product sourcing business plan

Retail | How To

Product Sourcing Guide: How to Source Products in 4 Steps

Published October 23, 2023

Published Oct 23, 2023

REVIEWED BY: Brigitte Korte

WRITTEN BY: Agatha Aviso

This article is part of a larger series on Retail Management .

• Step 1: Determine Products to Sell
• Step 2: Define Sourcing Criteria & Limitations
• Step 3: Vet & Select Suppliers
• Step 4: Nurture Relationships with Suppliers

Benefits of Effective Product Sourcing Strategies

Bottom line.

Whether you’re starting a retail business or just looking to add some new items to your shelves, product sourcing lays the foundation for your supply chain.

We’ll walk you through a step-by-step breakdown of how to source products by choosing the best items and receiving them most effectively—plus, how to find suppliers, maintain relationships with them, and identify growth opportunities.

Step 1: Determine the Products You Want to Sell

The first step to sourcing products is determining what products you want to sell. There are a few things to consider when sourcing products, including your brand as well as your competition and target market.

Research Your Target Market

Market research is the practice of gathering information about your target market—the group of people you are aiming to sell your products or services to—and their habits, needs, and preferences. This helps give you a better understanding of your target consumers and what products they want or already have. It also helps you spot potential market opportunities that you can profitably fill.

You can perform market research by observing customer buying behaviors in your store or at stores with similar products and customers. You can also do interviews, hand out surveys, or do focus groups. This is when select people who represent your target market come together, and a moderator leads a conversation where they offer insights about their experience, specific products, or brand messaging. Focus groups are an especially helpful strategy if you are creating a new product. You can use just one strategy or employ a variety of methods.

Look at Search Trends

Another way to research for products that you can sell is to look at trends. People search for things that they’re interested in every day; you can get rich insights into what your target market is looking for (and purchasing) by looking to search trends. Google Trends is a great tool to see what people are searching for and at what volume on the world’s most popular search engine.

Since social media platforms have become the go-to destination for people to share their thoughts, they’re also a rich source for direct consumer insights. Use social media analytics tools that can help give a quantitative measurement of product trends if you need numbers to back up your research.

Perform Demand Forecasts

Demand forecasting is the practice of researching and making predictions about your target market’s future buying habits and demands. If you currently have a store, the best way to keep track and pull different reports on your business’s performance is to use a point-of-sale (POS) system like Lightspeed. Lightspeed keeps track of all your sales and individual product performances, and will automatically create graphs and reports so you can make the most informed decisions about your business. You can learn more about the software in our Lightspeed POS review .

If you don’t have any records to look back on, look to your competitors and additional outside resources for insights. Look at Google Trends or in Amazon’s bestseller pages to see what products perform well within specific product and industry categories—like outdoor gear, tech, apparel, toiletries, and more.

Step 2: Define Your Sourcing Criteria & Limitations

After you have determined which products to sell, it’s time to begin looking at the logistical side of product sourcing.

There are many types of retail suppliers for sourcing products . For example, dropshippers are a popular and low-cost choice when it comes to product sourcing for ecommerce.

List your nonnegotiables or criteria on how you want to get your products. We recommend you base your criteria on shipping speed, customization abilities, storage consideration, order quantity restrictions, and middleman costs.

The table below focuses on the three most common and popular sources. Use it to compare how they do based on your supplier criteria before sourcing items.

Shipping Speed

Set a timeline on how quickly you want your products to get delivered—this is a crucial consideration for both your initial purchase and any future repurchases.

If you’re ordering merchandise frequently and placing reorders often, you’ll likely need to work with suppliers that can offer you a fast turnaround time. On the other hand, if you don’t place frequent orders and operate with less merchandise, shipping speed will likely be less of a concern.

The shipping speeds you need might also be on a product-by-product basis, depending on individual sell-through rates and purchase frequency. For example, at my boutique, we had a list of bestsellers that we were constantly reordering. Because of how quickly our bestsellers sold and the consistency of demand, we worked with suppliers who offered fast shipping windows—like wholesalers and certain trade show representatives.

On the other hand, we also stocked bulk-order items that were much slower sellers (like denim), so we didn’t have to reorder often at all. Because our denim did not sell through quickly and we rarely reordered it, we didn’t have to rely on super speedy shipping times and could work with a supplier with longer shipping windows.

Working with suppliers with longer shipping windows is possible for any product as long as you leave yourself enough time. You can use a POS system to set low stock alerts at set stock levels, depending on the time you need to get a restock.

Another thing to consider when choosing suppliers is whether they’re international or domestic. International suppliers have longer shipping windows, and their transportation fees will be higher—often requiring larger bulk orders.

Customization Abilities

Depending on what products you decide to source for your business, you might need to work with a supplier to create something completely new or customize an existing product. In this case, you should be asking each potential supplier whether they can meet this kind of need.

Your best bet will be to reach out to manufacturers and independent suppliers as they are most likely to offer these services.

• Learn more about how to find and sell private label products .
• Read our guide on how to manufacture a product .

Storage Considerations

Storage is another factor to consider when choosing a supplier. Storage will play a role in how much merchandise you can hold, the size of the orders you can place, and the types of inventory you can hold. Before placing orders, you should have a plan for how you are going to store products.

Brick-and-mortar retailers—especially single-location stores—will likely house and store products on-site, while multi-location retailers may have a centralized warehouse.

Growing ecommerce businesses will likely have a warehouse or storage as well (unless they use outsourced fulfillment methods). A dropshipper is the only supplier option that will hold your stock for you, shipping the items you sell online directly from its factory or warehouse as customers place orders.

If your storage space is limited, you should avoid suppliers that have high minimum order quantities (MOQs), like importers and wholesalers. Conversely, if you have the space and want large order quantities, you should look for suppliers that can send large order volumes.

Order Quantity Restrictions

Another thing to consider is the order quantity restrictions set by the supplier. This is usually referred to as the minimum order quantity (MOQ)—the fewest number of units a supplier is willing to sell to a buyer at once.

Manufacturers usually sell in bulk to wholesalers, who in turn sell in bulk to retailers using an MOQ. When ordering your products, you need to balance the economic order quantity (EOQ)—the ideal quantity of inventory your business should have—and the supplier’s MOQ.

When you find that balance, economies of scale (bulk savings) take into effect. In short, you get the best price per unit.

To calculate the EOQ for inventory, take into consideration the following factors: setup costs, demand rate, and holding (inventory storage) costs.

• Setup costs are all the associated costs of actually ordering the inventory, such as the costs of packaging, delivery, shipping, and handling.
• Demand rate is the amount of inventory your company sells each year.
• Holding costs are the price you pay for storing goods (inventory space or warehouse lease, on top of manpower expenses).

Compare your EOQ, your supplier’s MOQ, and your break-even point (the point at which total cost and total revenue are equal, meaning there is no loss or gain for your small business). From there, go with a supplier that has an MOQ that is not above your EOQ.

Middleman Costs

Middlemen are usually known as distributors and act as an intermediary between a product supplier and a retail buyer. They may or may not be present in the product sourcing process. They typically do not produce items but have extensive market knowledge, so they charge a fee or commission for their services.

In retail, middleman are usually classified into two types—merchants and agents. Merchants buy and re-sell their goods, and agents specialize in negotiations of selling or buying goods.

Middlemen usually have close relationships with manufacturers because they valuable market feedback on top of providing the ancillary services of warehousing, distribution, advertising, insurance, finance, and more. In short, they let manufacturers focus on production and make their goods easily available to consumers.

When sourcing products, you can cut to the chase and go straight to manufacturers. However, there are things that can prove worth the additional fee charged by middlemen, like logistics handling and industry regulation knowledge (such as import taxes, fees, etc.)

For more resources and info, read our related guides below:

• How to Find Wholesale Suppliers for Your Retail Business
• 9 Best Wholesale Suppliers to Source Products
• What Is Dropshipping & How Does it Work?
• Alibaba vs AliExpress: Which Is Best for Importing & Dropshipping?
• How to Import From China in 6 Steps

Step 3: Vet & Select Suppliers

Once you’ve identified your sourcing criteria and limitations, you can identify relevant suppliers and begin to vet their products and form relationships.

When doing supplier research, it’s wise to have a shortlist of multiple suppliers for each of your products, including a primary source as well as backups . This helps ensure you always have an alternate source if needed. It will also allow you to shop around and work with the supplier that gives you the best deal.

Request Samples

To help you decide on a product supplier, order product samples to inspect the merchandise. Most suppliers will have a built-in option for you to order samples, but you can also request one via a quick message if needed. If a vendor does not allow sample orders consider it a red flag and move onto other potential partners.

Samples typically have a much higher unit price than when you buy the same product in bulk. You’ll probably also have to pay shipping and handling costs, but don’t let this be a deterrent—it’s much better to spend a little extra upfront than it is to order in large quantities and receive an unsatisfactory product.

When requesting a sample order, be sure to include all the relevant information so they can process your order quickly and easily. You should include:

• The product you want to sample
• The number of samples you want
• Your shipping address
• Any customization requests and instructions
• A request for a price quote for the potential final order

Aside from testing product quality, this initial test order can help you gauge how easy or hard it is to work with a potential supplier. During this process, you should be weighing logistics, quality, value, and supplier dynamics to select the best option.

Perform Quality Testing

Quality testing includes any experiments done to determine the performance potential and general quality of a product. It is a great way to ensure better customer satisfaction and catch faulty products before you put them on the shelves.

You should be performing quality tests on all of your samples, using them as customers would for at least several days to spot use problems. Spotting problems beforehand will allow you to either return to your supplier with feedback so they can tweak the product or work with a different resource.

Before setting out with sample and quality testing, you should define nonnegotiable quality standards—this will depend on the products in question, your brand, and your general price point.

Some standards you should consider are the following:

• Quality matching: Does the product match what you ordered online? Is it damaged? Discrepancies between listings and the product you receive are a bad sign for the reliability of your supplier.
• Logistics: Did you receive your product in the guaranteed shipping window? Was it produced in the guaranteed timeline? Were there any transport damages? How did the item get to you? Was your order filled accurately? How long did it take to fill your order?
• Communication: Were you able to reach out to suppliers and get answers to your questions? Did they keep you informed of product progress? Was the supplier respectful and timely? Was there a language barrier? You should avoid suppliers that are difficult to reach, disrespectful, or not transparent.
• Legal requirements (if applicable): Does this product meet its legal requirements?
• Product consistency: Take a closer look at your products and note if there are any inconsistencies with the production quality. Usually, this is a telltale sign that if a supplier cannot produce quality output consistently in one batch of orders, chances are they probably won’t in the long run.

Negotiate Volume Discounts

As you compare suppliers, another key factor to consider is the price. Simple math tells you that if you can get your products for cheaper (without sacrificing quality), you will have better margins and higher revenue.

So, get quotes from multiple suppliers—even ones you don’t plan to work with—and use those to find the best deals and negotiate better terms. If you can show a supplier you have a better offer, they’ll often be incentivized to negotiate and sweeten the deal.

Work With Multiple Product Suppliers

When sourcing products, you wouldn’t want to be at the mercy of a single supplier. It is always recommended to work with multiple suppliers. Among other things, there are very few instances where a single supplier has all the products you want to carry in your store.

This situation is not necessarily a bad thing. It can give the following advantages to your business:

• Better (and lower) prices: When suppliers know they are not your only option, they will work to retain your business. This can include giving you better offers, such as free shipping, a good discount, or even lower pricing.
• An assurance of steady supply for your products: A holdup with a supplier has a ripple effect in your supply chain. By having multiple options, you can turn to another supplier in case your main supplier has issues meeting your delivery deadlines or requirements.
• Better product quality control: When you have more than one source for products, you can compare product quality easily and even have better standards if you notice a supplier is doing a product better than the other.

When working with multiple suppliers, ensure to nurture relationships with all of them. We discuss this further in the next step:

Step 4: Nurture Relationships With Your Suppliers

Once you’ve narrowed down the best suppliers for your business, you’re ready to start ordering products and pursuing vendor relationships.

As a retailer, your relationship with your suppliers will likely not end after your initial purchase. Product sourcing takes time, energy, and resources—so it’s beneficial to keep working with your existing partners rather than looking elsewhere every time you need to reorder. Plus, as your vendor relationships grow, you’ll be in a better position to negotiate discounts, customizations, and credit lines.

Here are some tips for developing strong vendor relationships:

Organize Vendor Data

You should keep and organize all of your vendor information either via vendor management software (VMS), in your POS system, or in another consolidated location like Excel. This will create seamless communication and organization that allows you to easily navigate your supplier information.

In your vendor data log, include information like representative contact information, a list of their product, storage, and office facilities, contracts and policies, and receipts. You should log all of your purchase orders, invoices, and order receipts for tax and inventory management purposes.

Keep a list of the products you order from each supplier, as well as how many times you have ordered and any logistical information (order minimums, production time, shipping times, etc.)

Pay Invoices on Time

An invoice lists all purchased products/services as well as the payment details and due date. All suppliers will send invoices with your order, and you should always pay them on time to establish trust (and even possibly get a discount).

When first starting, it’s common for suppliers to charge upfront for initial orders. However, once you have an established relationship, the typical standard retail payment term is “net 30”—meaning the customer has a 30-day length of time to pay the total amount of their invoice. Some suppliers and wholesale marketplaces (like Faire ) operate on net 60 payment terms.

Check your supplier’s terms to see whether the 30 or 60 days start from the day you place the order, the day it ships, or the day you receive the order.

Leave Reviews

An easy way to help your suppliers and foster a strong relationship is to leave product reviews.

Suppliers know reviews are important for consumer buying decisions. In fact, a study from BrightLocal found that 46% of consumers trust customer reviews as much as a personal recommendation. So, vendors greatly value your positive reviews.

How to Know When You’ve Outgrown a Supplier

As your business grows, you may outgrow your suppliers. Your business’ needs will likely change in its formative years—which may result in the need for faster shipping times, larger order capabilities, or better product options. When this happens, it’s important to evaluate your fit for your acting suppliers.

• If you need larger product orders as customer demand increases, you can turn to manufacturers, wholesalers, and importers—who may be able to better meet that need than independent suppliers (who typically work on a smaller scale).
• If you have a desire to manufacture or customize new products because you have forged strong brand loyalty or identified a promising original product, the next step may be to make the shift from ready-to-order goods to custom-manufactured products —or even private label items .

Once you employ our tips on effective product sourcing above, such as requesting samples, performing quality testings, leaving reviews, and working with multiple suppliers, you will reap the following benefits:

• Increased overhead savings
• Increased efficiency on operations and innovation on products
• More flexibility on your supply chain
• Eliminating dependence on one product source
• Improved product compliance
• Increased capacity to meet demand if needed
• Better chances for scalability once your business is ready
• Strong supplier relationships

Frequently Asked Questions (FAQs)

Click through the questions below to get answers to some of your most frequently asked product sourcing questions.

What is product sourcing?

Product sourcing is the process of finding products you want to sell in your store, buying them from a supplier, and selling them. A typical source of products is a wholesaler, but manufacturers, artisans, dropshippers, importers, and trade show representatives are good sources, too.

What are the different types of product sourcing?

There are three common types of products sourcing—working with a manufacturer, ordering from a wholesaler, or utlizing dropshipping services.

How does product sourcing work?

Product sourcing involved determining which products to sell, establishing standards on how you want to get the products, vetting and selecting different suppliers, and nurturing relationships with them.

Product sourcing is a complex process that involves lots of trial and error. With the guidance above, you’re ready to start finding the best suppliers for your business and sourcing your items effectively.

About the Author

Find Agatha On LinkedIn

Agatha Aviso

Agatha Aviso is a retail software expert writer at Fit Small Business. She specializes in evaluating ecommerce and retail software features that help small businesses grow. She has evaluated dozens of the top software for retail SMBs. Agatha has more than 10 years of experience writing online content for both small business owners as well as the marketing industry. She also served as a content strategist and digital marketing manager for many entrepreneurs.

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Everything You Need To Know About Product Sourcing For Your Business

By Molly Olson Last updated on August 14, 2023

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Table of Contents

What is product sourcing?

Where to find wholesale product suppliers, six steps to successful product sourcing, benefits of having multiple sources for your products.

As a retail buyer, sourcing the consumer packaged goods (CPG) products to stock your shelves is integral to the success of your store. Without the right products, you won’t have customers. And without customers, well, you won’t have a business.

Today’s CPG landscape offers myriad opportunities for buyers to source new products. Suppliers big and small are ready and waiting to get their products on store shelves and in online shops, which can be overwhelming for buyers. It is essential that buyers understand where they are sourcing their products from, and how that ultimately affects their business. Here’s what you need to know about product sourcing.

Simply put, product sourcing is finding the products you want to sell in your store, buying them from a supplier, and then reselling them. If you’re a retailer — brick and mortar, online, or both — then product sourcing is the linchpin of your business.

Finding the right supplier for your business can be a challenge. The number of suppliers worldwide boggles the mind. And for retailers, there is no single supplier who can provide every single product you’ll need to stock your shelves and meet the needs and wants of consumers.

You will also need to meet your own business needs, whether it’s managing a small business, an online store, or even an online marketplace. It makes sense then, when looking for multiple product suppliers , to check multiple avenues to source those suppliers and products.

It seems that these days, everything starts online. Product sourcing is no exception. When looking online for places to source products for your retail business, there are two options:

•      Supplier websites
•      Online supplier platforms

While any business worth its salt these days has an online presence, it’s time-consuming and utterly laborious to try and find the right product for your business simply by searching websites. A single product search can turn up thousands of results.

Today’s grocery stores can carry upwards of 40,000 items in a single store, and while buyers aren’t adding that many new products, there’s an average of 30,000 new food products that roll out every year, ripe for the retailer picking.

As the CPG industry has changed, online product sourcing has as well. The launch of platforms that streamline product sourcing makes the process easier for buyers and suppliers alike. Using a platform like RangeMe , for example, retailers can log on and enter specific search criteria around the type of new product they are searching for. With more than 125,000 suppliers in the system, the results they get are the ones that most closely match their needs, and in many cases have been verified by RangeMe so retailers know that these suppliers have the capabilities to meet the retailer’s needs from the start.

Trade shows

While trade show attendance has been on the decline in recent years, they remain a viable and important source for new product research and acquisition for buyers. Trade shows allow buyers the opportunity for immediate information, seeing the product firsthand, and creating a relationship with suppliers. Trade shows also provide retail buyers with the opportunity to get a heads up on the latest trends, so they can be sure they’re stocking their shelves with the hot products of the present and future.

Sourcing new products can seem overwhelming — it’s not as simple as just finding a great product and putting it in your stores. But there are steps that retailers can take to make the process flow smoothly.

1. Research your product

First and foremost, retailers need to understand the product. Market research is essential to success; sourcing products without the necessary research is asking for failure. The research retailers need in-hand should be well-rounded. This can include:

• Store data. What are the numbers telling you from specific stores? Is there enough interest to drive sales and growth in your retail stores overall? Or would certain products work better for certain stores?
• Consumer demand . What are your consumers asking for? What are they talking about on social media? What are their concerns in surveys? What kind of feedback are you getting through different channels? What topics engage them most? And, linking back to store data, how does what they are saying actually compare to what they are purchasing?
• Trends. What’s trending in the product category, and which companies seem to be addressing these trends? Are these trends crossing over into any other categories?

With this information in hand, buyers can make more informed decisions when it comes time to initiate contact with suppliers. The more a buyer knows about the product he or she wants, the better the result will be.

2. Contact any potential suppliers

Before contacting suppliers, know exactly what it is you, as the buyer, need. Yes, part of this is doing research on the product, as mentioned above. But the other part of it is knowing what you want out of this initial contact with the supplier. Are you looking for information? For samples? Specific products? Knowing that, and being upfront about your needs, will help the process go smoothly.

This step is also where buyers put their contacts from trade shows to use, reaching out to suppliers they’ve met or been in contact with. It’s also a time when they can engage on platforms like RangeMe, as RangeMe streamlines the process so buyers can research products and easily reach out to suppliers all in one spot.

3. Ask for samples

Would you test drive a car without buying it? No. As a retail buyer, you’re not going to put a product in your store without sampling it. When contacting suppliers, part of the ask should be for samples so you can get feedback from team members, view the product up close and personal, and see how the supplier handles this first transaction before you make the decision on whether to include it in your product mix. Asking for samples is an important part of your sourcing strategy and a good way to test the quality of products.

