Product Sourcing 101: How to Source Products in 2022 (2023)

Sourcing products starts with some questions: Should you purchase from a manufacturer, wholesaler, or dropshipping supplier? How will each option affect your margins, branding, and business growth?

These are big questions.

Why? Your product sourcing strategy will serve as your business’ foundation and will have a significant impact on your overall success.

Get this right and you’ll set the stage to scale your business. Get it wrong and you could waste countless hours and dollars.

No pressure then…

That’s why we’ve put together this product sourcing guide. In it, you’ll learn all about the three main methods of sourcing products. Plus, we’ll share an eight-step product sourcing strategy to help you get started.

Let’s dive in.

Post ContentsShow

  • What is Product Sourcing?
  • 3 Common Ways to Source Products
    • 1. Manufacturers
    • 2. Wholesalers
    • 3. Dropshipping Sources
  • Which Product Sourcing Strategy is Right for Your Business?
  • How to Source Products: A Step-by-Step Product Sourcing Strategy
  • Summary: Product Sourcing 101

What is Product Sourcing?

Product sourcing definition: Product sourcing is the process a business uses to acquire the products it plans to sell. Businesses can source products from manufacturers, wholesales, dropshipping suppliers, or print-on-demand services.

3 Common Ways to Source Products

The first step when sourcing products is to decide which type of supplier you want to partner with:

(Video) What is the BEST Way to Source Products For Amazon FBA?

  1. Manufacturers
  2. Wholesalers
  3. Dropshippers

These product sources are very different, and each one will heavily affect the foundations of your business.

Before you start sourcing products, it’s vital to understand their differences, strengths, and weaknesses. Only then can you choose the method most suited to your business.

Let’s take a closer look at each product sourcing method.

1. Manufacturers

Product Sourcing 101: How to Source Products in 2022 (2)

Manufacturers are the companies that make the products you want to sell.

Working directly with a manufacturer is a great way to source products if you have a unique product idea. This could be for a new product that’s not currently on the market or a variation of an existing product.

Before developing a new product, you would need to validate the market demand and be confident that it will sell.

You’ll also need to carefully manage the design process and create prototypes in partnership with the manufacturer. This process can be lengthy, complicated, and expensive.

Manufacturers are typically more focused on making than selling. As a result, they often prefer to work with a small number of large retailers and traders. For this reason, manufacturers usually sell products in substantial quantities. Think four figures, or even five.

It can also be challenging to build relationships with manufacturers at first – especially if you plan to outsource manufacturing to a foreign country like China or India. In these cases, time zones and language barriers can make communication difficult.

Where to Source Products from Manufacturers

You can source products from manufacturers by attending trade shows or using popular B2B marketplaces, like Alibaba and IndiaMart.

Product Sourcing 101: How to Source Products in 2022 (3)
  • Low cost per unit. Sourcing products directly from manufacturers means that there are no middle-men. Consequently, you should be able to attain a low cost per unit – and higher margins.
  • Unique products. You’re able to create unique, branded products that help to differentiate your business from competitors.
  • Easy to expand. Once you have a working relationship with a manufacturer, it’s easier to create new products and expand your business.
  • Large minimum order quantities (MOQs). Most manufacturers set high minimum order quantities that require businesses to invest significant capital upfront, with no guarantee the products will sell.
  • Need for storage space and infrastructure. You’ll be responsible for storing and shipping orders. (Although, it’s possible to simplify this process with the Shopify Fulfillment Network.)
Product Sourcing 101: How to Source Products in 2022 (4)
  • Logistically challenging. You need to manage product development, prototyping, shipping, duties, storage, and order fulfillment.
  • Long lead times. Creating a new product and bringing it to market can take months, if not years. If you work with a foreign manufacturer, the shipping and customs clearing process alone can often take a couple of months.
  • Potential for fraud and foul play. If you source products from abroad, it’s possible that manufacturers may try to scam you. As a result, you’ll need to do a lot of due diligence before placing an order.

2. Wholesalers

Product Sourcing 101: How to Source Products in 2022 (5)

Wholesalers are brands that sell goods and products in bulk to both brick-and-mortar and online retailers.

