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How to source products to sell on Amazon successfully

By Julian Bonte-Friedheim | April 13, 2023
How to source products to sell on Amazon successfully
Boost your cash flow with 8fig.


Amazon, as the world’s prime eCommerce website, offers phenomenal opportunities to establish an online store and sell to its unrivaled audience. However, Amazon’s marketplace is also becoming more and more competitive as a growing number of sellers flock to the platform. That means you need to be on top of your game to keep up. The first step to doing so is finding the right product to sell. Secondly, you need to know where to buy items to resell on Amazon. These choices can make all the difference in whether a business manages to stay afloat or not. In this article, we’ll show you how to source products to resell on Amazon with success.

Table of Contents:

What Is Product Sourcing?

Product sourcing is the process of finding inventory to sell in your Amazon store. This requires research, preparation, and simple trial and error to determine which products are profitable and in demand. It is important to find a reliable supplier that can provide you with your goods year-round so that you don’t run out of stock. You also want to make sure that a certain standard of quality is upheld, to reduce the chance of customer returns.

Most Amazon sellers source their products from abroad. While this might mean lower prices, it also guarantees longer shipping times. It is for this reason that any decisions regarding your products have to factor in the logistics of getting them to your customers.

Key Factors in Product Sourcing

Demand

In order for your eCommerce store to succeed you need a product that people will want to buy. Establishing whether there is enough demand is a crucial part of this process. However, even low-demand products can be a good choice if you have a plan to boost their desirability, for example with an extensive marketing campaign. Tools like Google Trends offer a good way to assess the demand for a certain product.

Competition

The second most important factor in a product’s viability is how large the competition among sellers is. Even if you sell the most desired product on Earth, if hundreds of other Amazon sellers offer it too, you will have a tough time expanding your market share. You want to pay serious attention to whether a version of your item is being sold through the Amazon Basics label, which tends to be cheaper than might be viable for a small eCommerce seller.

Seasonality

Items that sell year-round are always a good bet as it means your operations run at a consistent pace, as does your income. Investing in a seasonal product such as snowboarding gear or flip flops isn’t necessarily a bad business idea, but you have to make sure you are ready for high peaks and deep lows. That means your supply chain and marketing need to be in line with consumer demand patterns.

Profit margins

Every product has different profit margins, meaning how much money you have left after sourcing, shipping, packing, and marketing it. Low-margin products, for example, books or clothing, have to be sold in very high numbers in order to be profitable. That makes them ideal for big companies with serious financing and risky for small eCommerce stores.

Compliance

Whichever product you plan on selling, make sure to read up on all the regulations that apply. While selling something like phone cases might be more straightforward, items such as dietary supplements or e-cigarettes come with serious restrictions. This means much higher compliance costs. Depending on the product, new regulations that harm your sales or make your current stock unsellable might emerge.

Transport expenses

The ease of shipping a product from the supplier to your warehouse and then to the customer will have a major impact on your costs. On one hand, you have to factor in weight, as heavy products will balloon your shipping costs. On the other, the further the shipping distance, the more you will have to pay.

Logistics

Even the greatest product isn’t worth investing in if you aren’t able to get a steady supply of it. Factors such as having one or multiple suppliers will affect your operations. More than anything else you want to find a supplier that maintains shipping times and product quality.

Market Research

Launching your Amazon store doesn’t mean you need to develop a new gadget yourself. It usually comes down to finding out what people already want and providing it for them. Trends like people buying equipment to take ice baths or cooking with air fryers provided amazing opportunities to eCommerce sellers that entered those markets early on. Today these sectors have become mainstream, making the competition much fiercer. A good understanding of upcoming consumer trends can give you an immense leg-up over other sellers.

This is where data analysis tools can make a huge difference. By going over consumer data, you can develop a better understanding of what products might perform the best. Here are several options to check out:

Google Analytics

When you are looking for your niche, Google Analytics can help track and compare trends based on keyword searches. You can narrow your search results down by region and city, following trends in various markets over the last 20 years. Tailor your advertisements based on the most active keywords on both Google and Amazon. Google Analytics is free for all sellers.

Amazon Trend Report

The Amazon Trend Report gives you a clear view of analytics on the site. While it isn’t as expansive as other services, the information it does offer is accurate and usually helpful.

Keyword browser extensions

Using a browser extension tool can help you to figure out which products are trending or losing popularity. Extensions such as Helium 10 and Jungle Scout are among the highest-rated among Amazon sellers. They can help you track keyword searches on Amazon, meaning you get to see what consumers are looking for the most. Services like Jungle Scout even let you filter products by demand, as well as how many sellers offer them. That means you can identify what markets are likely to be the most lucrative for a new seller.