4. Choose supplier to trial-run an order

Once a retail buyer finds a product that shows potential, order a trial-run for that product. This can mean the buyer asks for a certain number of units to be trialed across a retail chain, or it can mean a product is being tested in only certain stores. A buyer may choose to only trial certain products from the supplier’s overall lineup, rather than the lineup in its entirety.

Buyers should set parameters and key performance indicators around the trial run, including how long the trial will run, sales ratios, and consumer feedback, for example.

5. Evaluate supplier

Whether or not a buyer chooses to move forward with a supplier and form a more long-term relationship depends heavily on how the supplier performs during a trial run. Having the parameters mentioned above will help retail buyers better evaluate suppliers when the trial run ends. Did the product meet the expected goals? Did it overperform or underperform? How was it received in the stores?

In addition to these questions, retail buyers need to ask questions about the relationship with the supplier. Were they timely and clear in their communications? Did shipments arrive on time and with the proper products and counts? Where the products intact when they arrived at the store? Was the quoted cost on point?

These details can make or break a buyer- supplier relationship . And if a buyer chooses not to pursue a relationship with a supplier, honest, constructive feedback can be helpful to understand why the relationship isn’t moving forward.

6. Keep other supplier options!

Businesses merge, or disband completely, supplies can be difficult to get, or sometimes product quality goes down. These things are to be expected from suppliers in the wide world of CPG, where trends and products can change as often as the wind.  And when a consumer expects to always see a product on the shelf and suddenly isn’t, it can be a huge blow, shaking consumer trust in the retailer.

It is essential, then, for retailers to keep their supplier options open. Having more than one supplier for a product ensures that not only is the retailer getting what they need, but consumers are as well.

When sourcing products, retailers don’t want to be at the mercy of a single supplier dictating the terms. Retailers are most concerned with getting the products, their consumers want, on the shelf, and to do that may mean having more than one supplier providing certain products.

And that’s not necessarily a bad thing. Think about it. A multiple-supplier situation can provide:

• Better prices. When more than one supplier is in the mix, there is the opportunity to bring costs down on products.
• Insurance for supplies . If one supplier has an issue getting the necessary parts or ingredients for their product, it can cause a trickle-down effect of product delays, increased logistics costs , or more. But with more than one supplier on a product to pick up the slack, retailers should never, then, be without that product.
• Quality control. When there is more than one supplier for a product source, retailers can easily and quickly compare the quality of the two (or more) products, to ensure that both are still meeting the specs set forth from the beginning.

Sourcing products for CPG retail isn’t always an easy, straightforward process, and even after a retail buyer has found a great supplier and established a strong relationship, the work doesn’t end there. Product sourcing doesn’t stop once the product is sourced — maintaining the quality and integrity of the product is essential, as well as strengthening the relationship with the supplier.

Buyers should always be on the lookout to develop new supplier relationships and keep in mind the essential steps that will guide them toward success.

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Written By:

Molly Olson

Molly Olson is a writer and editor 10+ years of experience working on print and online publications in the CPG space. Her work has appeared multiple national publications, including the Baltimore Sun and Retail Leader. She is a self-proclaimed grocery store nerd and proud of it.

Read all posts written by Molly Olson

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Modern Spend Management and Accounts Payable software.

Helping organizations spend smarter and more efficiently by automating purchasing and invoice processing.

We saved more than $1 million on our spend in the first year and just recently identified an opportunity to save about $10,000 every month on recurring expenses with Planergy.

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• Where the best opportunities for savings are in indirect spend.
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• How strategic sourcing, cost management, and cost avoidance strategies can be applied to indirect spend.

Strategic Sourcing Plan: The 7 Key Steps

• Written by Lyle Del Vecchio
• 15 min read

Your business needs raw materials, components, finished goods, and services to produce the products and services you offer to your customers, as well as conduct daily business operations. 

Competing effectively in the modern global marketplace requires careful planning to create and optimize a sourcing strategy that provides not just a healthy return on investment (ROI), but value in the form of increased competitive performance, operational efficiency, and insight-driven decision-making. 

The strategic sourcing process begins with a well-developed and properly implemented strategic sourcing plan.

It might seem like a daunting endeavor, but creating and implementing such a plan doesn’t have to be an obstacle to your company’s long-term success. 

Form a team, invest in the right digital tools, and follow a few basic principles, and you’ll be well-equipped to create a strategic sourcing plan you can use to fine-tune your supply chain for maximum cost reductions, streamlined business processes, and big-time value that exceeds, rather than simply meets, your business requirements.

Why Having an Effective Strategic Sourcing Plan Matters

Doing business in the modern world is both more rewarding and more risky than ever before. Digital transformation and emerging technologies like artificial intelligence, Big Data analytics , and process automation have radically altered the ways in which businesses seek to meet the needs of their customers.

In procurement, the challenge has become maintaining business continuity despite disruptions like the COVID-19 pandemic, natural disasters, and international political upheaval. 

Every dollar you spend as part of your procurement strategy needs to generate the best possible ROI, both financially through cost reductions and lowest possible total cost of ownership (TCO), and in less tangible ways like improved supplier relationship management, bigger market share, and stronger competitive performance.

For companies of all types and sizes, strategic sourcing is a core component of overcoming this challenge.

Proactive and driven by analysis of internal processes, supply markets, and supplier performance, strategic sourcing makes it possible to meet business needs with maximum efficiency and value. 

Companies who choose to invest the resources, time, and talent required to develop a strategic sourcing strategy will improve their ability insulate themselves against unnecessary risk while freeing capital required for growth and innovation

Ideally, (your) strategic sourcing team will be made up of professionals who understand the importance of procurement and its partner accounts payable as drivers of value creation and cost savings for the business as a whole (particularly via the procure to pay, or P2P, process).

Implementing Your Own Strategic Sourcing Plan

Because it can be complex and, in some cases, require a fundamental shift in how a company does business, the first step in building an effective strategic sourcing plan isn’t diving right into a checklist; it’s assembling a specialized procurement team. 

Ideally, this strategic sourcing team will be made up of professionals who understand the importance of procurement and its partner accounts payable as drivers of value creation and cost savings for the business as a whole (particularly via the procure to pay , or P2P, process).

Better still, they should have the eProcurement tools they need to analyze their organization’s business needs, review its current supply chain management paradigm, and develop both a flexible and responsive strategic sourcing process that applies the principles of business process optimization continuous improvement to supplier relationship management , cost analysis, risk management, contract management, and finding ways to center procurement as a value driver.

One of the best ways to begin is by choosing a comprehensive, cloud-based procurement solution like Planergy. Modular, mobile-friendly, and equipped with artificial intelligence, advanced analytics, and process automation tools, such a solution makes it easier both to review your company’s current sourcing activities and develop a plan for optimizing them. 

Having a centralized data management solution, as well as the tools needed to analyze the data being managed, makes everything from benchmarking supplier performance to measuring the overall efficiency of internal workflows for refinement opportunities that will yield greater savings and value in addition to actionable insights for financial and procurement planning.

Let’s take a closer look at a typical, seven-stage strategic sourcing plan:

1. Needs Analysis

In order to identify what’s working, what isn’t, and where you need to trim the fat, the first step in achieving strategic sourcing involves benchmarking your current procurement processes (efficiency, cost-effectiveness, roadblocks and pain points, etc.) and the vendors in your supply chain (e.g., compliance and performance data, redundancies for both direct and indirect spend , etc.), as well as identifying the goals you’d like to set for improvements to both.

Having the right software tools will make this process much easier, as you’ll have access to both historical and current performance, compliance, and cost data, as well as analysis tools to mine it for insights.

2. Supply Market Analysis

At this stage, your strategic procurement team identifies the markets most likely to provide reliable, consistent, and high-quality raw materials, components, finished goods, and services. 

These markets are then analyzed for suitability and ranked accordingly based on cost analysis, spend categories (including identifying contingency suppliers for essential raw materials, goods, and services), and external factors, such as location, logistical considerations, potential political, social, and ecological concerns, etc.

3. Supplier Review

Once markets have been identified, reviewed, and categorized, potential suppliers are identified, evaluated, and ranked for suitability based on a number of factors, including:

• Financial performance and stability.
• Creditworthiness.
• Reputational issues.
• Current and historical compliance with industry and government standards.
• References supplied.

Ideally, this review will also help the team identify opportunities to eliminate wasteful redundancies and either eliminate or rehabilitate underperforming vendors from the existing supply chain while simultaneously adding contingency suppliers to help preserve business continuity and ensure supply chain resilience in the face of potential disruptions.

4. Sourcing Strategy Development

Knowing who you want to buy from is important, but you also need a strategic plan for how you intend to buy. 

Based on your organization’s overall business strategy, goals for supplier relationship management and development, and risk management strategy , you may revise existing protocols or establish new ones, including (but not limited to):

• Direct purchase via requests for proposal (RFP) or Requests for Quote (RFQ) sent to targeted vendors.
• Acquisitions: Identifying and contracting the most suitable suppliers for direct purchase for a specific term, rather than by the project.
• Strategic partnerships established through advanced contract management to create long-term agreements that benefit both parties.
• Vendor Management Key Performance Indicators (KPIs) to monitor and evaluate vendor performance, pricing, and compliance data over time.
• KPIs for internal processes and workflows to establish standards for profitability, performance, efficiency, growth, etc. while working to reduce costs and TCO wherever possible.

5. Implementation

Having developed a strategic sourcing strategy, your team will need more than a quick email to bring your organization into line with its mission. 

For example, if you’ve historically relied on manual processes and paper-based workflows, the transition to an eProcurement suite will require time, training, and support from the C-suite to succeed. 

Introducing concepts like guided buying, paperless processes, and automation of high-volume, repetitive tasks will likely mean training staff to adopt new, more efficient processes and adhere to the overall sourcing strategy in order to prevent problems like rogue spend.

In addition, even seasoned veterans may require additional training to use digital tools in executing more complex sourcing initiatives like strategic partnerships, process optimization, and revised RFP or RFQ processes. 

This is especially true if your team is implementing multiple sourcing strategies at the same time.

The best approach in this case is to execute implementation in stages:

• Information Period : Preparatory education and training for staff, management, and vendors.
• Implementation Period : New processes are implemented and monitored.
• Review Period: Evaluation of adherence to the new processes and improvements realized.
• Revision Period: Additional training and refreshers as needed to secure full buy-in; formalized key performance indicators to measure performance and refine processes over time.

6. Engaging with Suppliers and Reassembling Your Supply Chain

The supply chain you activate when you implement your new strategy will likely look very different from the one that preceded it. 

At this stage, your team has analyzed your available supply markets, identified and categorized suppliers based on the criteria you set, and is ready to execute the processes that will integrate these suppliers into your procurement process.

Communication and collaboration are especially important at this stage, as vendors need to know your expectations and the requirements you’ve set for both securing your business and doing business with you once the contract has been signed.

Ensuring everyone knows how to navigate your vendor portal, for example, will promote and preserve good relationships with current and potential suppliers while ensuring vendor information is captured in your centralized data management system from day one.

Both parties in every transaction should have an immediate and clear understanding of the expectations and obligations they bring to the negotiation table, and access to the tools they need to successfully strike a deal that meets everyone’s needs. 

New suppliers will appreciate the transparency and smooth transition; existing suppliers (especially key suppliers) will appreciate being treated like partners in your shared success.

7. Review, Refine, Revise

At this stage, the steady stream of data flowing through your eProcurement solution can be analyzed and compared to the KPIs you’ve set for vendor management and internal procurement processes. 

Through data analysis, the team can carefully review these KPIs to determine areas in need of further improvement, as well as opportunities to adjust the supply chain to improve resiliency, profitability, and competitive agility.

Source Strategically for Maximum Value

It’s always good to know you’re getting the best possible value for your dollar. So why not improve your risk management, enhance supplier performance, and turn your procurement team into a powerhouse of value creation while you’re at it?

By investing in a comprehensive procurement solution, assembling a strategic sourcing team, and following the basic tenets of strategic sourcing, you can improve supplier relationships, optimize your procurement process, lower total cost of ownership, and ensure your sourcing activities generate cost savings, competitive advantage, and a healthier bottom line for your business.

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What is product sourcing and how to source products

This post was last updated on February 14th, 2024.

Check out these vital tips for defining the right product sourcing strategy for your eCommerce business . Learn the ins and outs of finding the right suppliers and maintaining a well-oiled product sourcing machine.

One thing online storefronts and brick-and-mortar businesses have in common: there’s no store without products. That’s true whether you’re a home decor website, a fashion business or an artisanal coffee roaster. Every small business owner needs to have a good handle on product sourcing to succeed when starting their business .

Suffice to say that product sourcing isn’t just about selecting cool products, either. You must be able to accurately assess the efficiency, flexibility, and cost of your sourcing model in order to safeguard your business.

Need a better system for managing your online store? See how Wix eCommerce can help you streamline your business, from managing suppliers to monitoring performance.

What is product sourcing?

In the simplest of terms, product sourcing is the process of acquiring stock that you plan to sell on your online store. It involves working with suppliers who can provide you with the proper levels of inventory to satisfy customer demand.

It’s a critical part of any eCommerce business plan . And while new merchants may be focused on getting their first units built, established merchants may be reevaluating their product sourcing methods to help expand their catalog and shave costs.

Why product sourcing is so important

The wrong product sourcing strategy can take a toll on your profits and productivity, and affect the overall success of your eCommerce business . More specifically, product sourcing is important because:

You need to have the right inventory at the right time

Most eCommerce shoppers expect to receive their products within days. If your suppliers are out of inventory and orders start backing up, customers are likely to ditch your store and shop elsewhere.

We saw this happen often as pandemic-era shortages crippled the global supply chain. Out-of-stock messages rose by 250% in October 2021 compared to a pre-pandemic period (January 2020), according to Adobe . Electronics, jewelry, apparel, pet products, and home and garden were among the most affected categories.

As the supply chain crunch continues, having a strong product sourcing strategy with multiple suppliers will help you weather port closures, shipping delays, and other disruptions so that you can keep your customers satisfied and reduce the risk of them going to a competitor’s site.

Product quality is crucial

Few things will erode your store’s reputation faster than inferior products that let customers down. Not only will poor product quality lead to a spike in returns, but you run the risk of receiving negative customer reviews and damaging your reputation online.

Today’s eCommerce shoppers are also ever-sensitive to both poor-quality products and perceived (and actual) couterfeits. Sixty-eight percent of U.S. shoppers said that they are worried about more fake or low-quality products sold online due to the recent pandemic, according to a report by brand protection firm Red Points .

Flexibility is required for your business to scale

The right product sourcing strategy should help you achieve your growth goals. Spending too much upfront cost on supplies, or taking too long to produce handmade products are two challenges that tend to fetter growth. Each of these should therefore be taken into account when identifying the right suppliers and processes for product sourcing.

Read Also: 10 ways to grow your eCommerce business

How to source products for eCommerce

There’s no one-size-fits-all approach for product sourcing. Rather, you should choose the most appropriate strategy for your store based on your overall goals, your products, your target audience and your budget.

To get you started, here are the four most common ways to source products:

• Dropshipping

Manufacturer

01. Dropshipping

If you’re interested in starting a business but don’t actually want to design, manufacture—or even ship—the products yourself, consider starting a dropshipping business .

With both dropshipping and reverse dropshipping , you never actually need to touch the products. Instead, rely on suppliers then take care of everything from manufacturing to order fulfillment.

Here’s how it works: connect with dropshipping suppliers through a platform like Modalyst and select which of their products you want to sell on your website. You can choose to dropship all the items in your catalog, or only dropship a portion of your catalog. When a customer makes a purchase on your store, the order will get sent to your supplier, who’s then responsible for delivering the product straight to your buyer’s doorstep.

Create a dropshipping website to get started.

Merchants like Cruising Aviation have relied on dropshipping to get up and running quickly. Founded by a student pilot, Cruising Aviation offers more than 300 aviation-themed products, ranging from wall art to clothing that’s all delivered within two to four days.

Low upfront costs. Because you don’t create, design, store or send products, you can start dropshipping with modest financial investment.

No excess inventory. If no one buys your products, you’re not stuck with shelves of paid-for products—in fact, you don’t have to worry about the bulk of inventory management tasks. This gives you more time to focus on marketing your products and elevating your store.

Quick to scale . You can easily add a wide and diverse range of products to your store. For example, if you sell dog sweaters, you can expand into leashes, water bowls, and toys from a variety of different vendors.

Limited quality control . Since you aren’t making your own products, the quality of the products and the service level of fulfillment will be based on your vendor’s abilities.

Lack of competitive differentiation . When you work with dropshippers, it’s possible that shoppers will be able to find the same product that you sell on another site (and potentially for a lower price).

Lower profit margins . While dropshipping doesn’t bring high upfront costs, it can mean smaller profits depending on how much you’re paying your vendors and how competitive your products are.

Dropshipping success tips

Choose a quality partner. Modalyst , Spocket , Printful and Printify are all great platforms for finding dropship suppliers—and they all integrate with Wix eCommerce. Many of these platforms additionally offer print-on-demand services that allow you to create your own designs and patterns, while still reaping the benefits of dropshipping.

Get accurate shipping dates for each product. Make sure that every product you list on your online store has an accurate shipping and arrival date.

Choose partners that integrate with your eCommerce platform. Wix’s eCommerce platform, for example, directly integrates with many dropship platforms, including the ones listed above. This makes it easier for you to execute and track orders from one place.

Create unique product titles and descriptions on your website. A branded and compelling title and description will help you differentiate your product offerings from competitors’.

02. Wholesaler

When you choose a wholesaler for product sourcing, you get the opportunity to buy products in bulk. Partnering with a wholesaler is a good choice if you don’t want to create products from scratch, and want to fill up your catalog quickly.

Alibaba and AliExpress are two of the most popular wholesale marketplaces. Some well-known marketplaces, like Etsy , also offer a place for buying wholesale.

Wholesales suppliers typically keep an eye on trending products in order to provide the best, most relevant selection of products for their retailers. But once obtaining inventory from your suppliers, you’re responsible for warehousing those products and fulfilling orders.

Low cost per unit. Because you order in larger quantities, you’ll pay a wholesaler a relatively low per-unit cost for each item. That may lend to larger profit margins.

Fast to start up. Wholesalers typically work with many retailers. That means they know which products will sell, giving you a better chance of driving sales starting on day one.

Access to a wide variety of products. The right wholesalers can help you assemble an impressive array of products and accessories to sell on your online store.

Inventory and fulfillment is on you. A wholesaler will ship their product to you, not your customer. That means you’ll need a warehouse or another facility to store inventory, and you’ll have to either fulfill orders yourself or hire a vendor to do the work for you.

Lack of product differentiation. Other retailers may use the same wholesaler as you and offer the same products.

Larger upfront costs. You’ll need to anticipate paying for all items upfront prior to selling them online, which can put your business in a pinch if you don’t have enough capital or don’t wind up selling as many units as you anticipated. Wholesale discounts will also depend on how much inventory you’re able to buy in bulk, so you may not snag as good of a deal as a larger retailer who has more cash on hand.

Wholesaler success tips

Invest in research. It may take some digging, but it’s worth the time to find a wholesaler who has exactly the type of product you want to sell in terms of quality, features, and other criteria.

Look for wholesalers with private-label services. This will allow you to sell their products with your branding on them, helping you draw more attention to your brand and visually differentiate products. (If you need help creating a logo, check out Wix’s free Logo Maker .)

Negotiate smartly. Wholesalers will likely have minimum order quantities (MOQs) that you must meet. However, there may be room for negotiation—for example, you may offer to pay a slightly higher per-unit price, diversify your order, or ask to pay in installments.

03. Manufacturer

Let’s say you have a great product design. You’re just looking for someone to bring it to life. How do you source products then? The answer may lie in manufacturing .

This product sourcing strategy allows you to design private-label products and potentially select the raw materials yourself, while your vendor will do the actual product creation. The manufacturer will then ship their products to you so that you can store and sell them.

Wix merchant Forge to Table manufactures its own hand-crafted knives. When they experienced a shortage of their signature product during pandemic-related lockdowns in early 2020, they found another local manufacturer to produce and sell a different item—branded aprons—to help weather the storm. Then, once their knife manufacturer got back up and running, Forge to Table reaped the benefits, achieving a YoY sales increase of 345% in Q4.