(Video) How to Source Profitable Products FAST | Amazon FBA Online Arbitrage

Wholesale product sourcing is a straightforward process that’s far easier to manage than working with a manufacturer to create products.

And by purchasing products in bulk, you’re still able to get a low-enough cost per unit to enjoy healthy margins.

Most wholesalers list their products on product sourcing websites, so it’s easy to find new products to sell. Plus, there are countless product options to grow and expand your business.

Where to Source Products from Wholesalers

There are many product sourcing websites out there designed to help you buy wholesale – including Handshake!

I know – shameless plug, right? But for good reason.

Here at Handshake, we’ve vetted and curated a unique selection of independent creators. These suppliers and product collections are handpicked to make it easy for you to source products that help your store stand out from the crowd.

Product Sourcing 101: How to Source Products in 2022 (6)
  • Good margins. You’ll usually find larger margins when manufacturing and smaller margins when dropshipping – wholesaler distributors offer a comfortable middle ground.
  • Quick and Simple. Wholesale product sourcing is relatively fast and straightforward – especially when using a platform featuring only pre-vetted and curated suppliers, like Handshake.
  • Validated products. Other businesses are usually already selling wholesaler’s products, so you know they sell. As a result, there’s less risk than when bringing a new product to market.
  • Less capital is needed upfront. Wholesale product sourcing typically requires less money upfront than you’d need to manufacture products.
  • No need to develop products. Wholesale product sourcing doesn’t require you to spend time, effort, and money developing new products.
  • Branding opportunities. Although you’re usually unable to differentiate the product itself, many wholesalers offer private labeling services that allow you to brand products, such as Stoney River.
Product Sourcing 101: How to Source Products in 2022 (7)
  • Differentiation is challenging. It can be challenging to differentiate your business from competitors when selling the same products.
  • There’s still some risk. You still need to purchase inventory upfront with no guarantee the products will sell.
  • Need to manage inventory and fulfillment. You may need to store inventory and fulfill customer orders. (Again, you could get around this issue by using Shopify’s Fulfillment Network.)
  • Supply management challenges. As your business grows, you’ll likely start sourcing products from multiple wholesalers, which can become difficult to manage.

To learn more about wholesale product sourcing, check out The Ultimate Guide to Finding the Best Wholesalers Online.

3. Dropshipping Sources

Product Sourcing 101: How to Source Products in 2022 (8)

Dropshipping isn’t just a way to source products, it’s also a method of fulfilling customer orders.

Here’s how it works: You partner with a supplier and list their products on your online store. Then, when a customer places an order with you, your supplier is notified. The supplier then ships the order to the customer on your behalf.

Here’s a detailed breakdown of the dropshipping sourcing process:

Product Sourcing 101: How to Source Products in 2022 (9)
Where to Source Products from Dropshipping Suppliers

There are two main ways to start dropshipping.

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  1. Strike up direct partnerships with wholesalers who provide dropshipping services. Then, create a way to manage orders and payments.
  2. Use a platform that connects you with dropshipping suppliers, which also automatically manages orders and payments for you.

The first option allows you to find super niche products that not many other businesses are selling. But it’s a lot more difficult to set up and manage.

The second option makes it easy to connect with suppliers and start selling online in less than an hour when using a platform like Oberlo.

Product Sourcing 101: How to Source Products in 2022 (10)

Other dropshipping sources include print-on-demand services like Printify and Printful. These services allow you to customize your products. You could also check out niche dropshipping sources like coffee supplier Dripshipper and art supplier Creative Hub.

