Wholesale 101: A Guide to Product Sourcing for Entrepreneurs and Small Business Owners: A Guide to Product Sourcing for Entrepreneurs and Small Business Owners
272
Wholesale 101: A Guide to Product Sourcing for Entrepreneurs and Small Business Owners: A Guide to Product Sourcing for Entrepreneurs and Small Business Owners
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Overview
Whether you're looking to drop ship from wholesalers and manufacturers or import product direct to sell in your store, this unparalleled guide reveals inside informationof an industry full of secrets.
"If you are looking for a one-stop shop that turns the complicated world of sourcing product into a road map for success, then I encourage you to buy this book." — TOM MCELROY, VP, Marketing and e-Commerce, Genco Marketplace and NoBetterDeal.com
"Provides lots of concrete advice on how to profit from this new age of wholesaling." — DON DAVIS, Editor in Chief, Internet Retailer
"For any entrepreneur looking to start a business or expand their business, Wholesale 101 is a must read." — MARC JOSEPH, CEO and President, DollarDays International, and author of The Secrets of Retailing: Or, How to Beat Wal-Mart
"One of the most informative and useful books on Wholesale Sourcing I have laid eyes on in the past ten years." — SKIP MCGRATH, Publisher, Online Seller's Resource
"Very smart with a unique perspective on a variety of things important to our business, including global trade, international protocol, leveraging the Internet, and driving value for trade show participants." — CHRISTOPHER MCCABE, Senior Vice President, Nielsen Expositions
"A must-have addition to any wholesalers library." — CYRILL ELTSCHINGER, Strategic Advisor and author of Source Code China
Product Details
| ISBN-13: | 9780071811361 |
|---|---|
| Publisher: | McGraw Hill LLC |
| Publication date: | 07/19/2013 |
| Pages: | 272 |
| Sales rank: | 1,033,588 |
| Product dimensions: | 5.90(w) x 8.90(h) x 0.80(d) |
About the Author
Read an Excerpt
WHOLESALE 101
A Guide to Product Sourcing for Entrepreneurs and Small Business Owners
By JASON A. PRESCOTT, TARA GLADSTONE
McGraw-Hill Education
Copyright © 2013 McGraw-Hill EducationAll rights reserved.
ISBN: 978-0-07-181136-1
CHAPTER 1
The Changing World of Product Sourcing
We are all working together, that's the secret.
—Sam Walton (1918–1992), founder of Walmart
To obtain success, retail and wholesale entrepreneurs need to know how to source products. Skip McGrath, online selling expert and coach, agrees, "As a retailer or wholesaler, you make money on products when you buy them, not when you sell them." That's why product sourcing is so important. In fact, knowing how to source successfully is one of the most closely guarded secrets among resellers. An eBay seller, for example, will share all kinds of information with new sellers just starting out; typically, they are that helpful. But just see what happens when you ask a seller where he sources his products from; he clams up.
Budding entrepreneurs, small businesses, and savvy traders become experts at sourcing by knowing where to research, how to communicate, and when to adapt throughout the process. This is why I have spoken to over 40 experts who share pointers and coveted advice about product souring that will help you to develop those skills. Designed primarily to assist entrepreneurs, this book will provide you with practical information for
1. Finding and vetting domestic and international manufacturers or wholesalers
2. Searching for a factory to help turn your idea into a resalable product
3. Importing existing goods from overseas
4. Sourcing strategically using online business-to-business (B2B) trade platforms, trade shows, trade magazines, trading companies, manufacturers' reps, and other resources
5. Building strong relationships with trading partners
No matter which of the preceding you are trying to achieve, you'll learn how to select and maintain healthy relationships with trustworthy suppliers, which will enable you to achieve your business goals. You'll also learn about all the benefits that different sourcing options offer and why developing quality relationships with suppliers is the most important thing you can do to obtain success in your retail, wholesale, or trading business.