Create unique products. Working with a manufacturer allows your store to offer one-of-a-kind, branded items.

High level of quality control. Even though you don’t make the products yourself, you can examine the products before you sell them. You also get to control branding and price.

More flexible than other methods. Working with a manufacturer can offer more flexibility in how you build your products, optimize them over time, and how much of them to produce in a given timeframe.

High upfront costs. A manufacturer will typically enforce an MOQ, which could require a significant upfront investment.

Longer product development cycle. It could take many months for a manufacturer to create a prototype, refine it, get it to your specifications, and then produce enough finished product to get you started.

Finding a quality manufacturer isn’t easy. Identifying the perfect manufacturer can be a long process. There are various factors to keep in mind—including price, reliability, and time to product items—when searching for a partner. (View this guide on how to find a manufacturer to get started.)

Manufacturer success tips

Choose a manufacturer that meets your current and future needs. Ask yourself, will the manufacturer be able to keep up with growth or fluctuations in demand month over month?

Ask thorough questions. Ask prospective manufacturers about their processes and timelines so that you don’t face any surprising delays. Also, check reviews, consult third-party sources like the Better Business Bureau , or chat with other users (if that’s an option) about what it’s like working with the manufacturer.

Factor manufacturing costs into your product cost. Make sure you account for the extra expenses that will arise from working with a manufacturer when creating your pricing strategy.

04. Handmade

A homemade or do-it-yourself (DIY) approach to product sourcing tends to work best for jewelers, carpenters, and other artisans. It’s also embraced by some cosmetic merchants. With a handmade approach, you can retain complete control over the design and manufacturing of your products.

Little Giraffe Bath & Body Co. prides itself on offering natural, handmade products. Little Giraffe uses high-quality ingredients, including pure essential oils, to ensure that its one-of-a-kind products are kind to the planet.

Full creative and quality control. Because you make the products, you can ensure each item you create meets your quality standards.

Competitive advantage. Your products will be truly unique to your brand; customers won’t be able find them on any other online store.

Freedom to work with whomever you want. You choose the raw materials. You choose the hands that make the products. You choose how to handle all aspects of the supply chain for your products.

Raw material scarcity. Current supply chain challenges may make it more difficult for DIYers to source the raw materials they need to create their products.

Difficult to scale. Every time you need to meet increased demand for your product, you may need to increase your staff.

Major investments in upfront costs and time. In addition to choosing and buying all the raw materials, you’ll need to hire the people to do the work or make the products yourself. You’ll still need to cover the other costs (and responsibilities) of business, too, like costs related to inventory, packaging, shipping, and marketing.

Handmade success tips

Choose the right raw material suppliers. Whether you need diamonds for jewelry or wood for homemade furniture, you’ll need to develop strong relationships with your vendors.

Consider the potential impact of supply chain delays. Plant shutdowns and other pandemic-era concerns can slow the delivery of your raw materials. Develop backup plans in case one of your main vendors experiences disruptions.

Plan for more storage space. In addition to potentially maintaining your own inventory of finished products, a DIY approach means you’ll need space to store your raw materials and products in development. Plan for this ahead of time, and understand how your workspace (plus processes) needs to evolve as your business grows.

Source your products wisely

No matter which product sourcing method you choose, your products are the lifeblood of your online store. The right product sourcing strategy not only affects the products themselves, but creates an engaging eCommerce experience that keeps customers coming back for more.

Product sourcing FAQ

Can i choose more than one product sourcing method.

The short answer: yes. It’s common for merchants to use multiple methods of product sourcing. Let’s say you sell camping and caravanning gear. You could work with a manufacturer to create custom-designed tents at scale, but then tap a dropshipper or wholesaler to provide sleeping bags and other accessories. Generally, the more options you create for your business, the better in terms of reducing over-reliance on one supplier or method to maintain and scale production. However, this could potentially add complexity to your business. You’ll have to be able to initiate, manage, and monitor your various sourcing methods.

How do I pick the right vendors?

Which kpis should i track with suppliers, how do i find trending products.

Brielle Gordon

Marketing Writer, Wix

Brielle is a Colorado native with a passion for innovation and helping to mobilize entrepreneurs. Brielle is a marketing writer for Wix eCommerce, which powers over 700k online stores worldwide.

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The Procurement Process – Creating a Sourcing Plan: Procurement : A Tutorial

The procurement process – creating a sourcing plan.

Introduction Identify Opportunities Analyze the Situation Undertake Strategic Analysis Case Study Create a Strategic Sourcing Plan

Introduction

The procurement process.

Business requirement for product or service

User need for product or service

Identify Opportunities

Opportunities are usually triggered by a business requirement for a product or service.

Material requirements might include:

• Raw materials
• Completely finished products

Service requirements might include:

• Computer programmers
• Hazardous waste handlers
• Transportation carriers
• Maintenance service providers

Users (also called internal customers ) identify a need for material or service requirements, and communicate this need to purchasing.

Analyze the Situation

Situation analysis can include “Purchase Requisitions” or “Statements of Work.”

Purchase Requisitions should contain:

• Description of required material or service
• Quantity and date required
• Estimated unit cost
• Operating account to be charged
• Date of requisition (this starts the tracking cycle)
• Date required
• Authorized signature

Statements of Work (SOW) for services specify the work that is to be completed, when it is needed, and what type of service provider is required.

• Marketing may want to purchase an advertising campaign.
• R&D may need a clinical trial.
• Human resources may need to print a brochure.

Undertake Strategic Analysis

Procurement must work with the suppliers and its internal customers to analyze the process to understand where opportunities exist to eliminate waste and increase value delivery.

Supplier evaluation

In-depth evaluation is required for major purchases. It is used for non-routine supply items of higher value. It begins with a list of potential suppliers. Existing suppliers with good track records should not be ruled out.

Supplier assessment criteria

1. Equipment and facilities

• Up-to-date?
• Ability to expand in the future?

2. Processes

• Ramp-up capabilities?
• Process cycle times?
• Reliable quality control program?
• General housekeeping?
• Working conditions?
• Status of back orders?

3. Management Capabilities

• Project management skills?
• Stable, harmonious team?
• How do they view your company as a customer?
• Long-range strategic vision?
• Leadership?

4. Information Systems

• Up to date?
• Training requirements?

Supplier evaluation criteria

1. Planning and control systems

Planning and control systems include those systems that release, schedule, and control the flow of work in an organization. As we shall see in later courses, the sophistication of such systems can have a major impact on supply chain performance. Among the questions the buying firm should ask: Does the supplier have well-developed systems for planning material, personnel, and capacity needs? If not, why not? Does the supplier track key performance measures, such as throughput time, quality levels, and costs? Are these measures compared to performance objectives or standards? How easy is it for customers to interact with the supplier’s planning and control systems? This last point is particularly important to organizations interested in effective supply chain management. When interaction is high, information about the customer’s needs flow easily to the supplier, and the customer can, in turn, retrieve important information from the supplier. Consider the relationship between Wal-Mart and Proctor and Gamble (P&G). When a Wal-Mart store sells a particular P&G item, the information flows directly to P&G’s planning and control systems. P&G can then plan production and schedule shipments accordingly. Furthermore, Wal-Mart can easily find out when a P&G shipment will arrive at one of its distribution warehouses, thereby allowing Wal-Mart to consolidate this shipment with others on the way to individual stores.

2. Environmental regulation compliance

The 1990s brought about a renewed awareness of the impact that industry has on the environment. The Clean Air Act of 1990 imposes large fines on producers of ozone-depleting substances and foul-smelling gases, and governments have introduced laws regarding recycling content in industrial materials. As a result, a supplier’s ability to comply with environmental regulations is becoming an important criterion for supply chain alliances. This includes, but is not limited to, the proper disposal of hazardous waste.

3. Minimum typical evaluations to consider

Weighted Point Method Using a Weighted Point evaluation system, purchasing can rank suppliers according to some of these criteria.

In this example, Supplier A has a score of 3/5 on quality, 4/5 on delivery, 2/5 on price, and 7 / 10 on service, with a total score of 63. Supplier B scores better than A on quality, not as well on delivery, but better on price and service. Given the associated weights on quality, delivery, price, and service that are important to the purchaser, the weighted scoring system suggests that Supplier B is better suited for this purchase, and should be awarded the contract.

Using the information provided in Case Study 2 , as well as the Excel spreadsheet, evaluate the following:

• Respond to your manager’s request by discussing the critical factors that you should consider when deciding whether to single source or multiple source this critical item.
• Provide your recommendation for awarding this contract using a formal weighted point supplier evaluation tool that you have developed.
• What other factors might a buyer or buying team consider when evaluating the worthiness of potential suppliers?

Create a Strategic Sourcing Plan

A strategic sourcing plan requires procurement to assess and manage the change so that the benefits of the procurement strategy are realized.

The plan must be created in a way that ensures:

• The benefits identified in the strategy are delivered in full and on time.
• Change will take place successfully and in accordance with a realistic time plan.
• Risks have been considered and the appropriate contingencies are built in to the overall plan.

What makes a good plan?

• Implementation is time-intensive and often has a high failure rate.
• Successful implementations are properly planned and communicated during the creation of the strategy, and then are actively executed and continually managed to completion.
• As the strategy is being developed, the procurement team will identify which areas of the business will be impacted, directly and indirectly.
• During implementation, measurement and attainment of results and the identification of key milestones help to ensure success.
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How to Write About Sourcing and Fulfillment in Your Business Plan

4 min. read

Updated October 27, 2023

Sourcing and fulfillment (which are direct costs) are the other side of the “what do you sell” question: How do you build that product? How do you fulfill that service? What does it cost you? Where do you buy the components? They’re critical factors for any business. 

In a Lean Plan, sourcing and fulfillment costs might be merely implied in the direct costs section of the forecast, or in a few bullet points in tactics, or operations. In a full formal plan , it might be included in the section on the operations. If you’re using LivePlan, you’d add sourcing and fulfillment as a topic within the operations section in the Execution chapter of your plan. Keep in mind, not every business will need a sourcing and fulfillment section in their plan, so only include it if you need it. 

• What are sourcing and fulfillment?

Sourcing or fulfillment are descriptions of where you get the products you sell (sourcing); how you fulfill the services you sell (fulfillment); or how you package, assemble, and ship products you sell online (fulfillment).

For products, sourcing commonly covers how you purchase from distributors, vendors of raw materials, suppliers, and so forth. For services, fulfillment commonly includes how you work with subcontractors, drivers, analysts, research sources, and so on. Fulfillment also applies to assembly, packaging, and shipping for online product businesses.

However, whether or not you include a section on sourcing and fulfillment in your business plan depends of course on the exact nature of your business.

Sourcing is important for most product businesses, but maybe not for the craftsperson selling handmade goods or hand-painted greeting cards at a local flea market. Fulfillment is important for most service businesses, but maybe not for the self-employed management consultant who does the work alone. It’s important for some product businesses—those that take orders and ship, or those that assemble products, might have both sourcing and fulfillment.

Use your common sense as you decide what works for your plan. If you are developing a more traditional plan, then the title of that section is normally “Sourcing” for products, “Fulfillment” for services, and “Sourcing and Fulfillment” if you sell products and services, or if the products you sell need to be assembled and shipped, or if you need to deal with packaging and shipping for online orders.

• Manufacturing businesses

Sourcing is likely to be important to a manufacturing company . Your vendors determine your standard costs and hold the keys to continued operation. Analyze your standard costs and the materials or services you purchase as part of your manufacturing operation. Include spreadsheet lists, bills of materials, and standard cost breakdowns. Include unit economics.

You may have additional documentation you can copy and attach as appendices, perhaps even contracts with important suppliers, standard cost breakdowns, bills of materials, and other information.

Where materials are particularly vital to your manufacturing, you might discuss whether second sources or alternative sources are available, and whether or not you use them or maintain relationships with them. This is also a good time to look at your sourcing strategy, and whether or not you can improve your business by improving your product sourcing.

• Product sales, retail, distribution, resale

The bookstore needs to buy books. The restaurant needs to buy raw foods. The hardware store needs to buy everything it sells to have the goods on the shelves. So, resellers should explain how they work with distributors if they do.

They can also call out the most important distributors, and explain the discounts and margins involved.

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• Fulfillment for products includes assembly, packing, and shipping

Some product businesses include a fulfillment function related to assembly, packing, and shipping.

For example, one of the early strategic decisions we took at Palo Alto Software was not to assemble physical products and pack and ship from our offices. Instead, we used an outside vendor, called a fulfillment house, that stored components (disks, boxes, packing materials) and did assembly and shipping on-demand, for a fee. That allowed us to focus on the software without having to manage those fulfillment functions.

The per-unit costs were higher, but we didn’t have to worry about capital costs for shrink wrapping equipment or fixed costs of employees and managers.

• Services have sourcing and fulfillment too

Sourcing is not just for product-based companies. For example, a professional service company , such as an accounting practice, medical practice, law practice, management consulting firm, or graphic design firm, is normally going to provide the service by employing professionals. In this case, the cost is mainly the salaries of those professionals.

Other service businesses are quite different. The travel agency provides a service through a combination of knowledge, rights, and infrastructure, including computer systems and databases. A restaurant is a service business whose costs are a combination of salaries (for kitchen and table waiting) and food costs.

• How to include sourcing and fulfillment in your plan

For a traditional business plan, “Sourcing,” “Fulfillment,” or “Sourcing and Fulfillment” will be a section in the product description. Include details, such as bill or materials, or distributor or vendor relationships, as needed to serve your business plan purpose.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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A Complete Guide to Product Sourcing for E-Commerce Websites

August 31, 2020

by Justina Bakutyte

On the surface, product sourcing for your e-commerce website sounds like the easiest part. 

Know your product, find a supplier, import, and sell. But in reality, the process is a lot more complex than that. Sourcing good quality products at good prices and good profit margins involves research and a lot of trial and error.

In this comprehensive guide, we look at what product sourcing actually is, to each stage of the product sourcing journey, types product sourcing strategies and finally how to evaluate and sell your products once you’ve sourced and supplied them.

What is product sourcing?

Product sourcing is the process of finding good quality products to sell from reputable suppliers at good prices. Within that process, there are a number of different stages, such as researching the chosen product, calculating the price and cost of the product, and then negotiating with suppliers in order to achieve the best deal. Ultimately, the goal of product sourcing is to locate the best products, from good suppliers, at prices reasonable enough that they allow for a distinct profit margin.

Product sourcing sounds simple but can be a minefield with unreliable suppliers, hidden costs, and sometimes misrepresented or low-quality products. To keep an edge on your competitors, it is important to take the time to learn effective product sourcing strategies in order to maximize your potential profit from each sale. Outreaching to a product sourcing agent is one way to make this process much more efficient by relying on their expertise of various suppliers and niches.

What is a product sourcing agent?

A product sourcing agent , or sourcing supplier, is someone who has several years of experience working either in or alongside a sourcing or trading company. Most of the time product sourcing agents come with an already established contact book full of reliable suppliers whom they have already formed good relationships with.

Product sourcing agents work as your representative and can help you identify a reliable supplier, negotiate prices on your behalf, as well as oversee production processes, sign off on any required documentation, undertake quality control procedures of your product, and most importantly, ensure that you receive your products at the agreed shipping time.

Whilst product sourcing agents are a good resource to use at any given time, they are particularly beneficial if you are sourcing your product from overseas in low-cost, multiple factory regions such as China or Taiwan.

What to look for in a product sourcing agent

Just like the product sourcing process, identifying a product sourcing agent requires similar levels of research! Key things to look for include:

A business license

All genuine sourcing agents should be licensed, which means they have legal jurisdiction to carry out their work. It’s also a layer of protection for your business – if anything negative was to happen, you could use their business license number to track and then subsequently get in touch with them.

Experience and industry expertise

It goes without saying that your agent should have proven levels of expertise, but specialisation in your chosen niche is just as important. If an agent has a good level of generalist knowledge but has very little experience sourcing your product, it may be worth continuing to search for an agent who has more relevant experience sourcing products like yours as they’re more likely to have a better network of suppliers and cost understanding.

Communication

Communication is vital in any relationship, but it’s even more so when sourcing products from abroad. Your agent should be available at all times to answer queries and should keep you well informed of every stage of their work. Miscommunication around the product, shipping time, or pricing can quickly become a big problem and is something to be avoided at all times, so if your agent is slow to respond, or avoids certain conversations altogether, it’s best to avoid.

4 product sourcing strategies to take note of

If a product sourcing agent isn’t available to you, or unnecessary for your e-commerce journey, then there are ways to learn and undertake product sourcing strategies yourself.

1. Work with a wholesaler

If a good relationship can be developed with a reputable wholesaler, there is a world of opportunity waiting in the form of being able to sell unlimited, unique products without the cost of needing to manufacture them yourself.

Additionally, many wholesalers will only produce products they know are guaranteed to sell well because of the huge quantities they make at any one time - so you already know there is an established need or market for your product. However, due to the nature of wholesalers, products will need to be bought in bulk which means bigger initial costs upfront, as well as inviting potential undercutting competition from other sellers procuring products from the same wholesaler.

2. Work with a manufacturer

Establishing direct working relationships with manufacturers cuts out any potential middlemen as you are shipping the product to yourself with no additional incurring fees. Whilst you will be able to attain products at lower prices than working with wholesalers, you will still need to buy in bulk because of the minimum order quantities manufacturers work to which could prove too expensive for a starter business with a smaller budget.

3. Try handmade products

A recurring trend, the appetite for artisan, handmade products is growing year on year as buyers aim for originality and uniqueness in their products or furnishings. A majority of the time, most sellers will be small independent businesses, so there is no need to pay bulk fees and the margin for competition is lower as the products sourced are likely to be completely unique. However, inventory could become a problem if the demand outsurges the rate the seller can produce, or if the seller is unable to continue manufacturing the products.

4. Visit a trade show

Trade shows, exhibitions, and conferences can not only be great places to conduct market research, but also identify and establish relationships with manufacturers, wholesalers and other independent retailers often selling unique products that are not yet common market knowledge.

You will be able to inspect the product up close and gain a deeper understanding of the seller or supplier which enables you to better navigate any potential issues like supply and demand. However, depending on your niche and location, these trade shows may not appear regularly enough.

3 tips to improve your product sourcing strategy

The more you undertake product sourcing, the more refined you can make your process. The art of product sourcing is that it rewards patience, research and curiosity so try not to let it overwhelm you and instead enjoy experimenting with different methods and strategies. Try these tips the next time you’re sourcing your ideal product:

Research, research, research

Analyzing the demand for your product and then analyzing it again is the key to differentiating a good product from a great one. Research your product on one channel, and then research it on another one comparing audiences, expenses, and lifestyles. If it is an already existing product, check reviews on all the major supplier sites, and find tools to analyze sales data. Is the graph going up, or starting to plateau?

Emulate a proven model

Imitating a retailer’s proven, successful sourcing model will not put you behind in the e-commerce world - in fact, it’s one of the best things you can do. Undertake research into either your potential competitor’s sourcing strategies or any successful e-commerce store: Can you identify where they purchased the product? Was it a brand or have they bundled from an unknown wholesaler? Is it handcrafted, or have they simply white-labeled their products? See what’s working on their channels and replicate those onto your own.

Always prepare a plan B

Try not to get tunnel vision for just one product. If that product ends up outstripping supply and demand, or its demand suddenly plateaus overnight, your store risks falling into disrepair straight away. When sourcing your initial product, try to identify another, potentially unique product you could sell alongside, or instead of, the original. Is there something similar? If the products are similar in nature, this could open up great cross-selling opportunities too.

Where and how to find trending products to sell

Part of being an e-commerce store owner is trying to stay ahead of the trend, and sell new, or trending products before the competition gets to them first. Knowing how to identify and monitor trending products is, however, a skill in itself. When the product is so new, there is often not enough data to accurately assess its longevity or if it's worthwhile.

Luckily, major retailer websites can often give good indicators as to how well something is selling or will sell. For example, many major clothing websites include an option to shop by trend, offering an opportunity to watch how well new seasonal products are being received by consumers.

Away from large sites, tools such as Google Trends offer Featured Insight tabs and opportunities to filter by product, location, and age and supply their data in an easy to plot graph, making rising or falling opportunities easy to identify and validate.