  • Inexpensive. Dropshipping is by far the cheapest and easiest way to start selling online because you don’t need to purchase inventory upfront. As a result, your investment could be as little as $29 per month – the cost of a Basic Shopify plan. (Oberlo is free!)
  • Little-to-no risk. Because it’s possible to run a dropshipping business where your only expense is a Basic Shopify plan, the only thing at risk is $29 per month and your time.
Product Sourcing 101: How to Source Products in 2022 (11)
  • Large selection of products. Because you don’t need to take ownership of any products, you can offer a large selection of products from the get-go.
  • Easy to test new products and expand. You can test as many products as you like without any risk, because there’s no cost to adding additional dropshipping products to your store.
  • Easy to scale. Dropshipping sources manage the storage, packaging, and shipping for you. As a result, you can focus on growing your business without infrastructure or logistical barriers.
  • Easy to work remotely. Because you don’t physically deal with products, it’s easy to run a dropshipping business entirely online – so you can work from home or while traveling.
  • Competition. The low barriers to entry mean that almost anyone can start a dropshipping store – this is amazing, but it also creates plenty of competition.
  • Tough to differentiate. Most businesses sell dropshipped products that aren’t branded or different from competitors’ products. This makes it challenging to stand out from the crowd. To compete, you’ll need to develop a strong brand and stellar customer service.
  • Smaller margins. Another business is sourcing, storing, and fulfilling customer orders for you – this makes your margins slimmer than if you source products wholesale or through a manufacturer.
  • Difficult to reinvest. With smaller margins than wholesale product sourcing, you’ll have less money to invest in marketing activities to grow your business.
  • No control over inventory. You’re reliant on your dropshipping suppliers. For example, you may establish a profitable product, only for your dropshipping supplier to run out of inventory.

Which Product Sourcing Strategy is Right for Your Business?

It’s important to weigh each product sourcing method’s pros and cons to decide which is the most suitable for your business’s needs.

Most large, established businesses prefer to work directly with manufacturers to cut out middle-men, have more control over the design process, and purchase products in big quantities. They’re also more comfortable handling the sizable upfront investments, long lead times, and complex shipping processes.

On the other hand, smaller businesses that are keen to minimize risk, source products quickly, and simplify logistics tend to avoid working directly with manufacturers.

Established small businesses, confident entrepreneurs, and growth-minded retailers are likely to prefer wholesale product sourcing. This method doesn’t require such large investments as sourcing products from manufacturers. However, it still provides good margins, control over inventory, and branded packaging opportunities.

New entrepreneurs and those with very little startup capital should consider sourcing products from dropshipping suppliers. There’s no need to invest in inventory upfront – which means there’s little-to-no risk. It’s also a great way to learn the ins and outs of ecommerce, selling, and digital marketing.

That said, you may consider using more than one of these product sourcing methods.

For example, it’s not uncommon for a business to design and manufacture a flagship product and then source complementary products from wholesalers or dropshipping suppliers.

How to Source Products: A Step-by-Step Product Sourcing Strategy

If you want to know how to source products for your business, here’s an eight-step strategy to help get you started.

(Video) The BEST Way to Source Online Arbitrage Products as a Beginner | Amazon FBA

1. Conduct Market Research

Before you begin sourcing products, it’s vital that you conduct some market research to ensure there’s a demand for your idea. Make sure to research competitors, pricing, and your target market. Plus, create a plan to differentiate your business.

2. Choose a Way to Source Products

Do you want to work with manufacturers to create a new product or source products from wholesalers and dropshipping suppliers?

3. Use Product Sourcing Websites

Choose a method to connect with suppliers, such as Alibaba or Handshake.

Product Sourcing 101: How to Source Products in 2022 (12)
4. Decide Whether to Source Products Locally or From Abroad

Are you interested in global product sourcing from countries like China or India? Perhaps you’d prefer to source products from the USA? Make sure to weigh the pros and cons of domestic suppliers vs. global suppliers.

5. Verify Your Product Sources

Before you place a large order, make sure to verify your product sources. You can do this by asking for official documentation and verifiable testimonials.

6. Verify and Test the Products

You also need to verify the products themselves. The best way to do this is to order samples. It’s also a good idea to start with a small test order. This way, you can see how the product sells and how customers respond before making a larger investment.

7. Have Backup Suppliers Ready

When sourcing products from wholesalers and dropshipping suppliers, it’s important to ensure that you don’t run out of stock. However, you don’t have control over the supplier’s inventory, so it helps to have other suppliers waiting in the wings.

8. Keep Sourcing Products

Don’t wait until sales slow down to start sourcing products. Plan for the future – consumer preferences may change, and competitors will catch up. When sales are strong, start looking for your next best-selling product.

