If you want to start selling physical products online, buying the stock upfront rather than drop shipping it, then you need to read this article. Nowadays we live in a world where most people are starting e-Commerce stores particularly dropshipping stores. However, not everyone wants to start a dropshipping store and that is completely understandable. Some people prefer packing and sending off the products themselves as well as assessing the quality, taking their own photos, etc. Buying physical stock upfront isn’t such a bad idea and it has been done by many for years and years. by many companies both brick/mortar and online.
Buying stock upfront is a perfect idea if you are selling things like lashes, skincare, car parts, etc. The reason why is because the profit margins are better and buying in bulk means it is cheaper. Dropshipping these things will make them more expensive and the margins will be less.
Many people are scared about purchasing upfront physical stock because they are scared that it will not sell. The way around this then is to take the risk and also to actually sell things people want. If you want your own makeup business or so start small. That is the beauty of buying physical stock upfront is that you can start small and grow. You start in the shallow end and swim into the deep, unlike drop shipping where you are instantly dropped into the deep end with orders, ads, etc.
Where Can I Find Suppliers?
The most popular site is Alibaba. However, do not think for a second it’s the best. Yes, there are plenty of great suppliers on there but also a lot of scammers. You should only interact with a supplier if they have:
- Good reviews
- A long trading history (over 3 years)
- Decent English
- Product Photos/Videos
- They Don’t Pester You
- They Have a Company Website
- Company Registration
- Good Delivery
- Customers From Western Countries
Do not interact with suppliers who do not have these. The reason why is because you will get scammed and it does happen on a daily basis. Do not ever send money to them via Western Union as you cannot claim it back. Paypal Business or Alibaba pay is the only way to pay.
You should also download WeChat for your phone. WeChat is Chinese WhatsApp and it is what most suppliers use to communicate. Sure you can use Alibaba’s chat but WeChat is far more convenient since suppliers are always using it and checking their messages a lot more on it.
Alternatively, you can use ChinaBrands or AliExpress to find a supplier. However, keep in mind you still need to follow the above points to find a good supplier. These sites are littered with scammers and as a newbie, it is likely you will end up contacting one. Just be aware because these people as friendly as they sound to you, can be absolute scammers and really rip you off. It has happened in the past and it will happen again. Just do not let it be you.
With Suppliers Always Ask
- What’s the MOQ?
- What are the delivery options?
- How long have you been trading?
- What country do you mostly sell to?
- What is the best price you can offer?
- Do you do samples?
- How many weeks will it take to arrive?
- Can you send me photos, please?
These questions are vital in finding a good supplier. Always have your wits about and never fall into the trap of the “nice” supplier where they are trying too hard to be friendly. They are the people who will scam you. Suppliers are not your friends. They are simply people doing a job for you so at first, always stay professional.
You can use domestic suppliers. To find them you can use eBay, Spocket, Thomasnet, eSources, Wholesale Scout, or even cash and carries like Costco. They may be more expensive, however, you do not need to pay any international customs or taxes or large delivery fees. You also get better protection being in a domestic country if things go wrong and there is no need to wait for any delayed deliveries since delivery will be a lot faster than it is coming from China.
What Do I Need to Be Aware Of When Buying Stock Upfront?
You need to be aware of a few things when buying stock upfront. First of all, is the tax issue. Before you buy anything make sure you understand your country or state’s taxes. There is nothing worse than not understanding your state or country’s law when buying stock upfront. You do not want to encounter any hidden costs or miss out on any fees that you need to pay because you could get fined for this.
Make sure you have everything set up prior to purchasing stock. You may need a shipping code, a tax reference identification number, a business license, etc. Suppliers especially domestic will want to know this.
Be wary of the Minimum Order Quantity (MOQ) a supplier sets. This means if they say the MOQ is 50 then the least you can order from them is 50. You can try to negotiate and get less for sample testing but ultimately it won’t be a heck of an amount less.
MOQ can become an issue when your product isn’t validated. What is product validation? Product validation is where you test to see if the product works or not. You can do this pretty easily. You purchase a small number of your products and test them to see if they sell and whether people will pay your prices etc. Then from this, you can decide whether or not you should continue selling the product in question or if you should quit it and move onwards. The only way to validate a product is to get sales and be profitable. If there are no sales and profit then move on. Alternatively, for a lower risk method, you can dropship the product in question until it is validated.
Be aware of the quality of the product. Order samples if need be. Do not order fancy packaging straight away until you are satisfied with your brand name being on a product. Protect your brand and don’t just sell anything for the sake of it. You want to be proud o what you sell because at the end of the day what you sell is a representation of you as a person.
Check every single product in depth. Check for marks, dents, scratches, etc on every order. Check the ingredients of cosmetics, etc when you test them and also see if the product itself is against any laws in your country. Make sure you are buying from a supplier who has all the correct licenses for safety, copyright, etc on their products. If they don’t it will be you in the deepest trouble. How do you check if the licenses are legit? If it’s domestic you can always sue if they have faked it but international that’s where things get hard. You want to ask for some sort of ID code for their license. For example, if it is a CE license (Conformitè Europëenne) then you should be able to request a certificate for this. If the certificate of certification for any license looks a bit shady and fake then you can always contact the certification board like CE to enquire more about the certificate.
For that selling in Europe. The CE mark looks the same as the China Exports mark except for a few small key details. Please keep this in mind and always ask the supplier for a certificate if they say their goods are CE registered.
In terms of packaging, make sure you check that too. Make sure it is to high-quality standards and not just some crumpled up junk.
Final Thoughts
This is the first part of what you need to set up an online store. In part 2 shipping, setting up a store, business registration, and marketing will be explained.
Before you even think about brand names, chose your product and niche first. And before you build a store decide on color themes, logos, and values for your business.
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