Are you inadvertently making these product sourcing mistakes? Even experienced online merchants fall into these traps!
Read through the list below and see if you recognize yourself in any of these scenarios…
Changing just one of these bad sourcing habits can add thousands of dollars and more to your bottom line every year!
Stuck in a rut selling only low dollar, low margin products. Why turn $1 into $11 if you can turn $50 into $100? Sure, in the first scenario you’re getting a 1000% markup. And in the second scenario you’re getting 100% markup. But you need to sell a
heck of a lot of $10 products to make any real income.
Does this mean you should never sell low dollar/high volume products? Not at all. If you have a high volume, low margin product that’s in-demand, go for it!
If you’re a start up with limited inventory budget, you need to start somewhere.
But long-term, if your Average Sales Price per item is below $25-$30 dollars, you must bring in some higher ticket inventory increase your profit margins and your revenues.
Selling dicey products. Are you building your business on real inventory or are you lured in by “get rich quick” inventory? A couple years ago a “hot” way to make money online was to sell secondary market medical test strips. People were driving hundreds of miles a week to meet up with “a guy in a parking lot” to get their inventory.
Did these people make money? Some did.
But many others landed themselves in big trouble for buying stolen inventory or selling test strips that were grey market or out of date.
Don’t ever compromise your integrity for the lure of fast “easy” money.
If you’re going to build a real retail business you must:
- Know how to source products wholesale
- Learn the correct way to use suppliers who will drop ship (and no they’re not all evil con-artists)
(they’re also not the ‘Easy Button’ answer).
- If you source inventory using retail arbitrage, master that method
Ultimately, the success of your business depends on what you sell.
Surface sourcing. Ever feel like all the good products are taken and those you sell have little to no profit margin?
While price compression and competition are a fact of life in ecommerce, if you’re only selling the top 2-10% of products in your niche, you need to dig deeper into that category and find the products that:
- Not everyone is selling
- Can’t be found in every brick and mortar or big-box store
And they’re out there!
This is one of the biggest things you’ll learn in both my Sourcing the RIGHT Products Wholesale to Sell on Amazon Course (for Amazon sellers) and Power of 10 Product Sourcing (for eBay merchants and website owners) - how to look for pockets of opportunities in niches, sub-niches and micro-niches.
Once you learn how to see product sourcing differently, you’ll start to spot product opportunities that have been bypassed, missed or ignored by other online merchants who are surface sourcing.
Ignoring product trends. This one is a business killer. How can you source the products your customers will buy if YOU don’t keep your finger on the pulse of the product trends in your category?
- What’s up and coming
- What buyers are spending their money on
- How technology has changed the products you sell
Without understanding consumer trends, when you pick up a supplier catalog, how will you know what to order?
If you want to be successful in retail, you have to care about product trends. And remember, there are product trends in every category. Even a basic category like light bulbs!
Thinking you are your customer. Would you buy a $700 ice cream maker, a $100 jar of hand cream or a $700 Mahogany Dog House/Nightstand/End Table. Amazon buyers do!
As an online merchant it’s critical to understand your target customer. But placing your value judgements on what people will or won’t buy limits what you
‘ll source.
You may think that the neon blue/stop yellow nail polish is the ugliest thing you’ve ever seen, but there are millions of fashionistas out there waiting for someone to bring it to the marketplace!
Which of These Resonates With You?
Even if you see yourself in all five bad sourcing habits, don’t worry they’re ALL fixable!
Recognizing these limiting sourcing practices is the first step.
Replacing them with profitable sourcing habits is the next step.
Which one is your “gotcha”?
-Lisa
Final TWO Days!
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I have done that mistake. For a while I was selling DVD’s and made $0.50 $1 profit on each DVD sale. After a while, I decided to get out of that business. For making $0.50, I looked at all the things that I needed to do and it looked like a waste of time. Now, I don’t sell any items if the profit I make is less than $8 to $10. More the better.
Hi Gopal,
Good for you for recognizing that and making the change!
The other issue with selling low margin items is there’s no wiggle room for price elasticity.
If a person wants to run a sale/promo on a low margin item, there’s no wiggle room for profit.
I’m glad that you are moving towards higher margin items.
-Lisa