Summary: Product Sourcing 101

Product sourcing is a process businesses use to obtain products to sell. In summary, there are three main types of product sources:

  • Manufacturers make the products you plan to sell. They typically provide the greatest level of control and the lowest cost per unit. However, they usually set sizeable minimum order quantities and require businesses to handle complex logistical and communication challenges.
  • Wholesalers source products from manufacturers and sell them in bulk to businesses. They typically provide good margins, and the product sourcing process is far simpler than working with a manufacturer. However, businesses often need to comply with the wholesaler’s pricing rules and manage their own inventory and fulfillment.
  • Dropshipping suppliers own and store the products you sell online. When a customer places an order on your website, the dropshipping supplier will ship it to the customer on your behalf. This product sourcing method offers little-to-no risk and allows businesses to test as many products as they like. However, this method usually provides the smallest margins, and it can be challenging to differentiate from competitors.

Make sure to evaluate each product sourcing strategy’s pros and cons to ensure you choose the right method for your business.

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What are your methods in sourcing products? ›

Six steps to successful product sourcing
  • Research your product. First and foremost, retailers need to understand the product. ...
  • Contact any potential suppliers. ...
  • Ask for samples. ...
  • Choose supplier to trial-run an order. ...
  • Evaluate supplier. ...
  • Keep other supplier options!
Mar 22, 2019

How do you source good products for dropshipping? ›

How to Find the Perfect Dropshipping Products
  1. Find trending products—they're perfect for a dropshipping business.
  2. Finding a niche dropshipping product.
  3. Competitor product research.
  4. Research product hashtags on TikTok.
  5. Search social shopping sites for products that sell.
  6. Join online communities to find products to dropship.
Apr 12, 2022

What is sourcing in product management? ›

Simply put, sourcing is the process of selecting suppliers to provide the goods and services you need to run your business. It may sound uncomplicated, but the process can be complex. Sourcing involves the following: Finding quality sources of goods and services. Negotiating contracts.

What are the 8 types of material sources? ›

research published in scholarly/academic journals. books and articles that interpret, review, or sythesize original research/fieldwork. 3)Tertiary sources are those used to organize and locate secondary and primary sources.
  • Primary sources.
  • Secondary sources.
  • Tertiary sources.
Jul 12, 2019

What are 5 sources of product information? ›

People you know, product advertising and labeling, media sources, consumer publications such as Consumer Reports, government agencies, or the Internet.

What are material sources answer? ›

Definition. The geographical origin of naturally occurring vegetable, animal or geological materials which either have been used to form an object or form specimens or deposits in their own right eg a quarry source for stone, country of origin of timber, geological outcrop for imported stone or fossil.

What products are in high demand right now? ›

The following best-selling products have been in high demand in 2022:
  • Beauty products, like false eyelashes and makeup.
  • Pet products and carriers.
  • Novelty T-shirts, especially those with unique and fun designs.
  • Water bottles, especially self-cleaning bottles.
  • Jewelry and fashion accessories (though trends change quickly)
Nov 10, 2022

How do I find a winning product for dropshipping 2022? ›

How to Find Winning Dropshipping Products? ^
  1. Search on Amazon, AliExpress, or Etsy for the niche you have selected for your store.
  2. Identify what products are the best sellers under each niche by looking at the number of items sold.
  3. Double check the popularity of those products on Google Trends.
Jan 27, 2023

What do dropshippers sell the most? ›

What are the best dropshipping products?
  • Baby products.
  • Pet supplies.
  • Home interiors.
  • Office products.
  • Tools and home improvement.
  • Phone accessories.
  • Car accessories.
  • Cellphone accessories.
Dec 15, 2022

What are the 3 types of sourcing? ›

Some sourcing strategies to consider:
  • Outsourcing. Having suppliers provide goods and services that were previously provided internally.
  • Insourcing. Delegating a job to someone within the company.
  • Nearsourcing. A business places some operations close to where its end products are sold to save time and money.
May 4, 2017

What are the 6 sourcing strategies? ›

Sourcing Project Data Gathering & Analysis. Source Plan Development & Approval. Contract Management & Execution. Supplier Relationship Management.

What is the first step in sourcing? ›

The first step is to identify the organization's needs and the goals for the sourcing strategy. At this stage, potential cost savings and opportunities to increase efficiency can also be identified.

