How I Find Suppliers
April 6th, 2009 by KenricMany people always email me and ask me how I pick my niche product and how I find dropshippers. There’s no exact science in finding a niche products. Alot of it is trial and error. You may find a decent niche product that has little competition and then find out that the wholesalers will only sell to you for $440 and the product has a $500 retail price.
It’s hard to explain how to find the product. Sometimes it’s just comes to you while you are surfing the web or shopping in a mall. Other times, you realize you need to buy something and find out that you can’t find many stores that carry it.
Once I find a niche that looks promising I do a google search on it and write down the contact information for all the manufacturers. There should not be too many manufacturers if you are truly looking at a niche product. Once I have the contact info, I shoot out an email like the one below:
Hello,
I am launching a new online store that will sell only WIDGETS. My store will carry about 30-35 total products from various brands of WIDGEST. I would like to carry your WIDGETS in my store.
If you are interested I can fax you my business license, EIN number, etc… I would like to know if you offer dropshipping and if not, what your wholesale order requirements are. I prefer to pay by credit card for my orders, but can purchase on PO’s and pay invoices also.
A little background about me, I create and run online retail niche stores for a living. I purposely target niches because I feel that I can instantly compete from day one and I can concentrate on providing great customer service, aggressive marketing for my products. This is much easier to do efficiently and effectively if I target a specific niche. My store will also all include a very active blog that will be updated frequently. The blog will run promotions, contests and product reviews. All of which will generate relevant, fresh content about your WIDGETS and your brand.
Please let me know if you have any questions, feel free to call me or reply to this email.
Thank you.
I usually get a few responses, maybe about 40%. If the niche has 10 manufacturers, 4 or 10 may be enough to open a store. I usually send a follow-up email a few days later. This usually gets me a few more responses. So if I get enough manufacturers to field a store of 30-50 products, I feel that I can move forward to the next step.
The next step is to evaluate the margins. In most of the responses, the manufacturers include their wholesale price list. I go through and calculate profit margins and wholesale requirements. They also usually tell me if they do or don’t dropship.
If they dropship great! If not, you have to look at their minimums. As long as their minimums are small like $200 order total or 6 total products, I feel that I can deal with it. Let’s say I’m selling a $100 product and the wholesale price is $50 and I only need to order a $200 minimum. I will wait till someone orders 1 and then I’ll order 4 for $200. I sell one for $100 and have 3 in stock. This capital outlay isn’t that bad.
Based on all this data, I decide if I can profitably create a store.
I am moving to a stock and ship type of system now because I feel that I can afford to stock products now. As my ebizes grow and I continually add more, I can sell the same stock in all my stores which gives me a better chance of not getting stuck with stuff.
Worst case scenario with stock is that you offload it on ebay at cost.
Questions? Ask away.
Posted in Making Money Online | 7 Comments »
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Hi Kenric, thanks for sharing your experience. On your post above- do you use just wholesale price as a deciding factor for picking which product to purchase from a wholesaler OR if prices are the same- do you still spread out your purchases across multiple wholesalers – sort of avoiding the ‘all eggs in one basket’ analogy ? Curious on your thoughts on that. Also, before you decide on a niche product- how do you go about deciding that there is market for that product- even if it is a niche product. Thanks !
By DK on Apr 7, 2009
I buy direct from the manufacturer so I’m not sure what you mean by spread out your purchases. Each manufacturer only carry’s their brand and they are the only source of their brand.
You can find out how many people are searching for products in the niche using google adwords keyword tool.
By Kenric on Apr 7, 2009
Thanks for sharing that Kenric. How important would you say it is for manufacturers to see a track record of trading etc? I have a few hobbies and I’d happily set up a 5-10 product niche store focused on one of them as a part-time business, with the aim of making $1-2K a month profit say, on the back of cheaper prices and excellent customer service. (I’m not turning down more money! :) But I’d be constrained by time regarding scaling it up).
But are manufacturers going to be interested in such small potatoes?
By Monevator on Apr 18, 2009
The manufacturers would ideally like to see a Tax ID instead of an SS#. Some are very forthcoming with wholesale info on the first email. With others you have to jump through many hoops just to get to the pricing.
I think you just have to convince them that you can sell their product for them. It’s just like the job catch-22 when you just get out of college.
You need experience to be hired, but they won’t hire you until you get experience.
You need a store to show them you can sell, but you need a supplier to open a store.
Once you get one supplier, you break the catch-22 and it will be very easy to find suppliers.
By Kenric on Apr 18, 2009
Hi Kenric, thank you for sharing your experience.
You said that you have multiple vendors.
1. they all have different shopping cost. Do you link each product to individual shopping rate somehow?
2. If your customer orders let’s say 5 products from different vendors. He pays only one shipping cost, as he is buying everything in one place – your store. But in reality you need to pay shipping each time you order the product from the vendor – finally you pay 5 times more and you are loosing money! How do you deal with it?
appreciate your advice.
By Jane on Nov 14, 2009
Hi Jane,
My stores have free shipping or flat rate shipping. My products are priced so that they are profitable if each is shipped individually. If an order comes from 5 different dropshippers, I do get them shipped individually and pay multiple shipping costs, or I ship them all to my house and then ship it to the customer if they are international.
By Kenric on Nov 14, 2009