Welcome fellow Amazon sellers, we understand the journeys we’ve chosen aren’t the easiest, but the rewards can be significant. If you’re here, you’re likely interested in how to optimize your product sourcing strategy for ecommerce, particularly when dealing with Amazon’s FBA program.
The reality is that product sourcing is not a one-size-fits-all matter, each product, each seller & each market comes with unique challenges & opportunities. One thing we promise you now, however, is that this post will offer some incredibly useful pointers.
The heart of an Amazon FBA business relies on the perfect product: high-demand, low-competition, good-margin. These factors are determined mostly by your sourcing technique. Manufacturers, wholesalers, liquidators, or sourcing agents can all be channels to explore when seeking suppliers. Domestic or overseas, every option has its pros and cons & needs precise analysis.
In the world of ecommerce, product research is a vital starting point when sourcing. The prospective product should align with your niche & should boast sizable demand. The importance of utilizing Amazon’s Best Sellers Rank (BSR), Google Trends, and other ecommerce analytics tools cannot be stressed enough. No good comes from sourcing a product that nobody wants.
Beyond demand, consider operationally vital elements such as product size, weight, seasonal relevance, and potential restrictions or guidelines on Amazon’s part. It’s essential to navigate the Amazon FBA fee structure to understand the profitability of your sourced products. Product sizes & weights can significantly influence storage and shipping costs, hence affecting your margins.
Your supplier screening process should involve comprehensive due diligence. Look into their credibility, product quality, responsiveness, and ability to deliver consistently. Alibaba, Global Sources, and Thomasnet are just a few of the platforms out there where you can find information & reviews on different suppliers. Always vet & negotiate.
Remember the Amazon ethos when sourcing products: Customer obsession rather than competitor focus. This demands that you source products which truly standout in quality. Remember that poor product quality leads not only to bad reviews & low sales, but also poses a threat of suspension from Amazon itself.
Negotiation is a core facet of effective sourcing. Always be prepared to negotiate order quantities, unit costs, shipping terms, and even lead times. Negotiation can be the key to unlock better margins, faster inventory turnover, and sustained business relationships. Just maintain professional ethics while negotiating & confirm everything in writing.
When sourcing overseas, particularly in China, it’s important to have familiarity with important dates & holidays. The Chinese New Year, for example, almost halts business operations for several weeks. Having a grasp of such calendars can avoid inventory shortages or delayed shipments, which could potentially hamper your Amazon FBA business.
Managing cash flow efficiently is imperative in ecommerce businesses. Product sourcing should align with sustainable cash flow. If a product generates profit but locks up your cash in inventory for too long, it might not be the best product to source. Similarly, working with suppliers offering flexible payment terms can improve cash flow health.
There’s often a rush towards trending products, yet it’s worth considering sourcing evergreen categories too. Products that perform consistently throughout the year can provide regular income and stability to your business. Diversification of product line-ups can help to balance out the ups & downs of trending or seasonal products.
Product sourcing is not something that you set & forget; it’s a persistent process. Keep evaluating your products and supplier performances. Maintain a close watch on shifts in trends, consumer preferences, and competitor activity. Remember, what worked yesterday might not work tomorrow in the fast-paced world of ecommerce.
Never underestimate the power of networking. Events, trade shows, and online forums are perfect channels to establish connections, gain insights, and discover sourcing opportunities. Remember, people love to share stories of their success & these can be incredibly valuable lessons. Join local Amazon seller groups & learn from their experiences.
In the ecommerce game, compliance can’t be side-stepped. It’s essential to thoroughly understand Amazon’s rules & regulations, from product approval requirements to labeling instructions. Failure to comply can lead to account suspensions, or even legal issues. We’re sure you’d agree: that’s an avoidable hassle when you abide by the rules.
Product sourcing for Amazon FBA isn’t just about sourcing the cheapest product. It’s instead the quest for sourcing products that offer the best value when quality, cost, demand, and competition are altogether considered. Effective sourcing is the result of thoughtful research, strategic negotiation, and ongoing evaluation.
As we near the end of this insightful post, we implore you to approach product sourcing as a strategy, rather than a task. The time & effort invested in finding the right products, suppliers, and partnerships are what differentiates a successful Amazon FBA seller from mediocre counterparts. Good luck and happy sourcing!
For information on getting started with an automated eCommerce store, schedule a free discovery call with us here at Elite Automation.