What are the 4 strategic areas of sourcing? ›

Four Key Strategic Sourcing Benefits
  • Reduce Direct and Indirect Costs.
  • Boost Long-term Supplier Relationships.
  • Gain Efficiency and a Systematic Approach.
  • Mitigate Supplier Risk.
Apr 22, 2021

What are the two types of sourcing? ›

There are a number of different definition of sourcing but mainly there are two major definitions: strategic sourcing and global sourcing.

What are sourcing rules? ›

You can define sourcing rules that specify how to replenish items in an organization, such as purchased items in plants. Sourcing rules can also specify how to replenish all organizations, as when the entire enterprise gets a subassembly from a particular organization.

How do I create a sourcing plan? ›

Better Sourcing in Four Steps
  1. Step 1: Find Potential Sources of Candidates.
  2. Step 2: Create an Outreach Plan.
  3. Step 3: Track Sourcing Progress and Effectiveness.
  4. Step 4: Analyze the Results and Apply Them to the Next Campaign.

What is an example of a sourcing strategy? ›

Examples of strategic sourcing scenarios: Selection of a new customer relationship management software. Evaluation of financial services or employee benefits. Engaging an architecture firm for a new construction project.

What are the 5 raw materials? ›

Key Takeaways

Examples of raw materials include steel, oil, corn, grain, gasoline, lumber, forest resources, plastic, natural gas, coal, and minerals.

What are the 5 basic materials? ›

As we read through the rest of the paragraph, we are told that the 5 basic materials are metal, glass, wood, cloth, and plastic. From this we can understand that wood is a material.

What are the 4 basic types of products? ›

There are four types of products and each is classified based on consumer habits, price, and product characteristics: convenience goods, shopping goods, specialty products, and unsought goods.

What are the 4 tips on obtaining information from sources? ›

  1. Check the publication date and the dates of sources in the bibliography. ...
  2. Cross-reference information for accuracy. ...
  3. Check for the author's or publisher's credibility. ...
  4. Watch out for one-sided or biased arguments. ...
  5. Understand a source's tone and intended audience. ...
  6. Is there enough evidence to support an argument?
Jan 6, 2016

What are the 3 main sources of information? ›

Sources of information or evidence are often categorized as primary, secondary, or tertiary material. These classifications are based on the originality of the material and the proximity of the source or origin.

What are two examples of material sources? ›

Material sources of history includes artefacts, fossils of ancient civilizations. Folktales and songs falls in the category of oral sources whereas the inscriptions and ancient books are the examples of written sources of history.

How many types of source materials are there *? ›

This guide will introduce students to three types of resources or sources of information: primary, secondary, and tertiary.

What are the two types of materials used as sources of information? ›

Primary and secondary sources explained
  • A source is something that provides information about the historical topic you are studying. They can either be written (e.g., books or websites), or non-written (e.g., photographs or artefacts).
  • No matter what you're doing in History, you will use sources.

What products will be in short supply? ›

Here are 12 products expected to be affected by supply chain shortages and heavy consumer demand in early 2023.
  • Cereal, bread and flour.
  • Lettuce.
  • Champagne.
  • Eggs.
  • Prescription medications.
  • Tomato products.
  • Cement and concrete.
  • Olive oil.
Jan 6, 2023

What sells fast on? ›

The 20 Best Things to Sell for Quick Money Right Now
  • Jewelry and watches. ...
  • Video game consoles. ...
  • Old phones and accessories. ...
  • Purses, wallets, and backpacks. ...
  • Yard equipment. ...
  • Jeans, workwear, and designer clothing. ...
  • Furniture. ...
  • Baby gear.

What is the most sold item in the world 2022? ›

Fashion items and clothing are the most sold products across the globe. These range from men's outfits to women's clothing, accessories, shoes, and more.

What products will be in demand in 2022? ›

12 high-demand trending products and niches of 2022
  • Clothing. The clothing industry is a big business, valued at $12 billion. ...
  • Skin care and beauty. Skin care and beauty products are having a moment. ...
  • Shoes. ...
  • Cleaning products. ...
  • Items for pets. ...
  • Coffee products. ...
  • Toys. ...
  • Subscription orders.
Oct 19, 2022

Who is the fastest dropshipping supplier? ›

What are the best dropshipping suppliers?
  • AliExpress.
  • Alibaba.
  • SaleHoo.
  • Worldwide Brands.
  • Doba.
  • Sunrise Wholesale.
  • Wholesale2b.
  • Megagoods.
Nov 1, 2022

How do I not get sued for dropshipping? ›

Having a business license means your dropshipping business is a registered entity on its own. That means your personal belongings are protected because if someone tries to sue you, all liability rests with your business.