If you want to potentially find these trending products quicker however, there are some valuable resources you can use.

• Trend Hunter : Trend Hunter is a global online community that aims to share and inspire the newest trends.
• TrendWatching : TrendWatching is one of the world’s leading consumer trend firms. They have in-house teams in Amsterdam, Berlin, Singapore and New York. They boast a network of 1,700+ spotters in over 80 countries who are always on the lookout for emerging consumer trends and new innovations.
• Springwise : Every day, powered by their community, Springwrise finds, curates and analyses the newest innovations from around the globe. They put all this information out in a newsletter full of free new trend data.
• Ecomhunt : A product curation website where trending products are added on a daily basis
• Uncrate and Bless This Stuff are popular consumer product blogs and magazines of curated men’s products
• PSFK : PSFK IQ is a membership-based platform that provides personalized trends intelligence & research to retail, strategy and innovation teams. It’s main aim is to provide the latest insights so you can stay ahead of the curve.

Product evaluation

Ultimately when selecting a product to take to market you only need to answer two fundamental questions:

• Will I be able to produce a profit with this product?
• Will this product help me scale by business?

If you have done your market research correctly you may already have a feeling of yes or no to both of those questions. There is however a lot more to consider before reaching your final answer.

Do you know the potential market size or demand? If your market is too small, or too niche this will limit how much you can scale. Standard market research should help you understand this, but it will also be worth checking search volumes to see online demand.

Is the product a trend, fad,is it in a flat or growing market? Is your product a long term one or just something to make a quick buck? Understanding which category your product fits into will help you understand if it's worth it. You don’t want to spend a lot of your time and energy to source a product to find you missed the boat and the market is set to decline.

Is the product available locally? Simply put if your product is available locally there is less need for people to search for and buy it online.

Who are your target customers? Do they regularly buy online? Can they actually buy your product? How are you going to reach them? For example understanding that your target market is 18-25 year old females who regularly use Social media will help you formulate a marketing plan that can instantly get your product in front of them and potentially your first few sales.

What is your potential selling price? What are you competitors charging? What price do you need to charge to make an acceptable profit margin?

What is your product profit margin? This will be a make or break question, if you’re not going to be able to make any profit on the product you may want to give it a miss and continue your search.

What is the size and weight of the product? This will impact your shipping costs, which again will eat into your margins so you need to get an idea of costs here as well.

Is the product durable? Linked to the above when your product is in transit you don’t want it to break easily and have costly returns or replacements to deal with.

Do you need to take into account seasonality? Understanding this will help you plan stock and also prepare yourself for potential drops and peaks in sales so you can manage your cash flow better.

Does your product serve a passion or solve a pain? Is your product a nice to have or will it make your customers' lives easier? If the answer is yes to both then you might be onto a winner.

Are you aware of any restrictions or regulations for your product? It’s vital to learn about any potential restrictions and regulations before investing your time and money into a new product. If you plan on shipping worldwide some countries may have different import regulations compared to others. Having an understanding of these in the beginning will save you a lot of time, energy and money.

Supplier evaluation

If the product has passed your initial evaluation checks, now it’s time to find a supplier. Look for suppliers that are reliable, and have experience in balancing supply and demand - especially if the product has the potential to sell many units in a fast amount of time. Make sure to order a test product from the supplier first so that you ensure you are getting the product for its expected quality.

If the product is priced well, communicate with the supplier for your shipping time estimations, and don’t jump straight in at initial prices - ensure that you are still making a profit margin for your store once shipping and purchase price are incorporated.

The importance of product pages on e-commerce websites

Once you have your product sourced, supplied, and ready to sell the next stage is showcasing it on your website’s product page. Product detail pages are often overlooked but they are one of the most crucial pages on any e-commerce website.

Product pages play a vital role in convincing your website visitors into a sale, and as such, they should be primed and prepared for maximum conversion value. Here are some key things to include for maximum value.

Clear, high-quality photos

It’s a well-known fact that the majority of people buy with their eyes. In fact, 67% of consumers say that the quality of a product image is “very important” in selecting and purchasing the product. Crisp pictures displaying your product in a variety of real-life scenarios and allowing your potential customer to envision it in their daily life can make the difference between a window shop and a must-have.

A positive product description

Product descriptions need to accurately define the features, benefits, and functions of your product. Descriptions should also appeal to either the needs or wants of the potential consumer, or explain how the product solves a problem the consumer could have.

It sounds obvious, but the positioning of the price can be vital for conversion. It should be prominently displayed near the Buy or Add To Cart buttons to help with the natural flow of the page, and price anchoring, or compared at pricing that encourages your consumer into buying a deal should be used.

A call-to-action

An essential part of the product page. Without a call to action like an “Add to Cart” your visitor will not convert to a buyer. Make these demands short, catchy, and snappy.

Social proof

Another well-documented fact is that often purchasers make decisions based on social proof , or in layman’s terms, the opinions of other people. In fact 88% of customers trust reviews as much as personal recommendations. So don’t discredit reviews. Make sure there is an easily navigable and easy to find review section where customers can all but sell the product for you by including their own pictures or talking about how great it is.

Within our comprehensive guide, we have charted the process of product sourcing and mapped out the key elements you need to achieve the one successful goal: Finding good products, from good suppliers, at prices that you provide you with a good profit margin.

We’ve talked extensively about developing relationships with product sourcing agents if it is an option suitable for your e-commerce business , and outlaid product sourcing strategies that you can undertake to further your experience and research, and we’ve given you tips on how to keep improving and refining your strategy, as well as some useful pointers for being able to identify trending products in the future.

Justina Bakutyte is the Growth Marketing Manager at Yieldify , a company that helps e-commerce companies quickly and easily grow their leads, conversions, and revenue by creating personalized customer journeys.

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How to Source Products (+9 Top Sourcing Websites and Apps) [2023]

To build a successful ecommerce business, you need an effective way to source products — but like so many things in life, this is easier said than done.

Before you can source products, you must choose a product sourcing method that works for you, evaluate different product sourcing companies, and then select a supplier to work with.

If that's not enough hard work, there are so many options out there — which ones should you consider?

No need to worry — we've got you covered.

In this product sourcing guide, you'll learn everything you need to know to get started. First, we'll explore 3 popular product sourcing strategies. We'll then take a look at 9 product sourcing websites and apps that you can use.

But first, let's get on the same page:

Start selling online now with Shopify

What Is Product Sourcing?

Here's a quick product sourcing definition:

Product sourcing is the act of acquiring products that you can sell. Today, most businesses source products online via B2B marketplaces, but you can also source products locally or at trade shows.

How to Source Products for Your Business

Basically, there are 3 main product sourcing strategies — y ou can source products from:

• Dropshipping suppliers , for a hands-off experience
• Wholesalers, to sell third-party goods
• Manufacturers, if you want to create custom products

Each of these product sourcing methods will affect virtually every aspect of your business operations and sales efforts, so it's vital to choose the best one for you.

Let's explore each one in a bit more detail so you can decide how to source products for your business.

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1. dropshipping sources.

Dropshipping is hands-down the simplest way to source products. The best part? Dropshipping isn't just a product sourcing method — it's also a fulfillment method.

So, how does dropshipping work?

First, you would partner with a dropshipping source and select the products you want to sell. You can then add these products to your store and start marketing them online. Then, when you receive an order from a customer, your dropshipping source will be notified, and they'll send the product to your customer for you.

The image below illustrates this process:

Dropshipping's key strength is that you don't need to buy inventory upfront — which means you can start an ecommerce business for just $39 per month with a Basic Shopify account.

What's more, you can test as many products as you like without risk of losing investment. 

It's also easy to scale since you can add products to your store without a time-consuming and costly product sourcing process.

That said, dropshipping can be very competitive thanks to a low barrier to entry. Also, profit margins are relatively low as you have to pay your dropshipping supplier to produce, store, and ship products to your customers.

Plus, it can be tough to differentiate your store from competitors' if you’re selling generic products. But you can get around this issue by selling print-on-demand products — a type of dropshipping where your supplier adds your designs to products before shipping them to customers.

2. Wholesalers

This next way to source products kicks things up a notch. With this method, you would purchase products in bulk from a wholesaler.

Now, if you're just starting out, it's possible to have the goods shipped to your home. You could then store them in a spare room or in your garage and ship orders to customers yourself.

However, as your business grows, you'll have to set up a warehouse and onboard a fulfillment team or hire a third-party fulfillment service to manage these tasks for you such as Shopify's Fulfillment Network .

The key advantage to purchasing products wholesale is that you'll get a low cost per unit — and the more units you buy, the cheaper the unit will be. Consequently, the more money you invest upfront, the larger your profit margins will be — this is referred to as 'economy of scale.'

Sourcing products in this way is also a relatively straightforward process.

Some wholesale suppliers also provide private label services — this is when you would purchase products in bulk and have the supplier add your branding to them. For example, Havlu Sport Beach & Swim Towels allows businesses to purchase a label package and sell towels under their own brand.

However, just like with dropshipping, it can be challenging to differentiate products from competitors if you don't opt for private labeling.

And investing in inventory upfront brings financial risk as no product is guaranteed to sell. Although, you can reduce risk by selling pre-validated products from established brands.

Also, as your business grows, you'll likely need to source products from many suppliers, which can create management challenges.

3. Manufacturers

Manufacturing is, without a doubt, the most challenging way to source products for your business.

Typically, you'll start with product designs and prototyping. Then, once you have a finished design, you'll evaluate manufacturers and order test batches before you select a supplier.

It’s also worth mentioning that it's possible to work with a manufacturer to alter or improve a generic product they already make. That said, it's nearly impossible to retain exclusive rights to the product you create if you do this. And so, the manufacturer is likely to sell the improved product to your direct competitors.

Still, if you have an original product idea and want to create something unique to set yourself apart from competitors, this is the only way to go.

Unsurprisingly, this product sourcing method is the most expensive and time-consuming approach. Manufacturers typically require high minimum order quantities to start production, and lead times can take months.

Plus, sourcing products in this way comes with all the same drawbacks that you'd encounter when purchasing goods wholesale, such as the need for an upfront investment, storage space, and fulfillment infrastructure.

To make things even more complicated, it can also be challenging to find a trustworthy and cost-effective supplier — especially if you're sourcing products from abroad.

Choose a Product Sourcing Strategy

Now that you understand the 3 main ways to source products, which strategy is right for your business? Here's what to do:

• Dropshipping sources : If you're just starting your entrepreneurial journey or would like to expand an existing business quickly, opt for dropshipping. This product sourcing method will allow you to hit the ground running and hone your business skills before risking capital purchasing upfront inventory.
• Wholesalers : If you have experience running an ecommerce business and have some money to invest, consider purchasing products wholesale. Although you'll need to set up a supply chain or work with a fulfillment service, you can enjoy higher profit margins and build a brand with private labeling opportunities.
• Manufacturers : If you're an experienced ecommerce seller with a unique product idea, capital to invest, and a willingness to take on complex challenges, consider sourcing products to sell from a manufacturer.

9 Product Sourcing Websites and Apps

Once you've chosen a way to source products, what's next? Now it's time to check out some sourcing websites and apps to find products for your business . 

Here are 10 product sourcing websites and apps to consider:

Dropshipping Sources

• Dripshipper
• Creative Hub
• Lulu Xpress

Wholesale and Manufacturer Product Sourcing Websites

• Made-In-China

Let's take a closer look at each one.

DSers is one of the leading dropshipping apps that provide a way to start selling products on Shopify in less than an hour !

Simply sign up for Shopify , add the DSers app, browse products, and add them to your store.

There are millions of products available in virtually every niche imaginable. However, it's smart to create a branded store with a selection of complementary products in a particular vertical.

There's a free plan available, too!

2. Printify

Printify is one of the best product sourcing apps for print-on-demand items.

It connects you to a host of print-on-demand suppliers all over the world, so you can choose a supplier that's geographically close to your customers for faster shipping. There are also more than 300 products to choose from.

This product sourcing app also provides a super simple mockup generator to help you customize products with your designs.

Like DSers, Printify also has a free plan that you can use to get started.

3. Printful

Printful is another popular print-on-demand product sourcing app with more than 220 products that you can dropship.

It offers a range of printing and customization options, such as direct-to-garment, cut-and-sew, and embroidery. This product sourcing company also enables you to customize product tags and include branded inserts in the product packaging .

4. Dripshipper

Dripshipper offers print-on-demand artisan coffee — so if you're passionate about coffee, this is the dropshipping source for you!

The service ships whole beans the same day they're roasted and ships ground coffee the day after it's roasted. The service is based in the US but will dropship coffee worldwide.

5. Creative Hub

Creative Hub is a print-on-demand company for art. It provides a complete white label service so you can sell art under your own brand name .

You can use Creative Hub to sell your art or contemporary art from the service's library (if you do this, you would split the profits with the creators of the art that you sell).

The service is based in the UK but ships anywhere internationally for just £7 plus VAT.

6. Lulu Xpress

Lulu xPress is a print-on-demand service for books, calendars, comic books, and magazines.

The service offers plenty of customization options, and there are no set-up charges or handling fees. Also, this dropshipping source will ship products to your customers globally. 

It's also worth noting that the company is a certified B Corporation and sources materials in a sustainable and environmentally conscious way.

If you're interested in sourcing products wholesale or want to find a manufacturer, check out Alibaba . This platform is the largest B2B marketplace in the world. It houses suppliers from more than 190 countries and regions, although the majority are based in China.

If you use Alibaba, tread carefully — scammers use the site . However, there is a service called Trade Assurance that's designed to help you find high-quality, reliable product sources.

8. IndiaMart

IndiaMart is the second-largest B2B marketplace globally and lists thousands of manufacturers and millions of products for wholesale.

As the name may suggest, most of the platform's suppliers are based in India. IndiaMart also has a service to help buyers identify the best suppliers to work with.

9. Made-In-China

Made-In-China is another hugely popular B2B marketplace that exists to connect suppliers in China with global buyers.

The platform offers a service that allows you to purchase reports detailing suppliers' financial situation, product capacity, work environment, and more.

Summary: How to Source Products

Before you start looking for products to sell, it's a good idea to choose a product sourcing method. In summary, there are 3 main ways to source products:

• Dropshipping sources
• Wholesalers
• Manufacturers

Remember, if you're new to ecommerce, it's a good idea to avoid large risks and to hone your skills with dropshipping. But if you've got a little experience under your belt and some money to invest, consider sourcing products wholesale or work with a manufacturer.

To finish up, here are 10 of our favorite product sourcing apps and websites:

Which of these product sourcing apps are you interested in using? Let us know in the comments below!

Want to Learn More? 

• How to Use Shopify: A Quick and Easy Shopify Tutorial for Beginners
• Shopify Pricing Plans: Which Shopify Plan is Best For Me?
• How to Start an Online Business in 2023
• 10 Important Ecommerce Trends to Watch for Next Year

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You’ve got the idea.

You’ve got the vision.

Now you just need the product.

When you source a product from a supplier , whether it’s local or (more likely) overseas, there are reasons to worry.

Pick an unprofessional supplier and you could waste hundreds of hours and have to restart. Or miss a mistake in your pre-shipment sample and you’ll be stuck with defective products collecting dust in your basement.

These are the kinds of crucial errors that Kian Golzari wants you to avoid.

Golzari is one of the world’s top sourcing experts. He has manufactured products for top companies and NGOs, including Tesco, the United Nations, the 2012 Olympics, and Google. In all, he’s sourced more than 2,500 products and works with 100 of the top sellers on Amazon.

He’s also the instructor for two Foundr courses: The Product Development Blueprint and The Product Sourcing Blueprint .

Get Golzari’s four-step product sourcing strategy below.

How to Source Products in 4 Steps

Before we get into the details of product sourcing, let’s get clear on a few key terms. The terms manufacturer and supplier are sometimes used interchangeably. That’s because a manufacturer can be a supplier, but a supplier isn’t always the manufacturer.

• A factory is a physical location where products are assembled.
• A manufacturer is a business that produces products from raw goods.
• A supplier sells finished products directly to retailers and outlets.

When you take your first step searching for suppliers and manufacturers, typically you’ll reach out to a supplier that either contracts or works for the manufacturer.

Golzari says to plan out 100 days to be safe when sourcing your product. That timeline will include everything from finding a supplier to getting your first shipment.

Here’s his timeline for you calendar addicts:

• 10 days to find a suitable supplier online
• 2 weeks for sampling
• 2 months for production
• 30 days for shipment

Now, onto the steps.

Step 1: Find the Wrong Supplier First

A mistake Golzari sees from early-stage founders is committing to the first supplier that meets their requirements on Alibaba , the world’s most popular product-sourcing platform. He says you still could be overpaying even if you negotiate the price. That’s because people don’t take the time to know the value of the raw materials.

“Let’s say I identify the top five suppliers I want to work with. I would also find a list of the top five suppliers I don’t want to work with, and I’m going to ask them all my questions to learn about the product,” Golzari says.

“I would also find a list of the top five suppliers I don’t want to work with, and I’m going to ask them all my questions to learn about the product.”

You can learn more about your product’s potential materials by interviewing low-grade suppliers. Get samples from them. Deconstruct the products and understand the impact of each raw ingredient on the product’s performance.

“So if you have an outdoor chair for your garden, online they look the same, but they’re different prices. And one might be polyester fabric, one might be nylon fabric,” Golzari says. “[You] can now think, ‘There are 30 different places where I could actually improve the quality without maybe adding so much cost.’”

From that information, create a product specification sheet and reach out to your top five suppliers.

“They’re not going to mess you around with the price because they know you know about the product, but you learned it from the suppliers you didn’t want to work with,” Golzari says.

Once you’ve chosen a supplier, start building a relationship with them. Golzari gets their WhatsApp information and regularly sends texts and video messages, sometimes with a friendly greeting.

“Now I’ve got video communication with my supplier through the app, and I’ve built that relationship,” Golzari says.

After building a relationship with the supplier over the product development process, Golzari even asks for a video tour of the factory the day before they ship out.

“So now you’ve got eyes and ears inside the factory and [are building] that relationship,” Golzari says.

This also gives you a chance to vet the working conditions in the factory. Aim to partner with suppliers that treat their team members well.

Don’t Skip:  New Product Development Process in 8 Easy Steps

Step 2: Sample and Sample Again

Golzari says sampling is one of the most critical product-sourcing steps. You get two types of samples from a supplier: the preproduction and pre-shipment samples.

The preproduction sample comes before committing to a manufacturing process, and the pre-shipment sample comes before the orders are shipped. Golzari says before you commit to shipment, both samples should line up perfectly.

After receiving the preproduction sample, you should test the product as much as possible in case you need to make tweaks.

“You are your own toughest critic of the product. That’s first. Once you’re happy with it, you might want to send it off to a third-party company for legal and product testing if it’s required,” Golzari says.

“You are your own toughest critic of the product. That’s first.”

He suggests also getting influencers or community members involved in testing your sample product.

“Get the influencers involved in the initial stage, and then they’ll be more compelled to share it with their audience when it’s launched,” Golzari says.

Another tip is to keep every sample you’ve made to compare quality over time. Write the purchase order number on the product’s label. That way, you can know which order has an issue if you have a bad batch.

Step 3: Inspection

Before sending your hard-earned cash to a supplier, you must get a third-party inspection of your products. Golzari says the most important thing to look at on the inspection report is the AQL (acceptable quality level).

Three types of defects might turn up on an inspection: minor, major, and critical. Each shipment cannot exceed the maximum percentage threshold of all the products in order to pass inspection.

• 4 percent for minor defects
• 2.5 percent for major defects
• 0 percent for critical defects

For example, if you were creating a children’s scooter, a minor defect would be scratching, a major defect would be the handlebars are too small, and a critical defect would occur if the wheels don’t work.

If your inspection fails, you have to do a reinspection. Golzari says the factory should pay for the reinspection because you paid for the initial one.

Golzari says if you get a failed inspection report, don’t freak out.

“Sometimes inspection companies can be overly harsh and overly critical. At the end of the day, you’re paying the inspection company, not the factory,” Golzari says. “The important thing is not to freak out when your product fails. Sometimes it’s actually absolutely fine.”

Dive Deeper: Your Guide to Product Packaging Design and Strategy

Step 4: Order and Iterate

Golzari says one of his consistent mistakes is spending too much time perfecting the product before launching. He says that comes from perfectionism and a fear of getting copied.

