17TH FEBRUARYCAMPBELL PHILLIPS
Article from The Power Retail
With the initial research and planning of your new online business out of the way, it’s now time to jump into the fun stuff and start shopping around for suppliers.
Welcome to the product sourcing and buying phase of development. This stage is not dissimilar to any shopping process, which can make for a highly satisfying experience for retail enthusiasts.
Just like any shopping adventure, the smart buyer begins with research. Find out who the suppliers of the specific product or product category are. Where are they based, and what do they charge? You may have already uncovered some supplier leads during the initial product research process.
However, if you are still finding it tough to discover leads, don’t be disheartened. Victor Lee, CEO of online technology retailer, Mwave, says the information is readily available, if you take the time to look in the right places.
“The great thing is that the industry really is very transparent,” says Lee. “This means the bulk of the key research done from the comfort of your own home. Performing an online search, placing some calls and asking for experienced guidance will yield all the information required to be confident about whether you can find a good deal or not.”
Finding suppliers
It’s important to make contact with as many relevant suppliers as possible, even if they might not suit your initial budgets. Establishing connections and continuing to research the mechanics of your chosen supply chain will continue to pay dividends into the future.
How you make those connections can vary widely, according to Lee.
“In today’s world, there is no fixed way of finding and dealing with suppliers,” he says. “You can make contact locally or remotely, face-to-face or online – it doesn’t really matter so long as you can build a business relationship.”
Part of building any business relationship relies on getting to know a prospective partner’s company structure and methods. As an online retailer, there are roughly four different categories of suppliers to buy from. These include: vendors, distributors, traders and manufacturers.
“Each will have a different agenda, so it is important to understand a supplier’s business to be certain that yours can benefit from working with them,” describes Lee.
While information regarding the supply of products is generally easily accessible, some categories can be tougher to source than others. These are usually categories that include exclusive or dominant brands, like sporting labels, perfumes and other cosmetics. Some categories attract a lot of cheap imitations, so, at this stage, always pay very close attention to the product itself. Other categories can have suppliers that are just plain difficult to deal with.
“Some product categories continue to be affected by anti-competitive behaviour, as other retailers seek to protect their supply chain,” explains Lee. “Traditional retailers pressure suppliers not to deal with online retailers at all, which we have found to be the case in the Consumer Electronics category.”
“However, I believe it won’t be long before this territorial behaviour disappears. The rest of the technology industry has become increasingly friendly towards online retailers, while those that haven’t will eventually bow to pressure,” continues Lee.
Making contact
Meeting with suppliers can require perseverance and confidence. Credit: Productive Solutions
Sometimes reaching out to suppliers requires careful thinking and dogged perseverance.
Not all suppliers have worked with online retailers, which can mean they may be sceptical. Others may have had bad experiences with the online market before, so it’s important to be prepared for some resistance.
Jethro Marks, Co-founder of online bookstore, TheNile.com.au, recounts his own experience in striving to convince book dealers that he didn’t need a physical store to sell print products.
“We wanted to do something the dealers hadn’t really seen done before, so our immediate challenge was to prove our business was worthwhile,” says Marks.
As a result of this dedication, TheNile.com.au now sources books from a range of suppliers, many of which were hesitant to deal with a pureplay online retailer beforehand.
Lee says he recognises stubborn suppliers, as well as the reasoning behind the attitude.
“It is probably due to the suppliers’ perceptions of pureplay online retailers and its potential, their current business agenda, support infrastructure, or even existing links to traditional bricks and mortar retailers.”
Discovering International Suppliers
In online retail, the world is your oyster.
Don’t restrict a supply chain to local sources only. In many cases, it may be a struggle to find manufacturers of particular products nearby, so be prepared to think globally.
Looking beyond national borders will not only expand buying opportunities, but it can also be highly informative. Marks believes it is important to continue learning as your networks expand.
“In the early days,” he says, “we spent a lot of time talking to international suppliers that already had some experience in providing for the online market.”
This allowed Marks to discover the practices of overseas competitors – useful information, particularly when local suppliers aren’t confident in dealing with online retail.
Marks found that this wasn’t possible with local suppliers.
“In Australia there were hardly any suppliers dealing with online, so it took some effort to help them figure out how best to work with us,” Mark says.
At some point in any sourcing venture, you are going to want to buy samples of product. Where possible, meeting suppliers face-to-face is a necessary element when developing business relationships, and it becomes more critical the longer interactions continue.
“Facing up at a meeting with potential suppliers is not only good for a business relationship in general,” says Marks. “It also gives you the chance to really get to know your supplier and see how they operate.”
In some cases, this will mean going overseas, and that means planning a buying trip.
Plan a Buying Trip
The very idea of jetting off overseas to appraise and buy a whole swag of products might have you jumping to book flights, but there are some things that should be considered first.
In dealing with international suppliers, you’ve probably noticed manufacturers are sometimes readily found in a handful of locations for a given product. On the other hand, it can be possible to find vendors, traders and distributors in many other places although their prices and supply levels may vary significantly.
Marks says it’s imperative to always remember key objectives and have a strong thorough understanding of the budget.
“While you can find just about any product anywhere these days,” he says, “it’s important to consider how you will transport it from the source to the market.”
“It’s always good to go as far up the supply chain as possible, but it isn’t always feasible,” Marks says. “The great example is Kogan, who did an excellent job of going straight to the manufacturers and convincing them to supply to him directly – however that model doesn’t work for everyone.”
Manufacturers of specific products cluster around the globe. These include electronic devices from China, electronic parts from Singapore, furniture from Vietnam, textiles from India as well as soybeans and coffee from Brazil.
Different regions manufacture and export different categories of products. For example, China is great for electronic devices, plastics and metal instruments, while you’ll find a wider array of textiles being made in India. Choose a destination for a buying trip based on your key research and put a team together to ensure efficiency.
It’s time to buckle in; next week Power Up discusses how to complete a fruitful Buying Trip!
Article by CAMPBELL PHILLIPS
Campbell is a content creator for The Media Pad, publisher of Power Retail. He has a background in science communication and a long history in retail. Campbell has a keen interest in emerging technologies and their impact in the world of media and online retail. Campbell is an indoor sports junkie, to the point of playing in a local dodgeball competition once a week, “just for kicks”.
Article from The Power Retail