When people enter the world of product sourcing for the first time, they often begin by focusing solely on the products. They want to find or produce the least-expensive, best-selling products and don't think about anything else. They forget about the fact that they will need to get those products from people, namely, suppliers, whose business operations will affect the success of their own businesses. Contrary to many a beginner's perceptions, Mike Bellamy, founder and China operations director of PassageMaker China, as well as the author of The Essential Reference Guide to China Sourcing, clarifies that "the single most important factor in determining the success or failure of your sourcing program will be finding the right supplier."
I agree with Mike and would like to add that the only way to find the best suppliers (and their stellar best-selling products) is by accessing the right trade tools. To find those tools, you need to be up to date with the technology and resources that have emerged, breaking the barriers to entering the B2B commerce-trading marketplace.
Evolution of the Sourcing Scene
While fundamentally product sourcing has never changed (it's still the act of finding products from wholesalers or manufacturers to resell through a business), technologically it's evolved into a whole new world. Not too long ago product sourcing was limited to word of mouth and archaic media for locating wholesalers and manufacturers. People used to have to literally go knocking on doors to find suppliers.
Jeremy Shepard, founder and CEO of Pearl Paradise, confirms this by sharing how his sourcing process has developed over the years:
When I first started the company in the 90s, I had no idea about how to find sources. However, I was a flight attendant, so I could travel for free. I flew to locations all around the world where pearls were produced and pounded the pavement looking for suppliers. In Hong Kong (where pearls aren't produced, but there is a major trading hub), I went through the local phonebook and found companies that had the word pearl in their name and then went and knocked on their doors. Luckily, today things are much easier. We typically find new suppliers at the large jewelry trade shows in Hong Kong, which we attend three times a year.
This is just one example of many that I will share with you about how professionals have changed their sourcing tactics in recent years.
Evolution of Trade Shows and Business-to-Business Print Media
Over the last 10 to 15 years, sourcing online has revolutionized the way retailers and wholesalers source products. Going online to locate suppliers became much more common after September 11, 2001, when not only the world economy changed, but travel, hospitality, and many other sectors also went through rattling shifts. The national crisis that took place on that day made it less appealing for people to travel, which, coupled with the emergence of new digital media, technologies, social media, and ubiquitous high-speed Internet, forced trade shows to face some competition as business travel took a huge decline.
This led to a massive consolidation in the trade-show industry. The ASD trade show (formerly known as the Associated Surplus Dealers/Association of Merchandise Dealers) used to have massive events in New York (at the Javits Center), Florida, Texas, and other areas. However, the company soon moved most of its shows to Las Vegas. And ASD was not the only major trade show to make these changes. Many trade shows that used to have smaller local shows now only had a couple of major events in one easy-to-access location.
Manufacturers and wholesalers also started to put their products online, and reselling professionals began flocking to the Internet to conduct all their industry research. Given these changes, the trade-show industry was cut by more than 40 percent in less than two years. The combination of the emergence of sourcing online and dwindling trade-show attendance made people fear that trade shows and business-to-business (B2B) print media eventually would disappear.
However, if you look at the sourcing industry today, this couldn't be further from the truth. The trade-show industry has not disappeared; things are just different. ASD's shows in New York are no longer the must-attend events for suppliers and buyers from all over the country. Today the company's events in Las Vegas are the most important, with an average of over 45,000 attendees and over 2,800 exhibitors. Also, trade shows are seeking expansion as the economy begins to resurge. ASD, for example, is currently planning to announce a new trade show in Miami beginning in 2013. The company wants to accommodate the increase in buyers and companies from the United States that want to export to South and Central America. This is an ideal location for language, culture, and ease of access. And other major shows, such as SOURCING at MAGIC, the Off Price Specialist Show, and the National Hardware Show continue to expand their international exhibits at a record pace. The Off Price Specialist Show, for example, has seen its number of attendees grow by more than 25 percent over the last three years. In fact, it recently received an award for being the fastest- growing trade show (www.toptenwholesale.com/news/offprice-show-wins- fastest-growing-show-award-17207.html).