“The window of opportunity could actually pass because while you’ve spent so much time developing [a product], other people have launched their version as well,” Golzari says. “So I always say develop until a product is 80 percent ready because it could take maybe a few weeks to get that from zero to 80 percent, but it could take nine months to a year to get it from 80 to 100.”

He suggests working on the final 20 percent while your product is selling.

“A lot of people are worried if someone copies their product. Well, if they copy your product, they’re copying what is already out there, so they’re copying what you’ve already made, but you’re working on the newer version,” Golzari says. “So by the time they bring that copied product to market, you’ve brought out your newer version. So as long as you stay innovating, stay on top of your products, you’ll always be one step ahead of the competition.”

Keep Learning:  How to Find a Manufacturer That Won’t Burn You

Start Product Sourcing for Your Business

By following Golzari’s blueprint, you’ll be more comfortable sourcing products again and again.

“It’s kind of like reps in the gym. The more you do, the stronger you get, the more samples you develop, the more suppliers that you talk to—you just get better at it,” Golzari says.

“The stronger you get, the more samples you develop, the more suppliers that you talk to—you just get better at it,”

Golzari says sticking to the details is well worth it, especially when you see your product making a real difference in your customers’ lives.

“The proudest moments I’ve had is when I’ve had products [that took] long hours, late nights in the factory making those products, and I’ll just see someone wearing it down the street, and they’ve got no idea [who made it],” Golzari says. “When I see that, it’s the best feeling in the world.”

The feeling of curiosity that Golzari had as a kid when his dad returned from China with a new product is the same feeling that drives him today. With his blueprint, you can do the same. And when you know you’ve followed the right process, that feeling will be even more special.

About Luke Ferris

Luke Ferris is the contributing editor at foundr and writes entrepreneur features for the magazine and website. He has been writing, editing, and curating stories covering entrepreneurship and small business for a decade. He is a graduate of Michigan State University's journalism school. When he's not writing, he's podcasting, discussing cinema over coffee, watching Tottenham Hotspur FC, or reading a book at the beach.

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Learn about product sourcing and how to get started

Every ecommerce business has to get its wares from somewhere, and product sourcing is an essential part of the process. Companies need to have inventory to sell, and product sourcing is how they find the products that go on the shelves.

As a business leader, you know how important product sourcing is — but you also know it’s not as easy as just finding a supplier, sourcing the product, and then selling it to your customers.

In this article, you’ll find a refresher on what product sourcing actually is, what it entails, and some best practices for doing it better.

What is product sourcing?

Product sourcing is the process of a business finding and acquiring marketable inventory from reputable suppliers to sell to customers at good prices. Typical sources include manufacturers, wholesalers, and artisans, as well as other creators and businesses that make products.

The steps involved in the product sourcing process include:

• Researching the product
• Searching for a vendor
• Calculating and comparing prices
• Negotiating with the supplier

Where can you source products from?

In the ecommerce industry, where access to virtually any product in the world is just a click away, it can be daunting to try and figure out where to source products from. There’s almost too much information and choice. Here are a few good places to start.

1. Wholesalers

This is a good place to start if you’re selling an established product. Wholesalers often sell you products that they sourced from someone else. They’ll usually offer decent prices for large orders, but you could have a high initial cost because you’re buying in bulk. It’s a good idea to make sure that you have the demand before committing to purchasing from a wholesaler.

2. Manufacturers

With this option, you can go right to the source and get products from where they are actually being made. Working directly with the manufacturer can save you money — but since you will probably need a large bulk order, the cost may still be high. Sourcing from a manufacturer is a good opportunity to get custom-made items unique to your business.

If you’re running a smaller business, you always have the opportunity to create your own products yourself. This is a good option for low-count items or products that you want to have a crafted, artisan-made feel. One potential problem with DIY is that you can’t produce items as quickly as a bulk provider can, so demand may outpace supply.

4. Dropshipping

While this is technically product sourcing because you’re getting products from a vendor, you never actually see the product. The vendor takes care of everything after the sale. Dropshipping is a good option if you want to take a lot of the hassle of product sourcing out of the equation.

Product sourcing best practices

The purpose of product sourcing is to find the best products at a reasonable price, as well as to have a consistent and reliable supplier to keep store inventory filled. Let’s review some product sourcing best practices.

Research your products and verify your suppliers

One of the most important steps of product sourcing is research. Make sure there’s demand for a product before purchasing it in bulk. Ensure you’re getting a product that can be produced at your company’s standards.

Not only do you need to research your products, but also your potential suppliers. Make sure they’re legitimate, registered, and reliable. You don’t want to receive counterfeit, poorly made, or delayed products.

Avoid intermediaries

Going through an intermediary, or someone “in the middle” might seem easy at times, but all it does is cut into your profit margins. Get as close to the source of the product as you can.

Have a plan B

It’s crucial to have a backup supplier that you can go to if needed. Problems arise, and you should be prepared for the worst — even if you have a good relationship with your primary supplier.

Imitation is encouraged

Chances are there’s a business in your industry that sells products similar to yours, and they probably have a product sourcing process that works. Copying a successful sourcing model that already exists is completely fine.

Getting started with product sourcing

Product sourcing is an integral part of ecommerce, and the process of product sourcing itself is important.

Once you’ve settled on a process and source and have your desired products, you need a way to sell them. That starts with a great ecommerce platform.

Adobe Commerce is the world’s leading digital commerce solution for merchants and brands. With Commerce, you can build engaging shopping experiences for every type of customer, no matter your business size or type.

Watch the Adobe Commerce overview video to learn more.

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What is Product Sourcing ? As a business owner, finding the right products to sell can be a challenge. Product sourcing is the process of finding products to sell in your business. In this comprehensive guide by Viindoo , we will explore what product sourcing is, why it's important, and provide examples of product sourcing strategies that you can use to build a successful business.

What is Product Sourcing?

Product sourcing is the process of finding products to sell in your business. It involves researching potential suppliers, evaluating their products, negotiating prices and terms, and ultimately purchasing products to sell in your store or online business.

There are several ways to source products for your business, including:

• Direct Sourcing: This involves sourcing products directly from a manufacturer or supplier. This method often provides the best pricing and allows for more control over the quality of the products.
• Wholesale Sourcing: Wholesale sourcing involves purchasing products in bulk from a distributor or wholesaler. This method can be cost-effective, but may limit control over product quality.
• Dropshipping: Dropshipping is a method where a retailer sells products without having to hold inventory. The retailer takes orders from customers and then purchases the products from a third-party supplier who ships the product directly to the customer.
• Private Labeling: Private labeling involves creating your own brand of products by working with a manufacturer to customize an existing product or create a new product from scratch.

What is Product Sourcing

Why is Product Sourcing Important?

What is Product sourcing ’s importance? It is crucial for any business that wants to succeed in selling physical products. It impacts not only the quality of the products you sell, but also your bottom line and overall success. Here are some reasons why product sourcing is important:

• Quality Control: When you source products yourself, you have more control over the quality of the products you sell. This means you can ensure that your products meet your standards and the expectations of your customers.
• Cost Control: Sourcing products directly from a manufacturer or supplier can often be cheaper than purchasing from a distributor. This allows you to keep your costs low, which can increase your profits.
• Product Differentiation: Sourcing unique or hard-to-find products can differentiate your business from competitors and attract new customers.
• Business Growth: Successful product sourcing can help your business grow and expand its product offerings, leading to increased revenue and profitability.

Product Sourcing Strategies

Now that we've covered what product sourcing is and why it's important, let's dive into some specific product sourcing strategies that you can use in your business.

Attend Trade Shows

Trade shows are events where businesses gather to showcase their products and services. Attending trade shows can be a great way to network with suppliers, discover new products, and stay up-to-date on industry trends. Some popular trade shows for product sourcing include:

• The Canton Fair in China
• The ASD Marketweek show in Las Vegas
• The National Hardware Show in Las Vegas
• NY NOW in New York City

Use Online Marketplaces

Online marketplaces like Alibaba, Amazon, and eBay can be a valuable resource for product sourcing. These platforms allow you to search for suppliers, compare prices, and read customer reviews. Keep in mind that you may need to do additional research to verify the quality of products and suppliers before making a purchase.

Product Sourcing - Online Market

Work With a Sourcing Agent

Sourcing agents are professionals who specialize in finding and negotiating with suppliers on behalf of businesses. They can help you find the right products at the best price, and handle negotiations and logistics. Sourcing agents can be particularly helpful for businesses that are new to product sourcing or lack the resources to source products themselves.

Visit Local Manufacturers and Suppliers

If you're looking to source products locally, consider visiting manufacturers and suppliers in your area. This can allow you to see the products in person, build relationships with suppliers, and negotiate pricing and terms face-to-face.

Attend Industry Events

Industry events like conferences and seminars can provide valuable networking opportunities and insights into new products and trends. Consider attending events in your industry to connect with suppliers and other businesses and learn about new product offerings.

Product Sourcing - Event

>>>> Read more: Retail Inventory Management : Best Practices for Small Businesses

Examples of Product Sourcing

What is Product sourcing example? Let's take a look at some examples of successful product sourcing in action.

Zara is a popular fashion brand that sources its clothing from manufacturers in Spain, Portugal, and Morocco. The company uses a fast-fashion model, which means it quickly produces and distributes new styles in response to changing trends. This allows Zara to differentiate itself from competitors and stay on top of the latest fashion trends.

• Warby Parker

Warby Parker is an eyewear retailer that designs and sources its own glasses frames. By cutting out the middleman, Warby Parker is able to offer high-quality glasses at a fraction of the cost of traditional eyewear brands. This has helped the company gain a loyal following and disrupt the eyewear industry.

Patagonia is a popular outdoor clothing brand that sources its materials from sustainable suppliers and uses eco-friendly manufacturing processes. The company's commitment to sustainability and ethical sourcing has helped it build a strong brand identity and gain a dedicated customer base.

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What is the difference between wholesale sourcing and direct sourcing?

Wholesale sourcing involves purchasing products in bulk from a distributor or wholesaler, while direct sourcing involves sourcing products directly from a manufacturer or supplier.

How can I verify the quality of products and suppliers on online marketplaces?

You may need to do additional research, such as reading customer reviews or contacting the supplier directly, to verify the quality of products and suppliers on online marketplaces.

How can attending industry events help with product sourcing? 

Attending industry events can provide valuable networking opportunities and insights into new products and trends.

This article has provided readers with the answer to the question “ What is Product sourcing ”. It is a critical component of any successful retail or e-commerce business. By sourcing high-quality products at the right price, businesses can differentiate themselves from competitors, increase profitability, and provide value to customers. Whether you attend trade shows, use online marketplaces, work with sourcing agents, visit local suppliers, or attend industry events, there are many strategies available for effective product sourcing.

>>>> Continue with:

• The Vital Role of Supply Chain in Retail Success

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Crafting a Winning Sourcing Plan: Strategies for Success

• January 11, 2024

By The oboloo Team

Introduction to Sourcing Plans

In today’s competitive business landscape, having a well-thought-out sourcing plan is crucial to stay ahead of the game. Whether you are running a small start-up or managing a large corporation, optimizing your procurement process can significantly impact your bottom line and overall success.

In this article, we will explore the essential strategies that will help you streamline your procurement efforts and achieve sustainable growth.

But first things first – what exactly is a sourcing plan? Put simply, it is an organized approach to identify, evaluate, negotiate with suppliers and manage the entire procurement process. By carefully designing and implementing a comprehensive sourcing strategy tailored to your business needs and goals, you can effectively enhance operational efficiency while minimizing costs.

Now that we have set the stage, let’s delve into the key steps involved in creating an effective sourcing plan. From understanding your business requirement s and identifying potential suppliers to evaluating supplier quality and negotiating favorable terms – each step plays an integral role in building a solid framework for successful procurement.

Understanding Your Business Needs and Goals

In order to create a successful sourcing plan, it is crucial to have a deep understanding of your business needs and goals. This requires taking a holistic approach that considers both short-term objectives and long-term aspirations.

Start by analyzing your current operations and identifying areas where improvement is needed. What are the pain points in your supply chain ? Are there any inefficiencies or bottlenecks? By pinpointing these issues, you can determine what specific products or services need to be sourced.

Next, consider your overall business strategy. What are your growth targets ? Do you plan on expanding into new markets or launching new product lines? Understanding these goals will help shape your sourcing plan and ensure that you find suppliers who can support your vision for the future.

Moreover, it’s important to evaluate the unique characteristics of your industry. Are there any regulatory requirements or certifications that suppliers must meet? Will you require customization or specialized expertise from potential partners?

Don’t forget about cost considerations. Determine whether cost reduction is a priority for your organization or if quality takes precedence over price. Finding the right balance between these factors will be essential in selecting suppliers that align with both financial constraints and desired outcomes.

By thoroughly understanding your business needs and goals, you can develop a focused sourcing plan that sets you up for success in meeting customer demands while driving growth within your organization.

Identifying Potential Suppliers

When it comes to crafting a winning sourcing plan, one of the crucial steps is identifying potential suppliers . This step involves conducting thorough research and analysis to find reliable and trustworthy partners who can meet your business needs.

To begin with, start by clearly defining your requirements and specifications for the goods or services you need. This will help narrow down your search and ensure that you are targeting suppliers who can deliver exactly what you’re looking for.

Next, utilize various resources such as online directories, industry associations, trade shows, and referrals from colleagues or other trusted sources to compile a list of potential suppliers. Cast a wide net during this stage to gather as much information as possible.

Once you have a list of potential suppliers, it’s important to evaluate them based on certain criteria. Consider factors like reputation, experience in the industry, financial stability, capacity to meet demand, geographic location (if applicable), and any specific certifications or qualifications required for your industry.

Furthermore, don’t forget the importance of communication when evaluating potential suppliers . Reach out to them directly via phone or email to discuss their capabilities and gauge their responsiveness. Open dialogue is key in building strong relationships with suppliers.

Lastly but certainly not least important: conduct background checks on each potential supplier before making any final decisions. Look into their track record with previous clients/customers and consider requesting samples or references if necessary.

By following these steps diligently during the process of identifying potential suppliers, you’ll be well-equipped to make informed decisions that align with your business goals.

Evaluating Supplier Quality and Reliability

When it comes to sourcing suppliers for your business, evaluating their quality and reliability is crucial. After all, you want to ensure that the products or services they provide meet your standards consistently.

One way to evaluate supplier quality is by conducting thorough research. Look into their track record, customer reviews, and any certifications or awards they have received. This will give you a better understanding of their reputation in the industry.

Additionally, consider requesting samples or prototypes from potential suppliers. By physically examining their products or testing out their services, you can get a firsthand experience of what they offer.

Another aspect to assess is the supplier’s reliability . Are they able to consistently meet deadlines? Do they have a contingency plan in case of unexpected disruptions? These are important questions to ask when evaluating a supplier’s dependability.

Furthermore, communication plays an integral role in gauging reliability. Prompt responses and clear communication indicate that the supplier values open lines of dialogue and can be relied upon for ongoing collaboration.

Negotiating Pricing and Terms

When it comes to sourcing, negotiating pricing and terms is a critical step in ensuring the success of your procurement strategy . This process involves finding a balance between securing competitive prices and favorable contract terms while maintaining a strong relationship with your suppliers.

To begin, it’s important to gather relevant mark et information to understand the current pricing trends for the products or services you are procuring. This research will provide you with valuable insights that can be used during negotiations.

During negotiations, it’s crucial to clearly communicate your expectations and requirements to potential suppliers. Be prepared to discuss volume discounts, payment terms, delivery schedules, and any other factors that may impact pricing and overall value.

Maintaining open lines of communication throughout the negotiation process is essential. Don’t be afraid to ask questions or seek clarification on any issues that arise. Remember, negotiation is about finding mutually beneficial solutions for both parties involved.

In addition to price considerations, pay close attention to contract terms such as warranties, return policies, intellectual property rights, and termination clauses. These finer details can greatly impact your business operations down the line.

Successful negotiations result in an agreement that meets both parties’ needs and sets the foundation for a fruitful supplier relationship. Once an agreement has been reached, be sure to document all negotiated terms in writing for future reference.

By carefully navigating through the negotiation process with transparency and professionalism, you’ll not only secure competitive prices but also establish a solid foundation for long-term partnerships with your suppliers – ultimately contributing positively towards your overall procurement strategy .

Implementing and Managing the Sourcing Plan

Implementing and managing a sourcing plan is a crucial step in ensuring the success of your procurement efforts . Once you have identified potential suppliers and negotiated pricing and terms, it’s time to put your plan into action.

The first step in implementing your sourcing plan is to communicate with all relevant stakeholders within your organization. This includes department heads, purchasing managers, and anyone else who will be involved in the procurement process . By clearly outlining the goals and objectives of the sourcing plan, everyone can work together towards a common goal.

Next, it’s important to establish clear guidelines for supplier performance evaluation. This could include setting Key Performance Indicators (KPIs) or metrics that will be used to measure supplier quality and reliability. Regularly reviewing supplier performance against these benchmarks will help identify any issues early on and allow for prompt corrective action.

To effectively manage your sourcing plan, you should also consider integrating technology solutions that can streamline processes and improve efficiency. This could involve implementing an e-procurement system or using software tools for supplier relationship management.

Regular communication with suppliers is essential for maintaining strong relationships and addressing any concerns or issues that may arise during implementation. By establishing open lines of communication, you can quickly resolve problems before they escalate.

It’s important to regularly review and analyze the results of your sourcing plan to identify areas for improvement. This could involve conducting regular audits of supplier performance or seeking feedback from internal stakeholders about their experiences with suppliers .

Implementing and managing a sourcing plan requires effective communication with stakeholders, establishing clear guidelines for evaluating supplier performance, integrating technology solutions, maintaining open lines of communication with suppliers, and regularly reviewing results for continuous improvement.

Measuring and Improving Success

Measuring and improving the success of your sourcing plan is crucial for the growth and sustainability of your business. Once you have implemented your sourcing strategy, it’s important to regularly evaluate its effectiveness and make necessary adjustments.

One key metric to measure success is supplier performance . Assessing factors such as quality, delivery reliability, and customer service can give you insights into whether your chosen suppliers are meeting expectations. Keep track of any issues or delays that arise, as well as feedback from internal stakeholders or customers.

Another aspect to consider is cost savings . Are you achieving the anticipated cost reductions through strategic sourcing ? Regularly analyzing pricing data and comparing it with industry benchmarks can help identify areas where further negotiations or alternative suppliers may be needed.

Additionally, evaluating process efficiency is vital in measuring success. Are there bottlenecks or inefficiencies in your procurement processes ? Identify areas for improvement by conducting regular audits and seeking feedback from employees involved in the procurement process.

Furthermore, monitoring market trends provides valuable information for adapting your sourcing plan. Stay informed about changes in technology, regulations, or supplier landscape that could impact your business operations. Flexibility and adaptability are essential qualities when it comes to staying ahead in a dynamic marketplace.

Don’t forget about sustainability metrics. Incorporating sustainable practices into your sourcing plan not only benefits the environment but also enhances brand reputation and customer loyalty. Consider metrics like carbon emissions reduction or percentage of sustainable materials used when evaluating success.

Continuously measuring and improving the success of your sourcing plan ensures that you stay competitive in today’s global business landscape. By regularly assessing supplier performance, tracking cost savings opportunities, optimizing processes, staying aware of market trends,and integrating sustainability considerations, you can drive continuous improvement within your organization while driving long-term growth.

A well-crafted sourcing plan is vital for the success and growth of any business. It allows organizations to strategically procure the goods and services they need, while also optimizing costs, quality, and reliability. By understanding your business needs and goals, identifying potential suppliers, evaluating their quality and reliability, negotiating pricing and terms, implementing the plan effectively, measuring success, and continuously improving your procurement strategies – you can ensure that your organization stays competitive in today’s dynamic market.

Procurement plays a crucial role in driving profitability and enhancing operational efficiency. A comprehensive sourcing plan enables businesses to secure reliable suppliers who can meet their unique requirements consistently. Whether it’s raw materials or finished products, having trusted partners ensures smooth production processes and timely delivery to customers.

Furthermore, an effective sourcing plan helps companies manage risks associated with supply chain disruptions or fluctuations in demand. By diversifying supplier sources or establishing backup plans through strategic partnerships or contracts with alternative vendors – businesses can minimize vulnerability to unexpected events that could disrupt operations.