Understand Your Requirements

Before you reach out to suppliers, you have to be sure what your conditions are. Make sure you are clear regarding these factors:

Establish a budget

It is important to review your budget once you have conducted your market and product research. Ultimately, a budget will help keep you on track when negotiating with suppliers and determine your profit margins once you start selling.

Payment terms

When you find a supplier or manufacturer, there are usually several options when it comes to paying for your product. Determining how you pay sets the stage for your future cash flow. If your supplier allows you to buy inventory on credit, you have some time to make the first payment and can start selling in the meantime. However, if you are required to pay the full amount for each order upfront, you need to make sure you have the financing to do so sustainably.

Lead times

Your supplier or manufacturer should give you an estimated time from when the order is received in their system to completion and arrival at your storage facility. This period is your lead time. It will matter a lot more once your first batch of product starts selling and your second or third freight is on its way. You have to make sure you aren’t overstocking and wasting resources on warehousing fees. On the other hand, Amazon seriously frowns upon going out of stock for too long, so you have to ensure that doesn’t happen either.

Risk assessment

When determining your risk assessment, you have to consider specific factors such as price change and pivoting trends. For example, if you use a material like gold that is subject to regular price changes, how will that affect your operations? How far ahead can you order stock without depleting your finances? How likely is your business to withstand a lost or significantly late shipment of inventory? You have to understand what hiccups you can handle, and how to avoid the ones that might derail your company. Supply chains are highly prone to disruptions so you need to be ready.

Where to Source Your Products

Finally, you need to know the best places where to buy items to resell on Amazon. Here are some of the best B2B resources available.

Alibaba

Alibaba is the leading platform that Amazon sellers use to source their products. Great pricing and the ability to buy from Chinese suppliers relatively easily make it ideal for new eCommerce sellers. What makes Alibaba special is the sheer variety of products, ranging in the millions, that are available on its platform. Many of them can be customized to fit your brand’s needs. The site also has low MOQs (minimum order quantities), meaning it is straightforward to sample products before investing in large shipments.

1688

1688 is essentially a more complicated version of Alibaba. ECommerce sellers still turn to this platform because it offers even better prices. It doesn’t have an English site, processing payments is more complex, and it can’t directly ship outside of China. The Google Translate browser extension and getting a sourcing partner can help you overcome these issues. If you are willing to put in the extra effort, 1688’s unequaled pricing can make your business much more competitive. For a better understanding of the differences between 1688 and Alibaba, and how to succeed on either platform, check out our full breakdown here.

Wholesale Central

Wholesale Central is one of the largest catalogs for manufacturers and distributors in the US. Its huge database provides ample opportunities for eCommerce sellers to find great products. Wholesale Central’s platform includes reliable sellers that have to go through a rigid approval process. Being able to get your items from within the US can significantly reduce shipping times and paperwork, but you are likely to pay more than with a Chinese partner.

Things To Keep in Mind When Sourcing Products

Once you’ve built a selection of suppliers that meet your requirements, you should follow these steps when making a choice:

Sample the product – When you choose a supplier or manufacturer, be sure to ask for a sample of the product. This hands-on approach allows you to inspect the quality of the product and determine if it meets your standards. Additionally, you can determine if its pricing is reasonable.

Set up a trial run – A probation period or trial run allows you to see how quickly the manufacturer or supplier can produce and ship a product. A supplier with multiple hiccups in procurement or shipping is a red flag. However, minor issues can be resolved and give you the opportunity to make changes to mitigate problems in the long run.

Check reviews – Going by word of mouth is one of the best ways to find out if a product or supplier is worth investing in. Quality, timeliness, and customer satisfaction can all be determined through reviews. Be sure to check a variety of sources.

Domestic vs international suppliers – You don’t have to source all of your products from one place. Domestic suppliers might offer higher quality and can provide a quicker shipping time without dealing with customs. However, international suppliers tend to be less expensive, allowing for a higher profit margin.

Have backups – When using a single product sourcing strategy, you open yourself up to a slew of problems. Shipping delays or component shortages for your supplier can completely disrupt your operations. Make sure to have alternatives ready in case your supplier can’t supply you adequately anymore. Sourcing from multiple partners is also a great way to reduce risk.

Get Financing To Fund Your Orders

In order to succeed with product sourcing, it is important to have secured the necessary eCommerce financing first. Doing so will allow you to make larger orders at a reduced cost per unit, or pay for more frequent shipments to keep your stock full.

8fig offers one of the most promising funding packages for eCommerce sellers out there. You receive regular cash injections to fund your operating expenses, and your remittances are personalized to maximize your cash flow. Plus, 8fig funding plans are flexible, so you can change it as you go based on the ups and downs of your sales. This means you have substantial cash flow at all times and can invest in new ventures or products to grow your business. You maintain full equity and don’t have to worry about hidden fees or interest. Join 8fig today to boost your store’s performance fast and sustainably.


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