the costs incurred to procure it. It can also mean faster delivery times because of proximity. There’s a higher chance that local suppliers will be more responsive and reactive to your business needs and fulfil and coordinate shipments faster.

Once you’re in the thick of acquiring new suppliers through the various methods and techniques detailed in this article, you should keep track of each supplier as your roster grows. What should you track and why? You should devise a tracking system to keep track of different suppliers’ capabilities, prices, shortcomings and your relation to them in the product sourcing process. Detailed records serve the double purpose of demonstrating transparency and the ethics of your supply chain.

Keep a detailed record of your process and the outcomes because doing so lets you see the parts of your product sourcing process that cause problems and contain inefficiencies. It also helps you identify areas in the product sourcing process that yield meaningful results. Tracking the results, in general, provides you with a good base for experience, and if, in the unlikely event that you end up having to overhaul your whole process, you have a girthy base from which to do so.

Learn the lessons from your detailed record keeping and the shifts caused by the recent global health crisis and re-examine your supply chain systems. Why? To mitigate risk and forecast demand with precision, so you give your business agility in an ever-shifting environment, as this gives you better visibility and transparency within your supply chain system. Some things re-evaluation will shed light on are, but not limited to, the need to put a risk-mitigation plan in place, diversifying your supply chain and investing in technologies that will streamline and optimise the process, and consequently contribute towards your business’s resilience in the long run.  

Now that you’ve got your product, how do you get it into stores, so customers have access to it? If it is your own store, you can simply stock your shop space or make the products available for purchase in your online store. If the store is not your own, there are several wholesale marketplaces with whom you can subscribe, which will give you access to retailers in need of your product and alert them to your products for order to stock their stores. A wholesale marketplace can be physical or online. It functions as a platform for retailers to find products from numerous different wholesale suppliers. It is a way of getting new customers and sales. The other way is to forge personal relationships with people in retail responsible for procuring stock, so they make sure to order from you.

Once the product sourcing process has been established, the next step is managing your stock in order to meet your customer orders. The inventory management step is an ongoing process which, if done well, contributes to making your business profitable as well as making running the business a smooth and streamlined affair. The key is to have reliable data on stock so that your business is prepared for almost every eventuality and can anticipate potential problems and take action to ensure that even in difficulty, the business continues to operate optimally and customer needs continue to be met. It also leads to cost savings by not overstocking, which can quickly become high storage costs on the books and let you quickly see where to invest, i.e. in products that sell like hot cakes and off-load the slow-sellers.

Inventory management is the process of tracking and controlling your stock from sourcing to selling. If done efficiently, it leads to the endless supply perception mentioned earlier in this article. Inventory management enables you to maintain the right quantities of products to meet the demand. Accurate inventory tracking makes sure you keep abreast of product count, low stock count for re-ordering. It is important to be able to get a clear overview of the stock status at a glance, as it influences your buying decisions. Failure to implement a proper inventory management system means you run the risk of either over or understocking, which are both harmful to your business.

A successful and profitable business is all about organization, i.e. up to date information and the dissemination of that information from all the sales channels to all team members. Integrated sales systems such as barcode scanners, quotation tools, accounts and invoicing, etc., create reliable data and provide a clear picture of everything, which enables your business to boost sales. It is also useful for retailers to easily check what stock is theirs if, for example, a customer enters the store with a product from another store which is also sold in their store. They can scan the item and easily determine that it is not a product from their stock. 

• Face unforeseen challenges

Consumer spending is increasing yearly, which is good for independent business owners. The challenge is always meeting orders and consumer demand. The pandemic has led to many shortages in production, so it’s more important than ever to have a handle on a seamless inventory process with accurate stock levels and streamlined processes, which at least lets you eliminate the possibility of living in a nightmare of never-ending stock-taking. Other complications that arise out of poor inventory management are too many backorders and late orders, both leading to reduced conversions. If you make your own products, then inventory management can be extremely useful for quickly identifying a part or parts that are problematic and then taking action in the form of recalling and fixing or removing them from the production of your product.

• Managing multiple sales channels

The number of sales channels in place for reaching your product audience has increased with the advent of technology. Tracking sales and stock across multiple channels is challenging. There are solutions that help retailers stay on top of it all by updating inventory across multiple channels in real-time so they don’t oversell on one channel and can focus instead on marketing and growing the business.

• Anticipate problems early

When you’re on top of your inventory levels, you can detect discrepancies and foresee problems immediately and not have to wait for your monthly or annual stock count. Any mistake will be recorded in real time, which will save you money in the long term.

• Meet demand 

Knowing when to re-order products and in what quantities, in order to fulfil all customers’ orders, is critical. This kind of organisational mastery enables you to dodge bullets like tying up your finances in overstocking.

• Optimising Re-ordering

Re-ordering stock should not be guesswork. Automating the process so notifications are sent when the stock for unique products reaches minimum levels lets you focus your attention on other aspects of the business. This also allows time to look for a contingency should there be an unforeseen disruption in product sourcing, like a rupture in stock. 

• Better investment decisions

Making wise investments in the right products at the right time is something that can be determined by managing your inventory correctly. Be able to generate inventory reports that quickly indicate slow-moving items so you can put them on discount and purchase those products that are flying off the shelves instead!

• Painless stock take 

With up-to-date inventory data, replenishing or phasing out stock will be a breeze. The actual work will cease to be a dreaded time-consuming chore. 

• Reduced warehouse costs

When your inventory report is accurate and tells your warehouse staff the exact count of all products, the pick, pack and ship process becomes smooth. When the inventory systems are accurate, they can be trusted; instead of staff spending time finding a particular product they know it is there somewhere!

• Efficient handling of peak seasons

Something mentioned earlier is preparedness in the event that sales or order volumes suddenly spike during particular seasons, holidays, sales, etc. The inventory systems and processes in place will manage the influx of orders and sales effectively with time to manoeuvre, if needs be, without losing out on sales.

• Healthy cash management

Managing cash and liquidity can only serve the interests of the business and involves cash forecasting, the ability to easily export data to other systems and file structures for external reporting and analysis and creating custom reports to track balances using different metrics. Doing so well contributes to the business’s longevity and success.

Sourcing products is a fundamental building block of your business and, as such, shouldn’t be undertaken lightly. To be done well, you should employ the strategies detailed in this article and adapt them based on the type of product and business your venture needs. Not only that, but you should also constantly be updating your techniques to meet the changing business environment, your customer demands and behaviors and the evolving technologies used to support these efforts. 

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