Additionally, negotiating favorable pricing terms is essential for maintaining healthy profit margins. With a well-defined sourcing plan that includes robust negotiation strategies based on market research and benchmarking data – organizations can drive cost savings without compromising on quality standards.

Implementing the sourcing plan requires efficient communication across departments involved in procurement activities like purchasing teams or supply chain management personnel. Collaboration between internal stakeholders facilitates seamless execution of the plan while minimizing delays or errors during supplier selection or contract negotiations.

Once implemented successfully, measuring key performance indicators (KPIs) related to procurement metrics such as cost savings achieved against targets set provides valuable insights into the effectiveness of your sourcing strategy. Regular review sessions enable identification of areas where improvements are needed so that adjustments can be made promptly.

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A Complete Guide to Amazon FBA Product Sourcing

Last updated on November 9th, 2023

Becoming a Fulfillment by Amazon (FBA) seller provides access to a global market. FBA takes care of many practical aspects of running a business such as warehousing, shipping, and customer service. If you want to succeed in this domain, one of the key skills you need to master is Amazon FBA product sourcing. 

This article focuses on revealing practical strategies and helpful tips to facilitate your journey towards becoming an FBA product sourcing expert. You'll learn valuable information on different types of product sourcing, factors to consider, the sourcing process, scaling strategies, and more. So, keep reading!

Table of Contents

What is Amazon FBA Product Sourcing?

FBA product sourcing refers to finding and acquiring products to sell on Amazon. This involves researching, selecting, and purchasing products that have the potential for profitability and meeting customer demand on the platform.

Types of Product Sourcing Strategies

By determining the most suitable product sourcing strategy for your business goals, you can effectively manage inventory, maintain high product quality, and optimize your profit margins. Each of the sourcing methods below has its pros and cons. Thus, choosing the one that best aligns with your resources, expertise, and objectives is crucial.

Discounted Prices on Retail Arbitrage

Retail arbitrage involves purchasing products from stores like Walmart, Target, and other local stores at discounted prices and then selling them on Amazon at a higher price. 

Online Arbitrage for Discounted Products

Take your product acquisition online for convenience through online arbitrage. It's similar to retail arbitrage, without the hassle of going to physical stores. You can purchase and sell products from eBay, Etsy, or other discount websites.

Wholesale Sourcing

Through wholesale sourcing, you can purchase products in bulk directly from manufacturers or distributors . Suppliers usually provide quantity discounts for bulk purchases, which can lead to higher profit margins. To obtain the best possible rates for your inventory, research multiple suppliers and negotiate deals.

Private Labeling

Private labeling entails sourcing products from manufacturers and applying your brand name to the product, thus creating an exclusive product line with its identity under your control. Conduct thorough product research and be mindful of customer preferences and marketplace trends before starting your private label business.

Manufacturing and Customization

Manufacturing and customization involve creating unique, customized products by producing them yourself or partnering with a third-party supplier. This strategy grants maximum control over product specifications and quality management. 

If you have a creative product idea with a high demand and low competition, manufacturing and customization can lead to a highly profitable Amazon FBA business.

Factors to Consider When Sourcing Products for FBA

Optimizing your FBA product sourcing strategy opens the door for long-term business success. Whether you’re expanding product sourcing or switching to a different one, use the factors below as a guide as you go through various sourcing strategies.

Product Criteria

When choosing products to sell on Amazon FBA, finding profitable items that cater to customer preferences and have a high demand is essential. You can perform product research by analyzing sales rank, marketplace trends, and monthly search volume.

Consider lightweight products, small in size, and easy to manufacture, as these attributes can help you achieve better shipping rates and lower production costs. You may also choose to specialize in a specific product niche or sell a variety of product categories.

Shipping Costs, Profit Margins, and Pricing

When sourcing products, it's critical to factor in shipping costs and pricing strategies. Calculating profit margins involves considering all expenses, including inventory, shipping, advertising, and Amazon fees.

Set competitive pricing while maintaining high-profit margins. This requires monitoring price history charts, fluctuations, and optimization techniques. Always consider prospect analysis and the potential for high demand and medium competition.

Quality Control and Brand Reputation

To build a successful FBA business, maintain a high level of product quality, and develop a strong brand reputation. Choose reliable suppliers or manufacturers that can consistently deliver high-quality products.

Work with multiple suppliers to guarantee product availability. Consider developing your brand name and packaging to enhance customer perception and increase sales. Regularly review customer ratings and feedback, and use them as a guide to improve what you sell.

Legal and Regulatory Compliance

When sourcing products for FBA, it is essential to ensure legal and regulatory compliance. Here are some steps you can take to ensure just that:

• Verify that the items you sell adhere to Amazon's seller guidelines and product restrictions.
• Consult legal and regulatory professionals to stay informed about laws and regulations surrounding your products and the market.
• Acquire necessary permits, certifications, and licenses.
• Adhere to safety, environmental, and import/export regulations and laws.

The FBA Product Sourcing Process

Product research, finding suppliers, and product quality control are just some of the steps you need to take for FBA product sourcing. Let's check them one by one, so you can do them correctly.

Step 1: Search for Profitable Products

Conduct thorough market research. Start by analyzing Amazon's marketplace trends and customer preferences to identify popular product categories and profitable products. Keep in mind the sales rank of products and competition from other sellers. Use price history charts to understand price fluctuations and predict prospect analysis.

Step 2: Reach Out To Suppliers

Once you have identified potential product niches , focus on finding reliable suppliers offering high-quality products at discounted prices. Study various sourcing methods mentioned above, and decide which works best for your Amazon business.

Reach out to potential suppliers, including dropshipping suppliers, manufacturers, liquidation stores, or even chain stores, and negotiate quantity discounts to ensure profitable inventory. Due diligence is essential to establish long-term relationships with trusted suppliers.

Step 3: Sample Test and Assess Product Quality

Before purchasing inventory from your selected supplier, request product samples and perform thorough quality assessments. Examine the products and ensure they are up to Amazon's standard to avoid negative reviews and impact on your reputation as an Amazon seller.

Step 4: Pick An Inventory and Fulfillment Setup

Depending on your business model and goals, you can use a single or multiple suppliers to source your Amazon FBA products. This decision impacts aspects like managing inventory, shipping costs, and fulfilling customer orders. 

Calculate shipping costs, Amazon FBA fees, and storage requirements for your sourced products to ensure your business model remains profitable.Regardless of the approach, stay on top of your inventory levels to avoid stockouts, which could lead to lost sales opportunities.

FBA Product Sourcing Growth Strategies

When you've mastered FBA product sourcing, scaling your business will be easier. You can use the strategies below to help not only in product sourcing but in ensuring your business grows.

Analyze Performance Metrics

To effectively scale your Amazon FBA business, it's crucial to analyze the performance of your products. Track key metrics like sales rank, profit margins, and advertising costs to make informed decisions.

Consider aspects such as monthly search volume, customer preferences, and competition when sourcing products. By identifying profitable products with consistent demand, you'll be better equipped to manage inventory, optimize pricing, and improve your overall ecommerce business strategy.

Launch New Products

Launching new products within your niche will strengthen your brand and cater to the evolving preferences of your target audience. To do the launch right, you can apply these strategies:

• Conduct product research.
• Identify product niches that complement your existing inventory and have high demand.
• Opt for items with medium competition and high-profit margins to differentiate from other sellers on the platform.

Diversify Product Sourcing Strategy

Use various sourcing methods like wholesale, private label, or online and retail arbitrage. Exploring multiple suppliers, such as dropshipping suppliers, surplus stores, or liquidation stores, can secure discounted prices, increasing your profit margins.

Expand Your Reach

Explore expanding your sales channels beyond Amazon. This could include launching your online stores or working with third-party suppliers. Diversifying your sales channels will help mitigate risks and enable you to tap into new markets, promoting growth and long-term stability for your business.

Challenges and Future Trends

To be well on your way to building a thriving Amazon FBA business, you must be well aware of the challenges and future trends below. The knowledge will help you prepare for roadblocks and maintain a thriving store.

Increasing Competition

Due to the success of many Amazon FBA sellers, competition is getting tougher. To stay ahead, here are some things you can do:

• Constantly refine your product sourcing strategies and adapt to the market's changes.
• Choose profitable products with high demand and medium competition to maintain your chances of success.
• Remember the importance of managing inventory, maintaining profit margins, and monitoring advertising costs.
• Familiarize yourself with different price history charts and the metrics of various product categories to stay informed of the competitive marketplace.

Rising Consumer Expectations

As an Amazon seller, you must meet the rising expectations of consumers, who are increasingly focused on product quality, quick delivery times, and competitive pricing. To do so, here are the things to add to your action plans:

• Prioritize high-quality items with good profit margins.
• Partner with reliable suppliers.
• Explore quantity discounts.
• Consider sourcing from multiple suppliers to help reduce shipping costs and ensure product quality.
• Stay tuned to customer preferences, pay attention to monthly search volumes, and adapt your product listings accordingly.
• Regularly assess the product specifications, price optimization, and overall customer satisfaction to meet the expectations of your target audience.

Integration of AI and Technology

Integrating AI and technology has changed the landscape of FBA product sourcing. To stay relevant in the market, develop your knowledge and skills related to digital tools and automation. These apps and software can assist you in accomplishing the following:

• AI-driven product research, sourcing methods, and inventory management systems
• Monitoring marketplace trends, such as adjusting your product niche in response to customer demand and refining your inventory strategies
• Familiarizing yourself with various drop shipping, ecommerce integration, and advertising technologies to improve your sourcing process, expand your product line, and achieve your business goals

Partner With Seller Interactive

As an aspiring FBA seller, choosing the right product and sourcing strategy can make or break your business. To tackle the challenges in FBA product sourcing, it's crucial to grasp key concepts and follow the best practices we shared.

Partnering with an experienced agency like us here at Seller Interactive can be a game-changer too. We are industry experts specializing in product launches for Amazon . We’ll guide you through every step of your product sourcing journey, from selecting the ideal niche to connecting with trusted suppliers and optimizing your listings for maximum visibility and sales.

Book a call with us now. Let us assist you in navigating the Amazon FBA landscape and turn your entrepreneurial vision into reality.

Go from surviving to thriving on Amazon .

Last updated on December 18th, 2023 Written by Mohamed Aden For Amazon sellers, having a strong marketing strategy is crucial for boosting sales. Having a landing page for Amazon products is a strategy many successful sellers apply, and you can also do. This article will explain what a landing page is and how it can […]

Last updated on December 13th, 2023 Written by Mohamed Aden The Amazon Best Seller Rank (BSR) is a crucial metric sellers like you should understand to maximize your success on the platform. This ranking system reflects a product's popularity and sales performance against other products in the same category. By grasping the intricacies of BSR, […]

Last updated on December 11th, 2023 Written by Himanshi Raj In a bustling marketplace like Amazon, every aspect of your online presence matters, and thoughtfully chosen Amazon seller names can be one of the first steps toward building a solid brand. However, coming up with an Amazon seller name is considered trivial for most sellers. […]

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Product Sourcing And Strategic Sourcing Explained

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Sourcing is part of supply chain management. Any importer, manufacturer, business owner, or retail store must look at sourcing products, goods, and services. Sourcing is an essential part of any procurement process.

Product sourcing is when you source or look to find a supplier for a product you need. Strategic sourcing is strategically sourcing products. Strategic sourcing is not about the lowest purchase price but the lowest overall cost. Product sourcing and strategic sourcing are very similar, but strategic sourcing is sourcing with a plan in place.

Table of Contents

Product sourcing defined, listen to our podcast why product development is essential part of global trade below or by clicking here., product sourcing vs. strategic sourcing, frequently asked questions, what is the difference between supply chain management and logistics, what are the benefits of supply chain management.

Product sourcing is finding products you can sell at the right price. For many people, when they think about product sourcing, they think about buying a product at the lowest possible purchase price. But product sourcing is not simply a matter of just finding the product at the lowest price. Product sourcing is about ensuring the product is the price, quality, and quantity you need.

Product sourcing includes all of the ways you use to find a product. For example, it could be doing online research, attending a trade show, and asking for a friend’s reference. You do everything to find or source the product at the price, quality, and quantity you need.

Product sourcing may seem very easy, but the truth is that product sourcing is one of the most difficult things for most importers, manufacturers, retail or e-commerce stores . The reason is that even if you find the right price, it may not be of the quality you need. Or the manufacturer may not be the right fit for you and your business.

This is why finding the right partner for your product sourcing needs is not always very easy, especially in our industry of home decor and home furniture manufacturing, as we are a design based business that usually requires a lot of product development , new designs, trend colors, and finishes.

Why Strategic Sourcing Is Important

Since product sourcing and finding the right supply can be one of the most difficult things any company can do, companies must source strategically. Strategic sourcing is the process of product sourcing but taking your sourcing to the next level with proper procedures for your product sourcing needs.

Strategic sourcing is a process that is driven by a goal, procedures, and need . It is also verifiable, meaning it has a system in place for your product sourcing requirements. In other words, it is not a haphazard kind of sourcing, but strategic sourcing is goal and process-driven.

Here is how you can strategically product source:

• Evaluate – Evaluate your current and potential sourcing opportunities and relationships. One of the most important things you can do is evaluate exactly what you need and why you need it. It is much easier for someone to tell you what they can or cannot do for you if they fully understand what you need in terms of quality, quantity, and price.
• Assessing – Assessing your strategic sourcing partner is also important. Is this a person, company, or manufacturer you can work with long-term? Ideally, you want to try to find someone you can do business with for a long time. One of the reasons is that sourcing can be expensive, and finding a suitable supply will save you time and money in the long term.
• Action Plan – The action plan and the procedures you have in place for sourcing is critical. Do you give your supplier detailed information or rough sketches of what you need? Do you have a clear indication of the colors, quality, and price that you need? These are all important things for you to understand when looking at a new product to source.
• Improvement Plans – One important aspect of strategic sourcing is that you constantly have an improvement plan in place. This means to evaluate and assess your sourcing needs and your sourcing strategy. Strategic sourcing is simply about having a system and processes in place for all your sourcing needs.

What makes strategic sourcing different from product sourcing is that strategic sourcing is not just about finding the lowest purchase price but also the overall lowest cost. Simply put, if you constantly need to be sourcing for the same product repeatedly, it will cost you money.

This is why strategic sourcing is not about the lowest purchase price but about the supplier or manufacturer that will give you the best overall costs. In other words, someone who gives you the quality, quantity, and on-time shipments.

If you must constantly change your manufacturing or sourcing supply, there are many hidden costs you do not see in your final product costs. There is a lot of value in a supplier fully understanding your quality needs without you having to teach or instruct them each time; there is a great hidden economic value in that kind of knowledge and understanding.

Product sourcing and strategic sourcing are the same except for one main difference: strategic sourcing is all about having a defined plan for your product sourcing needs.

Strategic sourcing does not look for the lowest purchase price but the lowest overall costs. With strategic sourcing, you are also constantly looking to improve and reevaluate your organization’s purchasing activities.

Anyone looking to do any product sourcing should also strive to take their source to the next level to do strategic sourcing. A large part of strategic sourcing is about locating the right strategic sourcing partner to help you with your product needs.

Find out more about how Mondoro can help you create, develop, and manufacture excellent  home decor  and furniture products – don’t hesitate to contact me, Anita.  Check out my email by clicking here  or become a part of our community and  join our newsletter  by  clicking here .

Mondoro gives out a  FREE Lookbook to anyone interested . You can receive a copy of our latest Lookbook by  clicking here.

Listen to our Podcast called Global Trade Gal .  You can find it on all major podcast platforms. Try out listening to one of our podcasts by  clicking here.  

Subscribe to our Mondoro Company Limited   YouTube Channel  with great videos and information by  clicking here.

What is product sourcing, and why is it crucial in supply chain management?

Product sourcing involves finding suppliers for the products a business needs. It is a critical aspect of supply chain management as it directly impacts a company’s ability to acquire quality goods and services efficiently.

How does strategic sourcing differ from regular product sourcing?

Strategic sourcing goes beyond finding suppliers; it involves a planned approach to procurement. Unlike traditional product sourcing, strategic sourcing focuses on minimizing overall costs rather than just the purchase price, considering factors like quality, delivery time, and supplier relationships.

Why is it important to have a strategic sourcing plan in place?

A strategic sourcing plan ensures that the procurement process aligns with broader business goals. It helps optimize costs, improve supplier relationships, and mitigate risks, contributing to the overall efficiency and competitiveness of the business.

What are the key considerations in product sourcing?

Key considerations in product sourcing include product quality, supplier reliability, cost-effectiveness, geographical location, and ethical and environmental considerations. These factors collectively impact the success of the procurement process.

How does strategic sourcing contribute to reducing the overall cost?

While product sourcing may focus on obtaining the lowest purchase price, strategic sourcing considers the entire cost of procurement, including factors like transportation, storage, and potential risks. By optimizing these elements, strategic sourcing aims to achieve the lowest overall cost.

Can strategic sourcing enhance supplier relationships?

Yes, strategic sourcing emphasizes building and maintaining strong relationships with suppliers. By fostering collaboration and communication, businesses can create partnerships that are beneficial for both parties, leading to more reliable and efficient procurement processes.

Is strategic sourcing only applicable to large businesses?

No, strategic sourcing principles can be applied by businesses of all sizes. Small and medium-sized enterprises can benefit from strategic sourcing by tailoring the approach to their specific needs and scale.

How can businesses ensure ethical and sustainable practices in product sourcing?

Businesses can prioritize ethical and sustainable practices by thoroughly vetting suppliers, choosing those with transparent and responsible operations. Certification programs and industry standards can also guide businesses in making environmentally and socially conscious sourcing decisions.

What role does technology play in modern product and strategic sourcing?

Technology, such as procurement software and data analytics, plays a crucial role in streamlining the sourcing process. It helps businesses gather and analyze data, identify potential suppliers, and manage relationships more efficiently, contributing to informed decision-making.

How can businesses adapt their sourcing strategies to changing market conditions?

Businesses should regularly reassess and adapt their sourcing strategies to changing market conditions. This involves staying informed about industry trends, monitoring supplier performance, and being agile in adjusting strategies to maintain competitiveness in a dynamic business environment.

Related Questions

Supply chain management is about the collaboration and partnerships to get the goods from raw materials to the end consumer; it is about the partnerships and collaborations within this supply chain process. Logistics is one part of supply chain management; logistics is about moving goods from one place to another. Sometimes, the logistics providers will also store the goods and send them to the end consumer.

You can learn more by reading our blog What Is The Difference Between Supply Chain Management and Logistics? by clicking here .

There are many benefits to supply chain management. The benefits of supply chain management include teamwork and collaboration, improved quality control , better efficiency and effectiveness, on-time deliveries, maximization of overhead costs, improved cash flow, risk mitigation, and shipping optimization. All of these areas are greatly helped by proper supply chain management.

You can learn more by reading What Are The Benefits Of Supply Chain Management? by clicking here .

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Products & Services Section in a Business Plan (+ Examples)

• March 21, 2024
• Business Plan , How to Write

In this blog post, we’ll guide you through writing the products and services section of your business plan. We’ll cover how to describe what you’re selling and why it’s important in your business plan.

Whether you’re launching a new startup or creating a business plan for an existing business, this section is crucial for showing the value you bring to customers. Let’s get started!

Why do we include them in a business plan?

The products and services section of a business plan is more than just a list of what a company sells; it’s a vital narrative that tells the story of the business’s core offerings and their significance to the market.

This section is paramount for readers (especially potential investors) to grasp the essence of what the business is about, the unique problems it solves, or the specific needs it addresses.

A meticulously crafted products and services segment does much more than describe offerings. Indeed, it lays the groundwork for comprehensive marketing strategies , informs operational planning, and financial projections.

Moreover, understanding the business’s offerings in depth enables stakeholders to envision the company’s value proposition and competitive edge.

Where should you include them?

In a business plan, the Products and Services section is typically included within the business overview section.

This allows you to first introduce the business model and what it offers to customers. Only after this you can provide more details of the products and services.

The Products and Services section should clearly detail what you are selling, highlight the unique value proposition . It should also ideally explain how it meets the needs of your target market if it isn’t obvious. T

What to include: 2 Examples

Begin with a clear, engaging description of each product or service you offer. For services, describe the process, customer experience, and outcome. For products, discuss the materials, technology, and any unique features.