What's the best dropshipping idea for 2023? ›

100+ dropshipping ideas for 2023
  • Beauty and skin care.
  • Clothing and accessories.
  • Jewelry.
  • Books.
  • Art.
  • Coffee.
  • CBD products.
  • Baby products.
Sep 14, 2022

How much can Beginner dropshippers make? ›

All businesses and entrepreneurs are unique, but it's possible to generate a $1,000 to $2,000 monthly income stream within 12 months working approximately 10 to 15 hours per week building your business.

How much does the average dropshipper make a year? ›

How much does a Professional Drop Shipping make? As of Feb 3, 2023, the average annual pay for a Professional Drop Shipping in the United States is $42,839 a year. Just in case you need a simple salary calculator, that works out to be approximately $20.60 an hour. This is the equivalent of $823/week or $3,569/month.

What are the three P's in procurement? ›

The Three P's of Procurement

There are three Ps in the procurement management process; people, process, and paper.

What is the 5th step of sourcing? ›

Step 5 – Negotiate & Select Suppliers

This fifth step is the most important step of strategic sourcing process.

What is the sourcing playbook? ›

Key policies and guidance for making sourcing decisions for the delivery of public services, including specific guidance on sourcing consultancy services. ' to 'Key policies and guidance for making sourcing decisions for the delivery of public services.

What are the 7 Rs of purchasing? ›

So, what are the 7 Rs? The Chartered Institute of Logistics & Transport UK (2019) defines them as: Getting the Right product, in the Right quantity, in the Right condition, at the Right place, at the Right time, to the Right customer, at the Right price.

What is the sourcing cycle? ›

What Is Sourcing Process? Sourcing in procurement is a process of assessing, selecting, and managing suppliers to acquire the desired goods and services from them. As the name suggests, sourcing focuses on creating sources through which an organization can obtain its supplies.

What are the six sourcing strategies? ›

Six essential steps towards a successful sourcing strategy
  • Spend analysis. ...
  • Supplier market share analysis. ...
  • Supplier-spend share analysis. ...
  • Procurement organization's demand. ...
  • Category risk analysis. ...
  • Vendor qualification.
Jun 19, 2019

What are the four sourcing strategies? ›

What's Your Sourcing Strategy?
  • Outsourcing. Having suppliers provide goods and services that were previously provided internally.
  • Insourcing. Delegating a job to someone within the company.
  • Nearsourcing. A business places some operations close to where its end products are sold to save time and money.
May 4, 2017

What is your sourcing strategy interview question? ›

General sourcing interview questions

What are you looking for from this position? Why do you want to work for this company? Why are you leaving your current company? What are your occupational goals? What would you say is your biggest weakness?

What is a typical sourcing strategy? ›

Examples of strategic sourcing scenarios: Selection of a new customer relationship management software. Evaluation of financial services or employee benefits. Engaging an architecture firm for a new construction project.

What is the first step in a good sourcing strategy? ›

Let's take a look at the 7 Strategic Sourcing Process Steps that can help you successfully implement an effective sourcing strategy in your organization:
  1. Spend Analysis. ...
  2. Market Research. ...
  3. The RFx process. ...
  4. Negotiation. ...
  5. Contracting. ...
  6. Onboarding. ...
  7. Monitor Performance.
Mar 16, 2022

What is the first step in strategic sourcing? ›

The first step is to identify the organization's needs and the goals for the sourcing strategy. At this stage, potential cost savings and opportunities to increase efficiency can also be identified.

How can I improve my sourcing skills? ›

Tips for an effective sourcing strategy in recruitment
  1. Know the difference between sourcers and recruiters. ...
  2. Plan your sourcing strategy. ...
  3. Understand the job requirements. ...
  4. Start your search with former candidates. ...
  5. Start your sourcing pipeline. ...
  6. Build and maintain your sourcing pipeline. ...
  7. Add candidates to the pipeline immediately.
Nov 20, 2020


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