Buying inventory for reselling
Before starting your online store, you have to buy inventory to sell. There are several ways to source products for your store and each has its own benefits or difficulties. How do you find a supplier that fits your business and what products are suitable to resell with profit in a competitive market?
Starting a reseller business
Buying a product and selling it at a higher price seems like an easy way to make money. And if you are leisurely selling during garage sales or on online marketplaces like eBay, it can be.
But if you want to make money with a professional online shop, reselling products is easier said than done. The competition in online retail is fierce. And so, selling unique products can really make a difference.
Find a niche and a specific business model
As an entrepreneur in ecommerce, you probably want your online sales to go big. But bigger is not always better. If you start out thinking you can compete with the enormous product range and target audience of a giant retailer like Amazon, you will be disappointed. Instead, aim for a specific type of customer and specialize in a niche product or smaller market segment. That way, your shop has the potential to stand out amongst the e-retailer crowd.
When first starting out, it is best to focus on a specific type of customer or niche product.
Your product range does not have to be big, as long as there is some variation. So instead of an online clothing store, try only selling t-shirts. Or even more specific: vintage band shirts. Another way to make your online store stand out, is to sell products in a higher price range. There are only a few online shops that sell expensive furniture or cars, for example. Even though buying inventory will be more expensive at the beginning, you can really become the expert in the field.
Buying products online
Once you know what products you want to specialize in, you will have to buy them. In the beginning you will probably roam markets, online platforms and thrift stores in search of unique products. This can take a lot of time and energy that you can better spend on, for example, marketing and customer service. Therefore it is recommended that you find a good supplier, so you can build your inventory fast.
The easiest way to find suppliers is through online wholesale platforms. A few well-known platforms to buy inventory are:
B2b-platform Orderchamp is a wholesale marketplace for retailers with low purchase thresholds and minimum orders. Big retailers use the platform to shop for complementary items, but small boutiques and concept stores can easily source their inventory here.
Another popular wholesale platform that is known for their low order minimum is BigBuy. The Spanish marketplace mainly works with dropshipping. You do not have to buy products in advance. Instead they send an order directly to your customer. Here you can start out small, but additional services will require a subscription.
In search of a unique wholesaler? Online wholesaler Salehoo has a large collection of suppliers from all over the world. For 67 dollars you have access for a year to contact them.
Buying stock from wholesalers
The traditional way to buy inventory that you can resell online, of course, is to start a relationship with a wholesaler. Unfortunately, this is not easy. Wholesalers usually have a bunch of loyal buyers already and rather sell them some more, than work with new buyers. Moreover, they are reluctant to supply to small online shops with fewer orders.
This is why you do not see wholesalers promoting their supply services loud and proud. And if you ask a supplier about it, they will have a list of strict requirements. For example, orders have to be of a high value. Some wholesalers may demand that you have a physical store or will not offer returns.
Wholesalers have strict requirements before you can place an order with them.
Since wholesalers play hard to get, it is easy to get discouraged when you are first starting out in ecommerce. However, it pays off to be prepared when approaching a wholesaler. Make sure you have an overview of your visitor numbers and, if you already have some products to sell, the number of sales. Also have your monthly revenue at the ready. This way you can prove that you will place an order regularly. This makes you a more attractive buyer.
Lastly, do not fall into the trap of blindly chasing the one wholesaler that shows an interest in your business. It is certainly possible to build an inventory by just ordering from one wholesaler. However, you do not want to put all your eggs in one basket. Reach out to multiple wholesalers. That way, if an order is delayed, you can avoid further disaster and keep selling products in your shop.
Shopping for stock in China
If you look at the label of any product, often times it will say ‘made in China’. This is why a lot of retailers buy their products directly from Chinese manufacturers. Buying stock straight from the source is appealing, since the purchase prices are a lot lower than those of European suppliers.
Buying products from Chinese companies is easy thanks to online wholesale platforms like AliExpress or Alibaba, the second being more business-to-business based. Suppliers on these platforms also have less severe requirements than European wholesalers. This also makes it an attractive venture for new online shops.
Beware of European rules and requirements
Buying inventory from Chinese suppliers can be lucrative, but there are a few things to consider. Things that often go wrong are sales tax, bad product images or a too long delivery time that customers will complain about.
But those are just ordinary steps. As mentioned before, products from Asian manufacturers have less severe quality requirements. This means you are usually not allowed to sell them to European customers. So before ordering from an Asian supplier, check if they meet European quality standards first.
Also, even though purchase prices are lower when buying from a Chinese manufacturer, there are some additional costs. Shipping costs, for example, will be a lot higher. There can also be customs fees involved. All things considered, it can turn out to be expensive. Keep this in mind when buying stock from overseas.
Buying and managing your own inventory can be costly and time-consuming. That is why some online retailers use dropshipping to fill up their shop.
With dropshipping, you do not need to buy your own inventory before you can sell it. Instead you offer products from a supplier, and when an order is placed, the warehouse ships it directly to the buyers. This means you can skip the high cost of building an inventory from scratch. And you will need less startup capital as a result.
A dropshipper usually works with software that easily integrates their products into your shop. In addition to your online store, you can also choose to sell the products on marketplaces. That way you will have an even bigger reach.
Dropshipping suppliers often have good integrations with online marketplaces and ecommerce software.
Dropshipping may sound like a dream, but keep in mind that there are some downsides as well. For one, you do not own the products or manage the shipping yourself. However, you are still the one responsible when issues arise. Customers will come to you looking for answers. Therefore it is worth it to research a dropshipper thoroughly before working with them. Try ordering an item yourself first, and see if other shops have a good customer experience.