Services example: a Cryotherapy business plan

Products example: a Brewery business plan

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How to Write Products and Services Section of Business Plan

Business plan products and services section  gives details of your product or service, how it is different and if you have a reliable manufacturing or sourcing system for the product. 

How do you write the business plan products and services section?

Key questions to answer in the business plan products and services section.

Show competitive advantages of your product or service. Convince investors or lenders that you can outperform competition; you’ll likely get the funding you need. 

Use this article as a guide when writing the product and service section of your business plan.

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Your goal in writing the business plan products and services section should be to explain your offering in simple, layman’s terms. 

Anyone reading about your products or services should be able to understand:

• what you are offering
• what is the unique value you are offering
• how will you do quality assurance 
• How will you meet the increased demand?

The product service plan section should include the following.

Explain Your Products or Services

Explain your product or service in detail. Try to include a brief about all the aspects of your product or service that will improve the consumers’ lives or increase business efficiency. 

Show why your Product is Unique 

Talk about the distinctive features of your product. Show what competitors are offering and explain how your offer is unique and better. 

Emphasize the Benefits 

Your hopes of capturing a share of the market depend on the benefits your product or service provides. Describe the benefits in terms customers can relate to. 

For example, if you are offering the same features as the competitors but at a low price, highlight the low price.

Manufacturing, Sourcing, and Fulfillment 

Explain if you will manufacture your products or you’ll source. If you are going to source the product from a manufacturer, how will you select the manufacturer?

Also, briefly explain the product supply chain and fulfillment process. Potential lenders may want to know if your supply chain and fulfillment system can handle high demand. 

Be Short and Concise 

Keep to the point. The Product service section in a business plan is about introducing your offering with a fair amount of detail. However, don’t make it lengthy.

You will discuss your product or service in every section of the business plan one way or another.

Show your Expertise 

A product coming from an acknowledged expert gets more acceptance in the market. 

Show your education or experience with the offering. If your business has any patents, trademarks, or special permits, make sure you showcase them. That way, you can establish yourself as an authority. 

For a sole proprietor, you can include your experience or education. For example, when an athlete starts a fitness brand, it becomes a quick success. However, other similar businesses face struggles at the start. 

Explain in Simple Language 

Make a detailed plan of product service but explain everything in simple language. 

Every industry has its jargon and buzzwords. People familiar with your product can understand the technical details, but the lenders or investors may not know much about your industry.  

Here is a pro tip for this. When you have written the product or service description, ask a trusted friend or family member to read it and explain your product to you. That way, you can know if your product service part of the business plan is generally understandable. 

What is your Exclusive Advantage? 

Your exclusive advantage is what makes you stand out. You spotted your exclusive advantage when you developed your product or service offering. Explain that exclusive advantage here. 

If you think there is no exclusive advantage, see if you can lower your price or provide better after-sale support. Even if your exclusive advantage is indirectly related to your product, it can help you get ahead fast. 

Assume you are talking to the customer

When you walk into the customer’s shoes, you can understand their needs better. 

Assume you are talking to an actual customer and convincing them to buy from you. They know your competition and they know what they need. You will have to talk in layman’s terms without missing any important details. You will need to focus on your competitive advantage. 

You will write an excellent product or service section when you think you are explaining it to a potential customer.

• Do you have a ready product or an under-development product?
• When will you bring new products or services to the market?
• What is the unique advantage of your product or service?
• What are the competitive advantages of your product or service?
• Does your product or service have any competitive disadvantages?
• Are you bound to charge a price in a short range, or can you charge a different price with a better offer?
• Are your business operating costs reasonable?
• Will you manufacture your products or buy from a supplier? 
• Do you sub-contract the parts of your product to different manufacturers and assemble the product at your facility?
• Will you be able to keep a steady and reliable supply chain for your product when demand rises?

WiseBusinessPlans is one of the best business plan writing companies !

In the products and services section, describe your offerings in detail, including their features, benefits, and uniqueness. Include information on pricing, any proprietary technology or intellectual property, and how your products or services meet customer needs.

Differentiate your products or services from competitors by highlighting their unique selling points, such as superior quality, innovative features, customizable options, or exceptional customer service. Explain how these differentiators give you a competitive advantage.

Yes, it’s important to outline your pricing strategy in the products and services section. Explain your pricing model, whether it’s based on cost-plus, value-based, or market-based pricing. Justify your pricing strategy by considering factors such as market demand, competitors’ pricing, and perceived value.

Demonstrate the market need for your products or services by providing market research and analysis. Include data on customer demographics, target market size, and any trends or consumer preferences that support the demand for your offerings.

Yes, you can mention future product or service expansion plans in the products and services section. Briefly outline your growth strategy, such as introducing new product lines, expanding into new markets, or offering additional services. However, focus primarily on your current offerings and their value proposition.

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What is a product plan and how to create one in 6 steps

Whenever I read about the next hot, new start-up with unicorn potential, I can’t help but think of Pinky and the Brain .

Both titular characters in the mid-90s animated TV series are genetically modified laboratory mice. Brain is hyper-intelligent; Pinky, not so much.

Brain’s primary objective? World domination:

Pinky : Gee, Brain. What are we going to do tonight? Brain : The same thing we do every night, Pinky. Try to take over the world.

In each episode, Brain devises a diabolical yet half-baked plan — for example, manipulating the world’s biggest magnet to form discarded satellites to spell “Brain is your ruler” — that invariably ends up foiled.

What does this have to do with product management?

Devise a product plan to take over the world

If you want to make an impact with your product and solve all your customers’ problems, don’t be like Brain; take the time to devise a product plan before you make your first move on your quest for market domination.

Creating roadmaps and backlogs is a great start, but product planning covers a much wider scope.

In this guide, we’ll define what product planning means, why it’s important, and the components and steps involved in creating a product plan.

What is a product plan?

Product planning covers all the steps, activities, and decisions a company must perform and make to develop a successful product.

A product can be defined as an input-outcome device. The input is the customer value proposition and the outcome is the company’s profit. Product planning includes everything you need to do internally to get from input to outcome.

It starts with a recognized customer need — after all, customers don’t just buy a product, they buy what the product will do for them to solve a problem they are having. It ends when the product has reached the end of its usefulness from a business perspective.

What is the purpose of product planning?

Product planning encompasses the actions and components that contribute to achieving a specific outcome. Product management is all about realizing outcomes.

Before jumping into the how and what, let’s first understand why product planning is important by outlining its six objectives:

• Company survival
• Meet customer needs
• Increase sales
• Understand and manage strengths and weaknesses
• Better manage capacity
• Plan effectively

1. Company survival

The eye of the tiger, survival of the fittest — or as P. Diddy said, it’s all about the Benjamins .

Product planning allows you to focus, remain viable, and understand your ability to innovate. It also helps you clarify how to introduce, grow, and sunset products in highly competitive markets.

2. Meet customer needs

The customer is at the heart of any product. Thorough product planning will set you up to understand and meet your customers’ needs. This, in turn, helps you quickly move customers from evaluators to champions through the product-led growth flywheel .

3. Increase sales

Your product can be lightyears ahead with brilliant solutions to customer problems, yet if they are not interested in the solution and don’t buy the product, your product fails.

For example, virtual reality seems to have finally found product-market fit . VR technology though, is not new.

In the 90s, VR was on the rise and forecasted sales potential was off the charts. Unfortunately, VR systems such as the Virtual Boy failed to deliver; its poor ergonomics and underwhelming stereoscopic effect gave users terrible headaches.

With better product planning, Nintendo might’ve been able to craft a more sophisticated product that satisfied customer expectations and, as a result, increased sales.

Over 200k developers and product managers use LogRocket to create better digital experiences

4. Understand and manage strengths and weaknesses

Product planning allows you to look introspectively and analyze your strengths and weaknesses in light of market requirements. What does your product do really well? What qualities distinguish it from competitors? What does your product lack and what do competitors do better?

By asking and answering questions like these, you’ll gain a better understanding of what you can take advantage of and what you need to improve in your product.

5. Better manage capacity

What’s one thing every company has in common? Limited resources in terms of capital, material, and human resources. Product planning enables you to plan these optimally and get the most out of them.

6. Plan effectively

When you’re building products, you have many competing priorities . Will you invest in new features, enhance and improve existing ones, reduce technical debt , or spend more time on improving discovery and delivery processes ? Product planning allows you to meet your long-term strategic plans.

6 considerations for product planning

Now that we understand why product planning is essential, how do you go about doing it?

Creating a successful product plan involves the following considerations:

• Research before development
• Choose a delivery method
• Coordinate activities
• Set a price
• Commercialize the product
• Abandon unprofitable products

1. Research before development

Energy to get going: Check. Confidence it will work out: Check.

Validation that the idea will deliver what customers need? [Buzzer sounds].

Before jumping into the deep end of product development, start with extendive market and user research. The insights gathered therein will help you establish what characteristics and requirements your product must fulfil to meet customers’ needs.

2. Choose a delivery method

All roads lead to Rome. The question is, which is the most efficient?

This is even more applicable when it comes to product delivery. Which delivery method will enable you to develop your product or feature exact how the customer needs it to be?

3. Coordinate activities

Product planning aims to coordinate all the initiatives and activities around the product and its investments. Doing so allows you to improve your competitive position and strive for market leadership. It also helps you quickly respond to changing market conditions.

4. Set a price

Product planning helps you determine the ideal price point for your product.

More great articles from LogRocket:

• How to implement issue management to improve your product
• 8 ways to reduce cycle time and build a better product
• What is a PERT chart and how to make one
• Discover how to use behavioral analytics to create a great product experience
• Explore six tried and true product management frameworks you should know
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The insights gathered during product planning can help you determine the best pricing strategy. For example, is your product most suitable for value-based, competitive, price skimming, cust-plus, penetration, economy, or dynamic pricing?

5. Commercialize the product

Product planning helps you uncover and validate the viability, feasibility, and desirability of your product.

Desirability speaks to satisfaction of customer needs and the commercialization of the product. This measure helps you ensure viability and, hopefully, rake in profits.

Product planning also considers how to best introduce the product to the market and continuously measure success post-launch .

6. Abandon unprofitable products

All good things eventually come to an end. Every decision in a product is a business decision, and there will come a time that further investment in a product or product feature becomes unprofitable.

At that point, a decision has to be made whether or not to sunset the product or feature.

Good product planning throughout the product lifecycle helps you recognize when it is time to abandon the product and sunset it in a structured way with minimal impact on customers.

How to create a product plan in 6 steps

OK, enough small talk. It’s time to deep-dive into the product planning process.

Product planning involves six steps:

• Market and user research
• Concept ideation
• Screening and testing
• Introduction and launch
• Product lifecycle

1. Market and user research

Before you start to build, it’s crucial to understand the problem you’re trying to solve, the market drivers, competitors, and customer needs. You can generate insights on all of the above through market research.

Competitive analysis , a subset of market research, is a structured approach to identifying and analyzing competitors.

Both are conducted to identify markets, investigate market positioning , and analyze the business’s success.

Through customer segmentation research, which is especially important to new businesses, larger customer groups are divided into different groups with personas.

The personas form the basis of user research, which is aimed at understanding potential customers’ problems, habits, interests, motivations, and more.

2. Concept ideation

A great product starts with a great concept and initial validation of that concept. This step is arguably the most fun and creative step.

During the concept development stage, you define what you are trying to build by figuring out how well it solves the identified problem, how easy it is to use, what it will cost the customer, the look and feel of the application, and so on.

A key step in this process step is product discovery and a continuation of user research, which enables you to uncover the problems the persona faces and the solution to aim for.

Concept ideation sources can be both external and internal. Externally, market and user research influence concept ideation. Internally, concept ideas originate from sales, customer support, marketing, engineering, designers, user research, executives, and investors.

3. Screening and testing

During screening and testing, the ideas generated during the concept ideation phase are critically evaluated.

The goal is to groom out ideas that are either inconsistent with the product vision , undesirable, and/or impractical.

After evaluation, the next step is to rigorously prioritize ideas . As the Highlander said, “ There can only be one .” This is not to say you should only test one idea; it just means you should pursue the most promising tests first.

There are plenty of prioritization frameworks to choose from with some of the most commonly used include:

• Value vs. effort
• MoSCoW method
• Opportunity scoring

Once you have a prioritized list, you should devise a hypothesis and experiment to verify or disprove it.

In product testing, customers are given an opportunity to try a prototype. This helps you understand whether customers understand the product idea, what they like or dislike about it, and whether they would ultimately buy and use it.

The concept ideation, screening, and testing as a whole are often covered in the Double Diamond approach, which is a design process to help you discover, define, develop and deliver solutions.

4. Introduction and launch

After a few iterations of screening and testing, the new features and usability improvements deemed ready to pursue and develop trickle through and are ready for development and launch.

In this step, the idea is converted into a product. It’s the PM’s job to schedule activities to ensure a successful product launch with a high adoption rate .

When ready, the product is launched and commercialized. If your product planning is sound, it should be poised to compete with existing products and maximize market share and profits.

5. Product lifecycle

After the product is launched, the real fun begins. Now it’s time to measure and analyze usage to gather new insights about whether or not your product launch was successful.

Using these insights, you can modify and enhance the product, introduce new features, improve usability, and help the product move from introduction to growth.

At a certain point, you’ll reach product maturity. The number of customers and sales will stabilize. Eventually, new investments in the product will have a harder time generating additional revenue. It will become increasingly challenging to compete.

Eventually, the product will decline, and the number of customers and sales along with it. This might be due to existing competition or the introduction of new products that are more advanced and better serve the customer’s needs.

Think about how the Walkman was surpassed by the Discman, which was overtaken by the mp3 player, and, eventually, an app on your phone.

6. Sunsetting

When a product is in decline, it’s time to sunset it. Sunsetting is also known as the end of life and usually involves deprecating the product.

Though it might feel difficult to say goodbye to a product that you birthed, nurtured, and watched grow, sunsetting a product is a perfectly natural part of the product lifecycle.

During the sunsetting phase, it is important to be diligent. You should devise a playbook or checklist to ensure all activities, such as communication, code clean-ups, and so on are covered during the end-of-life period.

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The Ultimate Guide to Product Marketing in 2023

Learn about the power of product marketing, how it can help your bottom line, and impact the success of your products.

THE ULTIMATE PRODUCT MARKETING GO-TO-MARKET KIT

Ensure that your whole team is aligned with four planning and internal enablement templates for your next product launch.

Updated: 02/02/23

Published: 02/02/23

Product marketing is essential, even if you only sell one or two products at your organization.

But what is product marketing ? How do you market a product, and how does that differ from conventional marketing strategies? Let’s find out.

What Is Product Marketing?

Why Is Product Marketing Important?

Product Marketing Duties

Product Marketing Strategy

Product marketing examples, what is product marketing.

Product marketing is the process of bringing a product to market, promoting it, and selling it to a customer. Product marketing involves understanding the product’s target audience and using strategic positioning and messaging to boost revenue and demand for the product.

What makes product marketing unique? How is it different from conventional marketing? Let's unpack the differences.

Product Marketing vs. Conventional Marketing

Product marketing is strategic whereas conventional marketing is all-encompassing.

Product marketing is considered a component of conventional marketing. In fact, if you look at the seven Ps of marketing , you’ll see product marketing is one of the most important aspects of a business’s marketing efforts.

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Product marketing is about understanding a specific product’s audience deeply and developing that product’s positioning and messaging to appeal to that audience. It covers the launch and execution side of a product in addition to the marketing strategy for the product — which is why the work of a product marketer lies at the center of a business’s marketing, sales, and product teams.

Conventional marketing is focused on broader topics under the umbrella of marketing, such as lead generation, SEO, and anything related to acquiring and converting new leads and customers . It’s about promoting the company and brand as a whole, including the products sold. These marketers make sure there’s a consistent, on-brand message behind all of the company’s content.

To understand it better, let’s look at product marketing goals.

Product Marketing Goals

Product marketing is focused on driving demand for and adoption of a product among existing customers. It’s focused on the steps people take to purchase your product so product marketers can build campaigns to support this work.

Usually, product marketing is executed with several goals in mind:

1. Understand your customers better.

When you implement a product marketing strategy, your target audience can see the value of having that specific product in their lives. Understanding how many customers gravitate to your product lets you conduct customer research.

2. Target your buyer personas effectively.

Alongside understanding your customers, you can figure out the type of buyer persona to target in the future. Knowing the exact needs of your target can help you when innovating your product to better suit their needs. Creating a value proposition can help with this. 

3. Learn about your competitors (products and marketing tactics).

When you market your product, you can compare your strategy and results to your competitors. What features and benefits of their products make a statement within the market? What ideas haven’t they explored? What does their product offer that yours doesn’t? You can use this research to your advantage when crafting your product marketing strategy.

4. Ensure the marketing, product, and sales teams are all on the same page.

Making your product offering abundantly clear for buyers and employees is mutually beneficial. Every team working together in your business can better understand the product's purpose and better communicate that in their operations.

5. Position the product appropriately in the market.

In product marketing, you want your product, brand image, and tone consistent and evoke the right feelings intended for your audience. When you brainstorm your brand positioning , some questions to consider are:

Is this product suitable for today’s market?

How is this product different from our competitors'?

Can we further differentiate this product from our competitors' offerings?

Are there any products we’ve sold in the past that we wouldn’t market or sell again? If so, why not?

6. Boost revenue and improve sales.

There are also questions you, as a product marketer, will have to ask yourself and reflect on regarding your product. Asking yourself these questions will help you ensure your product is successful among customers.

Is this product appropriate for our customers today?

How is this product unique from similar products of our competitors?

Is there a way to further differentiate this product from our competitors? 

Are there any products we’ve sold in the past that we wouldn’t market or sell ever again now that we look back? If so, why not?

As you can see, product marketing requires you to look at your products strategically to ensure they’re successful among customers in your current market.

Why is product marketing essential?

Product marketing is a critical part of any business’s marketing strategy. Without it, your product won’t achieve its maximum potential among your target audience.

To illustrate its importance, let’s look at an example of successful product marketing. During the 1950s, Volkswagen sold a bus. Although now considered a classic vehicle, the bus remains an icon for the car company decades later.

The cool part? Volkswagen announced their new VW Bus — it’s electric and features sleek, modern styling. Volkswagen’s marketing for the vehicle is eye-catching, unique, and fun, and it complements the original “hippie” vibe the company was once known for.

Image Source

Volkswagen also released a TV commercial for the bus that’s clever, minimalist, and on-brand. It introduces the new vehicle with the song The Sound of Silence playing in the background (hint: electric cars are silent) and ends with a short message on the screen for viewers to read: “Introducing a new era of electric driving.”

This sentiment touches on the fact Volkswagen is contributing to society’s interest in electric, eco-friendly vehicles. It also relates to this being a new era for the bus.

This is why product marketing is important: Because it highlights not the company but the product itself, ensuring longevity in the market.

But who works on this type of marketing? Who helps create content that excites consumers about new and updated products, like the Volkswagen bus? Who encourages consumers to buy? Product marketers.

Now, let’s take a look at the specific responsibilities that product marketers (or product marketing managers) face in their typical day.

Product Marketing Responsibilities

• Identify the buyer personas and target audience for your product.
• Successfully create and carry out your product marketing strategy.
• Work with and enable sales to attract the right customers for your new product.
• Determine your product’s positioning in the market.
• Ensure the product meets the needs of your target audience.
• Keep your product relevant over time.

Your responsibilities as a product marketer may vary slightly based on industry, company, products, and company size and resources. If you’re working for a startup, you may be a product marketer who also helps create the content the broader marketing team produces due to limited resources and budget. As the business grows, you may move onto a team whose sole job is product marketing.

Let’s take a look at six common product marketing responsibilities.

1. Identify the buyer personas and target audience for your product.

You must identify the buyer personas and audience for your product so you can target customers in a convincing way that makes them want to purchase. This will allow you to tailor your product and its features to solve your audience's challenges.

Pro tip: Use templates to create buyer personas for your business. A tangible outline of whom you’re catering to can help align different teams in your business and better position your product in the marketplace.

2. Successfully create, manage and carry out your product marketing strategy.

A product marketing strategy (which we’ll review shortly) allows you to create, build, and execute content and campaigns — this supports the steps that will lead your buyer personas and customers to make a purchase.

