Product Sourcing 101: Here’s How Your Business Can Source Products Overseas
By Space Coast Daily // December 23, 2021
When you’re just about to start your own business, one of the challenges you’ll face is product sourcing. That is, where do you get your certain supplies, materials, or merchandise?
One great option is overseas sourcing. That is, buying from suppliers abroad.
If overseas sourcing is new to you, don’t fret. Below are tips for sourcing products from suppliers overseas.
1. Identify the products
This may sound rather cliché, but it isn’t. You must choose your products carefully. I know a lot of people source products overseas based on which ones offer the biggest profit opportunities.
But, profits alone shouldn’t be the determining factor.
Yes, it might be true that a product can fetch you 1000% returns. But what’s the probability that your existing customer base will buy it?
The point is not just about finding a product that promises the best returns, but rather a product that checks important boxes.
For example, important boxes like:
■ The likelihood of your existing customer base buying
■ The difficulty in building a new customer base for it
■ The chances of easily finding a reputable supplier for it. Remember that not all businesses have the LEI codes yet. So, it may be hard to verify the identity of certain suppliers.
■ Probability of getting the products every time you need new stock. Remember, some products are only available during certain seasons in certain countries.
2. Choose a country
Now that you have a product in mind, the next question is, where will you be buying from?
Usually, most business owners and retailers make this choice based on where they can find suppliers. But if history has taught us anything, it’s that there are other important variables to consider.
Besides supplier access, another important factor to consider when choosing a country is the tax and costs associated with importing from that country. For instance, in some countries, exporting products overseas may warrant excessive custom duties, as well as government levies. Whereas, in other countries, this may not be so.
Basically, you should choose a country that keeps costs to a minimum.
Also, in some countries, international business owners may be expected to have verifiable means of identification, such as an LEI code. Without an LEI application number, importing products from these countries may be hard.
Finally, don’t forget the socio-economic aspects like the economic and political stability of the region. If you’re getting products from a region with a history of terrorism or violence, you may someday run out of stock and not be able to order new items simply because of an unrest in the region.
3. Confirm that you’re permitted to do business in or with someone in the country
To import goods from certain countries, there is a level your business enterprise must be at in terms of its financial situation and personal assets. While scouting for countries, you should take this factor under consideration. And prepare to cancel any country that is not in a position to allow you to do business.
4. Find a supplier
Product suppliers are the easiest to find in today’s world. They are everywhere. You will find them on social media, on e-commerce marketplaces, and in other strategic places.
Once you know where to look, you won’t have trouble finding suppliers for your products.
For starters, interesting places to look include:
■ Maker’s Row
■ Worldwide Brands
These platforms have amazing collections of product suppliers for just about any niche.
The only point worth stressing is that when searching for or choosing a supplier, you must look up the LEI number of the company or wholesaler on the GLEIF LEI database. With the number of fraudulent brands we now have around the globe, the last thing you want to do is transact business with someone you know nothing about. The LEI code helps ensure that that’s not the case.
If you check a supplier’s website and can’t find any information about their LEI registration, you can simply ask them via email whether or not they have one. A reputable and trustworthy supplier dealing in international transactions should have an LEI number – that’s their global reference number.
5. Contact the supplier
We already mentioned this in the previous section. So, we’re just going to bolster the points we made before.
Once you’ve identified the right supplier, the next thing is to reach out to them. Bear in mind that no supplier will say anything negative about itself. So it’s up to you to do your due diligence to figure out whether they’re good for you, indeed.
You can do that by asking the right questions. For example, if you’re buying baby products from a supplier in China, one good question to ask is how they secure their products. This can help you understand the quality of the products you’re getting.
Peradventure, you don’t get convincing responses from the supplier; you can go online to look for reviews about the business. According to Oberlo, 54.7 percent of consumers read at least four reviews before buying a product.
Still not convinced about what you find? No problem, go back to the Legal Entity Identifier (LEI) number we spoke about before.
LEIs are designed for exactly this type of situation – where people need to confirm the identity and trustworthiness of the brands they’re dealing with.
6. Don’t be afraid to select multiple suppliers
It may be tempting to find and stick with just one supplier when scouring for suppliers. But you really don’t have to do that. Sourcing products from overseas means you have the liberty to trade with as many product suppliers as you can see.
Feel free to explore the market for the best names you can find. Reach out to all of them and identify the ones that best interest you. If you find more than one, then so be it.
7. Request product samples
Before putting your money on the line, you should request samples. This is important so as to get a firsthand look at the product.
Want to check the product quality? Want to see whether the packaging looks attractive enough? Want to compare with local alternatives? Want to present presale samples to prospective customers?
Ask the supplier for a product sample.
Upon careful inspection and analyses of the product sample, you can now safely proceed with the purchase.
8. Reach agreements
Even if they offer to give you the best deals, never ever reach agreements with suppliers over the phone. Instead, have them put everything in writing, with both parties appending their signatures.
Thankfully, it’s now possible to append signatures digitally nowadays.
Also, before coming to the final terms of the arrangement, you should be clear on matters involving product pricing, price fluctuations, payment terms, shipping terms, and delivery.
This is so that you don’t run into complications later on. Imagine a situation where a supplier cites unforeseen issues like LEI verification or the global shipping crisis as the reason for late delivery. If you don’t have a clearly-defined contract beforehand, it may be hard to get them to compensate for the inconvenience.
When there’s a written contract everyone can refer to anytime, it makes it easier to reach decisions quicker in the nearest future.
It may take a while to find winning products. Don’t be in a rush. Simply take your time with the research and selections.
Even after finding a product, you may also run into challenges with finding the best supplier of the product. Again, don’t be in a rush. Weigh all the options available to you to be sure you’re making the right call.