Stages of Product Sourcing You Need to Know for an E-commerce Business

by WorkLooper consultants Internet Service Provider

Product sourcing is the process of finding, evaluating, and selecting the right suppliers or manufacturers to achieve high-quality and cost-effective goods that positively affect your company’s bottom line. It is an important process for every e-commerce business to find and acquire marketable inventory for selling at profitable prices. E-commerce product sourcing is carried out in a number of stages that include researching the chosen product, calculating the prices and costs of the products, and negotiating with suppliers or manufacturers to achieve the best deals.

Explore the Essential Product Sourcing Stages

Cost structure, profit margins, and competitiveness are the three central factors during the process of product sourcing. The general product sourcing process for e-commerce businesses can be divided into 5 stages that are explained below.

Stage 1: Research of the Product

Understanding the product and conducting market research are necessary processes for a successful business. A well-rounded research includes:

Storing data: the collection of specific data regarding the number of specific stores, creating enough interest to drive sales in your retail store, and determining the product’s specifications and requirements for a more successful business

Targeting consumer demands: identifying the consumer demands, their feedback on social media related to products, and their concerns in surveys.

Following Trends: Find the latest trends in product categories and which companies are addressing these trends.

Stage 2: Market and Supplier Evaluation

This stage focuses on contacting potential suppliers or manufacturers to select the best one as per your business needs. The supplier evaluation process involves assessing their capabilities and tracking records, taking quality control measures, assessing their production capacity, and understanding their pricing and payment terms.

Stage 3: Selection of the Right Supplier

After consulting with a number of suppliers, you need to select a final supplier and negotiate with them for a profitable business. Comparing the outcomes in terms of value or implementation of cost differences This step involves agreeing with them on your requirements and the terms of the contract, such as quality standards, the total price, payment terms, lead times, and delivery schedules. Once the contract has been signed, make sure the final suppliers come up with savings estimates.

Stage 4: Contract Implementation

You need to devise a communication plan with the supplier regarding the product you have selected for your business. You need to inspect them with quality control checking by verifying product specifications and performing other necessary product tastings to ensure that they are meeting your quality standards. Make sure that the potential risk of a relationship is identified and mitigated early with sufficient compliance measures.

Stage 5: Performance Monitoring

The performance of suppliers or manufacturers should be measured routinely and reported accordingly. It evaluates the collaborative efforts with suppliers and maintains an efficient procurement process. Monitoring and tracking supplier performance include:

Receiving timely delivery of products
Measuring the quality of products
The right invoice for the correct amount of goods
Their stock availability
Excellence in customer service

Conclusion

Product sourcing for an eCommerce business is the process of finding the most suitable supplier to provide high-quality products at a suitable price point that gives you a better profit margin. Collecting data from quality sources regarding products, conducting market research, negotiating contracts, and testing the products are the crucial steps for straightforward and fast product sourcing. For managing an e-commerce business, you need to develop a healthy supplier relationship and keep in mind all the essential stages of the product sourcing process that will guide you toward success.