3. Work with and enable sales to attract customers for your new product.

As a product marketer, you have to mamusta direct relationship with sales. You’ll work with sales to identify and attract the right customers for the product at hand and provide sales enablement materials to reps to ensure they understand the product inside and out, along with its features.

This way, you and your teams are on the same page in termregarding being shared with customers, allowing you to provide a consistent, on-brand experience for anyone who comes in contact with the product.

4. Determine your product’s positioning in the market.

One of the most important parts of your job is determining the product’s positioning in the market. Think about this process in terms of storytelling — your positioning requires you to create and tell the story of your product.

As a product marketer, you’ll work with the broader marketing team and the product team to tell this story by answering critical questions like:

Why was this product made?

Whom is this product made for?

What challenges does this product resolve?

What makes this product unique?

5. Ensure your product meets the needs of your target audience.

You must also make sure your product meets the needs of your customers and target audience. Through the research to determine your buyer persona and target audience, you should have uncovered the pain points and challenges you’re working to solve with your product.

If your product doesn’t meet your customers' needs, they’ll have no reason to make the purchase or choose your product over your competitor’s.

6. Keep your product relevant over time.

Your product needs to stay relevant over time. As needs, expectations, and challenges change and evolve, it’s your job to ensure your product marketing strategy and the products themselves remain relevant among customers.

This means you may have to manage slight changes in your product marketing strategy (which we’ll discuss next) or updates and modifications to the product itself (you’ll likely work with the product team, which creates the effect, to do this).

7. Guide marketing strategies for new products.

In product marketing, you'll need to pay close attention to what worked in your strategy and what didn't so you can better plan marketing strategies for new and future custom products . Pay attention to where your audience is and what they are looking for. What channels got the most traction and led to more converted leads?

All this information and more should be applied to marketing strategies for new products.

Your product marketing strategy serves to guide the positioning, pricing, and promotion of your new product. It helps you take your product from development to launch and informs what new audience(s) and markets to which to launch and market your product.

Now, let’s take a look at five steps that can help you optimize your product marketing strategy.

1. Define your product’s target audience and buyer personas.

As a product marketer, one of the main roles you have is to define a specific target audience and create buyer personas for the product being sold (different products will likely have different target audiences). This is the first step to marketing your product.

By understanding your customers and their needs, challenges, and pain points, you’ll be able to end that all aspects of your product marketing strategy (as in the rest of the steps we’ll define below) are tailored to that target customer and persona. This way, the product and the marketing content created for the product will resonate with your audience.

2. Determine the positioning and messaging to set your product apart.

After your customer research and learning about your audience, you’ll have identified their needs, challenges, and pain points. From here, you can think about how to highlight the ways your product resolves those challenges for your customers.

However, that doesn't necessarily mean you’ve differentiated yourself from your competitors. After all, they are your competitors because they solve your customers' needs in a similar way to your company.

The key to setting your product apart is positioning (which we touched on earlier ) and messaging . Positioning answers key questions your customers might have about your product and what makes it unique and then turns those answers into the main points behind your product’s marketing strategy.

It’s your job as the product marketer to ensure your customers and audience know the answers to these questions and don't have to dig around for (or make assumptions about) them.

Examples of questions you’ll need to answer to develop your product’s positioning and messaging include the following:

What specifically makes our product unique?

Why is our product better than our competitors’?

Why are our product’s features ideal for our target audience?

What will our customers get out of our product that they cannot get from our competitors’ products?

Why should our customers trust and invest in us and our product?

Once you’ve answered these questions, you can compile these responses into one impactful and shareable statement that captures your positioning and messaging. To do this, follow these steps:

Turn the answers to the positioning and messaging questions into an elevator pitch .

Use action words to excite your customers.

Ensure the tone of your statement captures the style of your brand.

Focus on the benefit of your product as a whole (not just one specific feature).

Pro Tip: As product marketers, you should ensure the sales, product, and (the broader) marketing teams are also aware of your positioning and messaging around the product so they, too, can communicate the same information to prospects and current customers.

This allows you to ensure the entire company is consistent in the content and information they share about your product. Additionally, you can provide this information to your support team if you think it’s necessary, as they may be fielding support calls and working with your customers who’ve already invested in the product.

3. Set goals for your product.

Next, you’ll want to set goals for your product. These will vary based on your specific product, the type of company you work for, your overall marketing goals, and more — your goals will be specific to your business and situation. However, let’s review some common goals product marketers aim to achieve:

Increase revenue

Engage with customers

Improve market share

Gain customers from competitors

Boost brand recognition

Pro Tip: Feel free to combine several goals or choose one to focus on — every company and product will have different plans. The key is ensuring you view and set these targets in the SMART goal format, meaning they’re specific, measurable, attainable, realistic, and time-bound.

Use a free template to help you create and achieve your SMART goals.

4. Price your product.

As a product marketer, you’ll also have to contribute to the discussion of the price of your product . Depending on your company, you might work with other teams on this part of the strategy, or it might be a job just for you and your fellow product marketers. Either way, you can consider competitive vs. value-based pricing.

Competitive vs. Value-Based Product Pricing

Competitive pricing means you’re basing your product’s price off similar products your competitors sell. It’s ideal for companies that have an effect similar to one that several other companies sell.

Suppose you believe your unique features warrant a significantly higher price e of your competitors’. In that case, you might price your product above the other similar products on the market. An excellent way to evaluate the fairness of the pricing of all of your competitors is by studying financial reports and industry trends.

Value-based pricing allows you to maximize your profit, although it’s a bit more time-consuming to establish in comparison to competitive pricing. It’s ideal for companies selling a product with very few competitors on the market or one with exceptionally new and unique features.

Value-based pricing quantifies your item’s value in a way your customer can relate to their profitability. It allows you to base your product’s price on its value for your customer rather than whatever the market, industry trends, and your competitors say.

5. Launch your product.

Now it’s time for the most impoessentialt of your role as a product marketer — not to mention, the most exciting: the launch of the product you’ve been marketing.

There are two main parts to the launch to focus on as a product marketer: the internal launch (what goes on within your company upon product launch) and the external launch (what goes on outside of your company, with customers and audience members, upon product launch).

Internal Aspects of a Product Launch

As previously stated, your job as a product marketer entails ensuring the entire organization is on the same page about your product. This way, your customers only receive consistent and accurate details about the product.

The marketing, product, and sales teams at your company should be aware of the following information:

The product’s benefits

Any available product demo information

Sales training opportunities on your product and details about how it’s used

What the positioning and messaging looks like

Who your buyer personas, and ideal customers are

What the goals for your product include

What your product’s features are

The pricing of your product

How your product is being launched to customers

Now, you might be wondering how to provide this information to marketing, product, and sales. Which channels are ideal for sharing these details with your fellow employees?

Here are a few examples of ways to do this:

Sales enablement kit (ideal for sales)

Presentation (ideal for the broader marketing department and product)

Knowledge base (ideal for support)

External Aspects of a Product Launch

Externally, there are many ways to market your product launch so your current base of customers, prospects, and target audience learn about whatever it is you’re selling.

First, determine where you’re going to focus your product marketing efforts. Here are some examples of channels and places to do this (you might choose several of these or just one to focus on depending on your needs, goals, and resources).

Social media

Product launch event

Website landing page

Exclusive product preview (prior to the official launch)

Promotional event/ campaign (in-person and/ or online)

On whatever channel you choose to focus your product launch marketing efforts, you should include relevant product information ( focused on your positioning and messaging ) so prospects and customers can learn all about your product and why they need it. This includes your product’s features, what makes it unique, pricing, demos for customers, training for customers, and any other materials you’ve created and want to share.

Congrats! You’ve just worked through the steps to marketing a product. Remember, this process is one that should be thought about and updated as your products change and evolve so they remain relevant among your customers. (This shouldn’t be an issue as long as you have a member of your team focused on product marketing, considering it’s one of their main responsibilities.)

Now that you know how to create a product marketing strategy, how do you market a product across your channels? Let’s take a look.

How to Market a Product

• Create a product marketing deck for other marketing teams.
• Publish product-focused content on your blog.
• Insert product mentions naturally in your existing marketing collateral.
• Try comarketing with a similar brand.
• Launch PPC ads and bid on your and competitors’ keywords.
• Focus on the benefits, not the features.

1. Create a product marketing deck for other marketing teams.

Non-product marketers — i.e, social media marketers and content marketers — won’t have the full know-how on your product, impeding them from marketing it properly on customer-facing channels. As a product marketer, your job isn’t necessarily to execute marketing campaigns or write content. Instead, your job is to enable specialized teams — such as your social media and content team — to market your company’s products effectively.

The first step is to provide a deck, presentation, or document that outlines your product marketing strategy to other marketers. That way, when it’s time to execute on a strategy, they know the positioning they are aiming for, the wording they are to use, and the personas they are targeting.

2. Publish product-focused content on your blog.

A blog is primarily a place to attract inbound leads. Rather than trying to hammer them with information about your product, you might write content that helps them solve an issue instead, and then offer them a free guide or ebook to help them further.

But did you know that your team can publish content that attracts inbound leads and encourages purchases and sign-ups? At HubSpot, we call this product-focused content. It’s just as helpful as our other content, but with a critical difference: It has a call-to-action to try one of HubSpot’s products.

For instance, our blog post, What is a CMS and Why Should You Care? , aims to inform readers about content management systems, but then includes a call-to-action to try CMS Hub .

While the blog post is still informative and not overtly promotional, it still promotes one of our products. In the same way, you or your content team can write helpful content for your readers, help them the inbound way, and still encourage customers to try your offerings.

3. Insert product mentions naturally in your existing marketing collateral.

If you’ve had a longstanding marketing strategy prior to beginning product marketing, we have good news: You can retroactively market your product in existing collateral. For instance, if you already have an expansive library of blog posts, you can update them with information about your products (so long as the mention is natural).

Recent social media posts can also be candidates for an update, and your website content should also change to show your brand new product. Internal links from related pages can help drive traffic to your new product pages.

In addition, if your marketing team has created marketing offers in the past, you can have them update the offer and add a call-to-action to try your newest product — like in this example from HubSpot’s Case Study Templates offer , where we prompt users to try CMS Hub.

4. Try comarketing with a similar brand.

Comarketing is an excellent way to market your product to a related audience. You can do something as simple as filming a video together, writing a collaborative blog post, posting on each other’s social channels, or running a webinar.

Your product should be an excellent match for the other company’s customers. Ideally, both of your products can be used in conjunction and not compete directly. For instance, Ankor Software and HubSpot partnered for a webinar, but Ankor Software doesn’t compete with HubSpot CRM — it complements it.

5. Launch PPC ads and bid on your and competitors’ keywords.

Pay-per-click (PPC) is an essential product marketing tactic. While content and social media marketing can help you attract inbound leads, you can get the attention of even more potential customers by posting PPC ads on search engines.

When setting up your PPC campaign, bid not only on general product keywords (such as “crm software” or “[insert category]”), but on your own branded terms and your competition’s as well. That way, customers who are considering purchasing the same product from a competitor will consider you as an alternative.

6. Focus on the benefits, not the features.

Regardless of the channel or platform you’re promoting your product on, highlight the benefits customers will experience, not the features of your product. Not only can features feel jargony (like “Customizable attribution models” or “Automated contact workflows”), but they shroud the benefits and alienate non-technical customers.

Try, instead, leading with the benefits, such as “Know where exactly your leads come from” or “Save time by automating tasks using contact workflows.” For instance, on the Marketing Hub page, the features snapshot reads:

“ Attract visitors through blogging, social media, ads, and more. Convert visitors into customers with landing pages, email, marketing automation, ABM, and more. Track ROI with revenue attribution reporting. All powered by the customer data in your CRM to enable personalization at scale .”

Using benefit-first language will engage customers and prompt them to try your products. The “how” of the benefit — such as features or functionalities — come after.

Let's review four real-life examples of stellar product marketing.

Apple is a household name for leading technology products and software. Not only are its products gorgeously well-designed; it’s also super useful. But Apple's product marketing doesn't focus on the many product features — it markets the user benefits.

Apple doesn't simply list the impressive features of their products; the brand uses those features to tell consumers who they could be and how they could work if they have those products. Apple tells a narrative using its products and encourages people to buy in the process.

Billie is a women's razor brand. In a highly competitive market, Billie has helped its products stand out. How? It established a sharp competitive edge (no pun intended) by doing what no razor brand had done before — show body hair in its advertising.

Not only did this advertising approach get Billie's audience talking about the brand, but they also appreciated the brand's accurate portrayal of women's bodies and body hair. These differentiators were more than enough to set Billie apart from other razor brands and products.

3. Pepsi Cola

As a brand, Pepsi has positioned itself as one with youthful energy and excitement, and this can be seen consistently through its product marketing campaigns.

Pepsi's customers are mainly aged between 13 and 35 years old with modern and active lifestyles, so it only makes sense to hire popular celebrities like Doja Cat for a commercial in a homecoming tailgate.

Through highly targeted positioning, repetitive advertising, and consistent branding, Pepsi has become a truly global household name and product.

4. MailChimp

There are dozens of email marketing tools on the market, but MailChimp hasn't been fazed by competition. In fact, the company has risen above its competition by positioning itself as more than an email marketing tool: it's an all-in-one marketing platform that helps businesses grow.

Like Apple, MailChimp primarily highlights its benefits for the end-user, not just its product features. A recent rebranding and site redesign further drives this narrative home.

Start Marketing Your Products

Product marketing is the process through which a company brings a product to market. Being a product marketer (or product marketing manager) means you’re at the center of your company’s marketing, sales, and product teams.

You’re an integral part to the success of your product, as you create and manage your product’s specific marketing strategy, but you also serve as a liaison between all three of these departments, ensuring everyone is on the same page with your product, it’s features, capabilities, and more. So, start developing your latest product’s marketing strategy to ensure it’s a success among your target audience and customers.

This post was originally published in February 2020 and has been updated for comprehensiveness.

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How Homegrown Indian Beauty Brands Are Plotting Their Next Launch

• Sneha Mankani

Key insights

• Increased disposable incomes, interest in trying new beauty products and evolving consumer preferences make India an exciting market to enter for both international and local brands.
• Homegrown brands are using their deep understanding of Indian shoppers to out maneuver international competition, with local consumer insights driving product development.
• Despite competition, affinity and support from Indian consumers is fuelling the growth of the local beauty industry.

MUMBAI – Nars Cosmetics, Rare Beauty, Kylie Cosmetics, Dr Dennis Gross, Sol de Janeiro, Laura Mercier and Urban Decay were just some of the international players that entered India’s $23.7 billion beauty playground in 2023. Ask any Millennial or Gen-Z with an interest in beauty about this list, and they’ll tell you it’s the reckoning of a distant dream. Still, that same shopper doesn’t feel as deprived as they did a few years ago when acquiring their favourite creamy concealer or multi-action cream which required a distant cousin visiting from abroad and a pricey flight. That’s because in the same universe that large prestige beauty lines are landing in the subcontinent, there is a crop of homegrown brands making their presence felt.

“Homegrown beauty has evolved. Dedication to transparency, ingredients, packaging, marketing and conscious thinking from the founder’s side is driving this change,” said Bianca Louzado, a makeup artist and founder of Code Beauty, a cosmetic sanitising brand.

Louzado said 20 percent of her professional makeup kit is now made up of homegrown brands like Asa Beauty, Aminu and Daughter Earth. And she isn’t alone. Out of the 6,200-plus brands retail giant Nykaa sells, over 400 brands represent Indian ingenuity. That number is growing daily.

According to Euromonitor, India’s per capita gross income is set to rise more than 130 percent through 2040. The Indian consumer, besides spending more on makeup and skincare due to increased disposable income, is also more aware of their needs and open to trying new things, with 42 percent strongly agreeing that they enjoy discovering new beauty and grooming products , according to a report by market intelligence firm Mintel.

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Tanya Rajani, principal analyst, beauty and personal care at Mintel India said the “desire for novelty, combined with increased internet consumption and digital engagement, has fuelled the growth of home-grown beauty brands in India.”

A ripe market and a willing consumer are great bait, but in order to succeed, home-grown Indian brands need to have strong strategic foresight and create products with perfect market fit without creating clutter. But above all, new items need to be increasingly guided by its users. To be chosen by the discerning Indian beauty shopper, what, when and how a brand launches a new product will make all the difference.

“India as a market is still at a nascent stage, I don’t think it’s saturated. There is a constant premiumisation happening,” said Aman Mohunta, co-founder of skincare line Aminu. “A brand needs to focus on which strata they want to operate in.”

Identifying a Gap

Oftentimes, the Indian beauty entrepreneur is the Indian beauty consumer, with a deep-rooted craving to find and fix what’s amiss. Identifying a gap has become the basis of product development for founders like Karishma Kewalramani, who launched FAE (Free and Equal) Beauty in 2019.

“While the penetration of new brands had begun, I didn’t see anyone making products that were working for brown skin at an affordable price,” she said.

FAE retails for an average of Rs 220 to Rs 750 ($2.65 to $9.04) and is sold online at Nykaa, Tira Beauty, Kindlife and Myntra, along with quick commerce platform Blinkit and its own e-commerce website. The line launched with multi-use sticks based on two consumer behaviour learnings: people wanted products that took them from day to night and worked for their lips, cheeks and lids. Customers also cared deeply about a matte finish.

Though the brand had customer data at the ready, evolving consumer preferences meant FAE had to continuously evolve. The brand entered the liquid lipstick category in September 2023 with Lip Whip in 10 nude shades. A mousse-like matte formula ensured it stayed on the lips for six to 12 hours, a chief concern of shoppers. But quickly thereafter, FAE phased out its multisticks because they didn’t have the performance that customers were looking for.

“In India, people tend to think that if it doesn’t last long, it’s not worth my money,” said Kewalramani.

Thanks to brands like The Ordinary, which familiarised a global audience with ingredients like AHAs and BHAs, Shamika Haldipurkar launched D’you in 2020 with a single product, a serum called Hustle that’s formulated with 11 actives. Hustle targets acne, dehydration and premature ageing among other skin concerns, and retails for Rs 3,200 ($38.58) on its website and at Nykaa, Tira and Amazon. Haldipurkar saw an appetite for premium products with sophisticated formulation, but also discovered that multi-step routines caused confusion among Indian shoppers. Hustle came without a side of overwhelm.

Though entering a price sensitive market with one product at a premium price was risky, the product helped D’you become profitable within three months of launch; it also has a 45 percent retention rate. Today, D’you’s portfolio includes five products, including its latest launch, the Unkissed sunscreen, its most requested product.

“It was a key product missing from our portfolio for consumers who wanted a complete D’you skincare routine,” Haldipurkar said, who noted that the flurry of sunscreen launches in the market is due to category awareness and consumption in the country. “Insights from our retailers show that it’s the number one category trending year on year … A lot more people have adopted the use of sunscreen.” Beyond its Lip Whip, FAE also launched a SPF Juice, a sunscreen that doesn’t leave a white cast. The brand has had its best year since launch, with 350 percent growth.

Meeting the Consumers All the Way

Increased interest in functional skincare has spurred the entry of brands like Minimalist and Aminu, which focus on high performance, science-backed formulas.

Minimalist has taken an educational approach to its marketing. Its website features a skin analyser tool to help a shopper build a routine and its social media is populated with skincare science. Minimalist acknowledges that products like its Tranexamic 3% or Sepicalm 3% Moisturiser could require some extra hand holding.

“All our products are clinically tested and we share those results on our website. Our transparency in sourcing, manufacturing processes and educating our customers wins us consumer trust,” said chief executive Mohit Yadav.

While seemingly commonplace in the West, brands have realised the importance of educating shoppers directly with platforms like TikTok banned.

Aminu, meanwhile, aims to build on the philosophy of personalised skincare by providing individualised regimens based on the skin’s age, hydration, oil production levels, barrier strength and other such factors through free consultations with experts. It includes over 200 ingredients to create multi active blends; its Melting Balm Cleanser, which sells for Rs 1,200 ($14.47), includes 12-plus seed and enzyme oils

“Our approach is to help you understand what your skin needs at that moment first, then advise on a regime that has the ingredient profile from our portfolio to suit those needs,” said Mohit. “We’re not claiming we found a miracle ingredient that works brilliantly on [all] subcontinental skin.”

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