Need help with sourcing your chosen products from a supplier directory? We have some actionable tips here to carry you through the process.
But before delving into the nitty-gritty of product sourcing, let’s take a step back and make sure you got the fundamentals right.
With so many dropshipping success stories rocking the Internet, patterns have started to emerge highlighting the best product sourcing practices and the most costly mistakes.
For the sake of this article, I’ll assume that you’ve settled on a profitable online business idea already (was that a distant sound of ka-ching?). A major task that should follow but can be easily overlooked by overenthusiastic dropshippers is the old good market research. Choosing a supplier directory only makes sense when you know what price point you’re looking for and what kind of supplier will be the best fit for your business model.
Ensure you complete the following steps before making any rash decisions.
- Let your market research guide you
- Price points
- Healthy margins
- Navigating a supplier directory: play around with product curation sites
- Quick tips for choosing the best supplier on AliExpress
- #1 Contact the supplier before ordering anything:
- #2 Start from sourcing a handful of products at a time:
- #3 Order product samples:
- #4 Find suppliers who specialize in your target product:
- #5 Pick products that are in demand all year round:
- Final Thoughts
Let your market research guide you
Will your product sell? That’s the most important question you should try to answer. A good way to determine the popularity of a product is to examine the competition. Does the product make the bestselling lists on Amazon, eBay, AliExpress or Alibaba? How many Google search hits do you get? Can you do or offer something better than what’s already on the market?
Playing to your advantages should also stay top of mind:
- Products that make good upsells and cross-sells, such as laptop or phone accessories, often have high margins and a high enough demand.
- Keep the shipping costs in mind: the smaller the item, the cheaper it will be for you to offer your customers free delivery (and they love free delivery).
- How easy or difficult is it to find the product locally? People tend to shop online when the scarcity is high.
- What spin can you put on the product? If you’re competing on price alone, the potential to scale is limited.
It’s not just browsing the Internet and shopping around to get a rough idea of different prices. Spend some time researching and recording the most relevant data and stacking it all in one clever spreadsheet so that you can sort and compare the different data points later on. Take note of the item name, price, sales volume, product images, delivery costs and general observations you make about the product. The more data you compile, the clearer the picture will get — it’s important to start from a position of strength.
A simple rule to follow in dropshipping is that profit margins lower than 100% are not worth the struggle. If you can’t sell a product for at least twice the price you’re buying it for, look for a different product. It’s difficult to anticipate the volume of sales when you’re just starting out, so aim to earn between $70 and $150 on every sale to keep the profits high. Some products do well with markups as high as 1000% — refer to your pricing spreadsheet to evaluate how you compare with the competition.
To build a loyal customer base and generate a high volume of sales, your online store will need to stand out from the hundreds of other retailers who are stocking similar products. Product curation is a crucial element of a successful dropshipping business. As a retailer, you’re in full control of selecting the products your customer will either appreciate and buy or simply ignore. That can be daunting. Just because a product is available, doesn’t mean you should be offering it. Remember, scarcity is one of the biggest drivers of sales, so aim to work with niche suppliers and avoid the “endless list of products” type of strategy.
Thieve is one of the best and most glamorous AliExpress product curation sites I’ve seen so far. Both consumers and dropshippers use it to discover the most interesting products available from AliExpress suppliers. Use Thieve to research product prices and gain a better understanding of current product trends. All products curated on the site are covered by AliExpress Purchase Protection, have positive reviews and free or cheap shipping. It can be a huge time saver.
Quick tips for choosing the best supplier on AliExpress
The overall Positive feedback: suppliers are very diligent when it comes to collecting feedback — they will ask you to bring up any issues with them before you leave anything lower than a 4-star rating for their store. This is a good indicator of a supplier’s quality and trustworthiness, so always look for a minimum of 95% positive feedback.
The Feedback score: the feedback score is the sum of all star ratings after they’ve been converted into points. To put it simply, you’re looking for a lot of diamond icons that represent a large base of happy buyers. The Feedback score of 2,000 or more is considered good.
Check the detailed seller rating: Pay attention to the detailed seller rating when you’re making a purchasing decision. The rating takes into account the shipping speed, communication and accuracy of a product description. Only the scores from the past 6 months are shown here, so you can always be sure the information is up-to-date. Once the ratings have been given, they cannot be changed or removed. The easiest way to check the detailed seller rating is to go to the seller’s store page and look under the overall positive feedback rating.
Open since: Maintaining positive Feedback ratings is a tough job, so checking how long the store has been in operation is also a good indicator of its reliability.
Should you hire a product sourcing agent?
The whole point of running your own dropshipping business is that you can make and keep a decent profit. Hiring a sourcing agent sounds like a great idea if you’re a big, profitable and growing business that deals with large quantities and a vast number of suppliers. If you’re just learning the ropes of running an eCommerce shop, it’s advisable to know the process in and out and experience all the potential joys and troubles first-hand. Sure, a sourcing agent working on a commission-based scheme could be a useful asset in terms of negotiating better prices with suppliers on your behalf and finding niche suppliers for your product. You would save yourself some time but is it really worth it? Again, probably not.
Most of the suppliers are willing to compromise on the price as long as you’re being reasonable — remember, they’re also trying to earn a living. Most of them speak good English and can answer your emails, which eliminates the language barrier. Your biggest concerns are product quality, shipping times and return policy. Here are some simple tips from fellow dropshippers how to ensure a smooth collaboration with a trader from a supplier directory:
#1 Contact the supplier before ordering anything:
You need to be sure that your supplier will respond to you on time in case something goes awry, so getting a sense of their style of communication, the speed of response and willingness to collaborate beforehand is crucial.
#2 Start from sourcing a handful of products at a time:
It’s understandable that you want to grab as many buyers as possible and a longer product list promises just that, yet, in the beginning, it’s probably safer to start with a few products to test the market response, understand the demand better and pick up on any issues quickly.
#3 Order product samples:
It’s simple — you need to know what you’re selling. To assess the quality of a product, delivery times, packaging and the overall process, you have to test it yourself. Try ordering at least a few samples from different sellers to give yourself enough wiggle room.
#4 Find suppliers who specialize in your target product:
If you’re indeed starting with only a handful of products in your store, a good idea is to find specialist suppliers who are pros in either manufacturing or trading those particular products. This will give you a better piece of mind knowing you’re in capable hands and also contribute to keeping the costs down.
#5 Pick products that are in demand all year round:
It sounds obvious but seasonality could be a huge growth hinder if you don’t take it into account early on. For example, sunglasses are a very popular item that can have a good margin, but if you don’t have a plan how to market this product to buyers in different countries (or even continents) at different times of the year, then it’s a risky game.
AliExpress is the best supplier directory for a small dropshipping business because it accepts orders in tiny quantities. Setting up an online store is so easy these days that many are tempted to skip a few steps and jump right into the ‘doing business’ phase. But I can’t stress this enough — if you don’t do your homework, you’ll soon get tired of firefighting different issues as they crop up in different parts of your operations.
Know thy market before you dive into a supplier directory. The rest will come naturally.