Many eBay sellers ask how they can optimize their sales before and after they find a product to sell on eBay. Using multiple sourcing techniques is a key factor to maximize your profit margins. Once you identify a product that sells well within your market, then having renewable sources through a variety of methods puts you a step above the competition. The technique is to identify how you can use all these methods together to make the most profitable model for your business.

The 6 Most Common Methods of Sourcing Products

Local Sourcing: The seller finds products from local sources such as Home, Garage Sales, Thrift Shops & Outlet Stores.

Drop Ship: A product sourcing method where the supplier will send products one at a time directly to your customer from their warehouse. The seller does not have to maintain an inventory or handle shipping. The seller however does handle the collection of the money from the customer and pays the supplier for the product purchased.

Light Bulk: A product sourcing method where the seller purchases from a wholesaler in quantities less then $500. Quantities are ideal for storing in a garage or a storage unit. The seller manages all interactions with the customer and the product from collecting the payment to handling the inventory to shipping to the customer.

General Wholesale/Large Volume: An extension of Light Bulk however the quantity of product is much higher. The larger the quantity purchased directly from the wholesale the higher discounts received by the seller. When a retailer buys in really large volumes the supplier will add discounts and different wholesale pricing structures depending on how much money the retailer is willing to spend. This is normal with all suppliers. The more money the retailer spends on inventory… the more discounts they get…the more discounts they get…the cheaper they can sell the product!

Liquidation – A product sourcing method where a seller can source commercial surplus inventory and closeout products through wholesalers.

Importing – Sourcing products from international countries. Importing can be done individually or through wholesalers that handle the importing procedures.

If you’re interested in learning visually about product sourcing basics, Worldwide Brands has a free educational video course available at www.worldwidebrands.com/productsourcingvideo

How to Compete - TIP #2: Find unique and different products through product sourcing

“But what product can I sell that is renewable?” – I’m sure this is the next question running through your head. The answer is pretty much anything and everything. Any of the products that you find locally can also be found in some shape or form through a wholesaler. However, there are a lot more unique products available through supplier sources that aren’t found through local sources. Everything from name brand products to niche products can be sourced from wholesalers.

How to Compete - TIP #4: Make sure you’re not buying from Middleman

Unfortunately, a common mistake made when sellers decide to start purchasing wholesale products to resell they often get caught in the trap of the “evil middleman scenario”.

The Product Supply Chain is how a product gets from the manufacturer to the end consumer, your Customer. When it’s working the way it should, it goes like this:

Manufacturer -> Wholesaler -> Retailer -> Consumer

Many people have the mistaken impression that the second link in the Chain, the wholesaler, is a Middleman, because they are in the middle, between the manufacturer, and you, the retailer.

That’s not true. The Wholesaler, the second link in the Product Supply Chain is there for a very important reason; manufacturers don’t have the infrastructure to actually sell and deliver small numbers of their products directly to you, the retailer. Real wholesalers provide that infrastructure (warehouses, order systems, delivery trucks, account representatives, etc.) for the manufacturer.

So, link two, the wholesaler, is a legitimate wholesale supplier, not a Middleman.

Here’s an example of where an illegitimate Middleman fits into that Supply Chain:
Manufacturer -> Wholesaler -> MIDDLEMAN -> Retailer -> Consumer

A Middleman is someone who takes your place in the Product Supply Chain, and bumps you down a link. They try to make you believe they are Link Two in the Chain (a wholesaler), when they are really Link Three (a retailer). Sometimes, it’s worse than that. You could end up dealing with a fake supplier who is actually three or four links down the Chain.

How does that effect you? It hits you where it hurts. Right in the profit margin. For every link you, the retailer, drop down in that Chain, your “wholesale” prices go up, and you earn smaller profits.

You need to be buying your products from a REAL wholesale supplier that works directly with the product manufacturer. Otherwise, you profit margin will suffer.

How to Compete - TIP #6 : Buy in larger bulk to get those wholesale discounts and increase the profit margins

Bulk Wholesaling works well, but most wholesalers have very high minimum orders. Supplementing your Product Sourcing with Light Bulk (low minimum order) wholesalers should be a part of your Sourcing efforts. General Wholesaling works well as an expansion tool. When your Drop Shipping and Light Bulk Sourcing identifies products that sell well, you work with General Wholesalers to get larger quantities of those products at better pricing, and increase your profit margin.

How to Compete - TIP #8 : Develop and Build a strong relationship with your supplier

Above all, remember to build a relationship with your supplier. Act professionally when you email them or contact them. Remember, they’re a business too. Don’t be afraid to pick up the phone and call them and ask those questions that are important to you. When you can show your supplier that you can drive sells of their product and that you are a real business, they’re going to be more inclined to offer you those better discounts and those special deals on new inventory.

Welcome and thanks for joining us today!

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Cheers,

Deirdre
eBay Community Development