6 Product Sourcing Strategies You Need to Know

At the core of every business is a successful product that’s known for its quality, value, and reliability. Savvy brands employ efficient product sourcing strategies that give them the edge over their competitors, and it’s these tactics that ensure customer satisfaction.

While logistical and manufacturing hurdles still linger, that doesn’t mean businesses should stay put and rely on a solution to fall on their lap. You must be proactive with your product sourcing to maintain the quality of your products and keep your inventory in check.

In this article, we’ll discuss several product sourcing strategies you need to know to ensure you choose the right one that meets business needs and customer expectations.

1. Wholesale

Wholesale is a product sourcing method wherein a business buys items in bulk from a manufacturer or distributor at a discounted price. It’s one of the most common sourcing methods throughout the e-commerce industry, as it allows brands to adjust their purchases depending on consumer demand.

If you want a readily available product that you can source in large quantities, you should consider wholesale as your sourcing method. One downside to wholesaling is the similarity in items to other brands, making it difficult to stand out from the competition.

When to use wholesale? – Wholesale is perfect for businesses who want to expand their operations without the need to assemble the products themselves. It’s also a great way to build a network of suppliers, making it easy to source products whenever you need them. If you can identify trends and capitalize on them, wholesale is a great product-sourcing method for you to use.

2. Dropshipping

Many brands favor dropshipping as their product sourcing method because of its simplicity and convenience. Businesses contact a supplier to outsource the product manufacturing, storage, shipping, and delivery to customers. The supplier handles everything and your job as a brand is to provide a storefront where the customers will order.

Once a customer places an order, you forward it to the supplier and let them handle the delivery. Businesses that want lower overhead costs can benefit from dropshipping since they don’t have to worry about inventory and warehouse management.

But dropshipping comes with downsides as well. Since you don’t have direct access to the products, you give up quality control in the hands of your supplier. Competition is also fierce in dropshipping since it’s a popular method to source products.

When to use dropshipping? – Dropshipping is ideal for brands that want to start with minimal investment and work their way toward building their business. Your only goal is to market the products and get customers interested in what you have to offer. If you don’t want to deal with the hassle of inventory management, then dropshipping is a worthy consideration.

3. Manufacturer

Going direct to the manufacturer has plenty of advantages for e-commerce sellers, like cutting off the middleman (i.e. distributors or wholesalers) and gaining control over the product’s quality and design. You can choose between a local or overseas manufacturer to create your items, both of which come with their set of pros and cons.

  • Local manufacturer – Local manufacturers provide faster turnaround times and adhere to strict intellectual property protections. Communication with the manufacturer is smoother since there is no language barrier, which leads to a more consistent and higher-quality product.
  • Overseas manufacturer – Overseas manufacturers charge cheaper per product compared to local manufacturers, which is great for small businesses with limited budgets. Variability is also a factor since many foreign manufacturers create a wide range of products for different niches.
Product Sourcing
If the budget permits, working with a local manufacturer can lead to higher quality products that conform to strict intellectual property protections.

When to use a manufacturer? – You want to go the manufacturer route if you want full control over your product’s quality and design. Businesses that want to create a unique product will benefit from working with a manufacturer as it helps differentiate them from their competitors. For those interested in starting a private label brand, using this product sourcing method is the way to go.

4. Arbitrage

Arbitrage is the process of sourcing products online or in retail and selling them for profit. In online arbitrage, you buy discounted products from websites and marketplaces and bump the price when you sell them. Retail arbitrage works similarly, except you source discounted products from retail stores and add a markup.

Arbitrage is a quick way to start an online business, as it takes advantage of volatile markets to gain profit. You get immediate access to the products since they’re readily available. But, you do need to conduct extensive product research and analyze the competition to make sure the products you source have high selling potential.

When to use arbitrage? Whether you go with online or retail arbitrage, these product-sourcing options are simple in approach and enable you to make a quick profit. Amazon Arbitrage is very popular since sellers gain access to the platform’s vast logistics network and global audience. If you consider yourself a flipper and want to make money by buying and selling products, arbitraging could be a good choice for you.

5. Third-party product sourcing companies

Given the meteoric rise of e-commerce, it’s no surprise that specialized product-sourcing companies are popping up all over the place. There are plenty of third-party companies dedicated to sourcing products for businesses, and they use their industry expertise to ensure their clients get the best products for their brands.

The biggest advantage to using product sourcing companies is it eliminates all the guesswork. You don’t have to look up online directories to search for manufacturers as the company has established connections. But this benefit comes at a cost, as you’ll need huge startup capital to pay for their services.

When to use product sourcing companies? If you have plenty of wiggle room with your budget and don’t want to deal with the hassle of finding the right manufacturer, then leveraging the services of a product-sourcing company is a good idea. It’s important to verify the legitimacy of the company before you engage in any transaction to ensure you get the most out of your hard-earned money.

6. Product sourcing platforms

Along with product sourcing companies are product sourcing platforms making waves in the e-commerce space. These websites serve as online marketplaces for suppliers and manufacturers where businesses can contact them and do business. Unlike online directories, product sourcing platforms contain all the information you need from manufacturers and suppliers, including their niche, pricing, and more.

Like sourcing companies, these platforms ease the burden of sourcing your products, helping you set up your business quickly. Simply contact the manufacturer and see whether their services will be a good fit for your product sourcing needs.

When to use product sourcing platforms? It’s always a good idea to look at sourcing platforms to narrow down your list of potential manufacturers/suppliers. The main benefit of these websites is they provide detailed information about the companies, thus helping you make a confident decision.


When sourcing your products, it helps to switch up your strategies depending on your current needs. Incorporating a variety of these methods will help alleviate your inventory issues and ensure consistent product quality regardless of consumer demand. Use a proven model for the products you sell the most as they’re more likely to be stable in the long run, helping you avoid issues that can hamper your sales figures.

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