Trade shows also have incorporated technological advances such as blogger lounges and mobile technology that help buyers to get the most out of the shows. The trade-show industry keeps evolving, rather than becoming outdated, with rapid technological changes. Trade shows and B2B media have adapted with the ease that technology has brought to the sourcing industry and have, in turn, brought more valuable resources to global trade. And new shows have emerged to help you stay up to date with technological development. Shows that focus on e-commerce, such as the Internet Retailer Conference and Exhibition, have more than tripled in size over the last five years. I will be discussing more about all these exciting trade shows in Chapter 5, but for now, stay with me as I discuss B2B magazines.
The Enduring Business-to-Business Magazine Industry
Business-to-business (B2B) magazines also have continued to endure the changes in the sourcing landscape. Despite being the most traditional method of sourcing, trade magazines have many uses and are important tools in the retail and wholesale industry. One reason is their extra long shelf lives—the information in them stays relevant for a long time. Back when I first started selling print advertising in 2001, I would get dozens of callers a week renewing their subscriptions or requesting copies of editions from five years prior, which continues to happen today.
Scott Steele, publisher and CEO of Canadian Merchandiser magazine, confirms that B2B trade magazines are a popular method for product sourcing:
From the retailer's standpoint, print trade publications are reliable as they are something that you can hold in your hands. They represent somewhat of an authoritarian figurehead for buyers that you can utilize, not just for product sourcing, but also for the editorial information that comes along with them. Retailers still like the idea of having a physical hands-on publication dedicated to their marketplace that gets delivered to them every month.
In addition, new magazines for the retail and wholesale industry have come into the mix to meet the demands of the technological changes taking place. Today there are magazines dedicated to retailers who sell online in the e-commerce industry.
Don Davis gave me a deeper understanding of how Internet Retailer magazine caters to the e-commerce industry:
Internet Retailer magazine aims to provide retailers with information they can use to more effectively sell online. It's aimed at a wide range of online retailers, from the smallest seller on eBay, to Amazon and Walmart. It's designed to provide information for e-retailers of all types: those that sell only on the web, retail chains, manufacturers, and retailers that sell through catalogs and call centers. In every article, we try to answer the question: How can our readers make more money by reading this article?
A small business or entrepreneur should subscribe to our magazines, visit our website, and use our research guides because they provide the most accurate and objective information and analysis about e-commerce. In each issue of the magazine we cover a range of topics, and each article is very specific. If you're interested in e-mail marketing or website performance, you'll find articles about those topics every few months in Internet Retailer and on our website. Those articles mainly quote retailers—not vendors—and provide reports from the front lines about how e-retailers are addressing these issues. Also, every article we've ever published, and that's thousands, is viewable on our website for free. Any retailer looking for information need only search our site for relevant articles. We also offer an e-mail newsletter, IRNewslink, which brings you breaking news on e-commerce five days a week.
Evolution of Business-to-Business Platforms
Business-to-business (B2B) trade platforms also have evolved considerably, even during their relatively short existence. What began as a simple Internet search engine, limited to listing suppliers' names, has now become your own personal sourcing assistant. Business-to-business platforms such as TopTenWholesale.com and Manufacturer.com enable you to send out product requests, look for verified suppliers, communicate with suppliers through instant chat tools, and use other resources that make managing your retail or wholesale business (and finding great suppliers) easier. In addition, the technological advances on B2B sourcing platforms make the supplier vetting process safer for buyers than ever before by verifying suppliers with the help of qualified third-party companies.
David Auren, an executive at Boulevard Apparel, explains how technological advances have improved his sourcing process:
Before sourcing platforms such as TopTenWholesale.com came into the scene, I had to do a lot of legwork and visit a lot of trade shows. I still go to shows, especially to build quality relationships with suppliers, but sourcing platforms have made life so much easier. They've opened up channels of direct communication between buyers and sellers from the comfort of my own office. Now I don't have to travel as much, and I feel more comfortable when choosing suppliers that have been vetted for me by these platforms.
Technology and Product Sourcing
Through the use of the technological tools that we have access to today (which I'll describe in detail later on in this book), finding information about companies and communicating with them instantly are more achievable than ever before. This makes managing relationships with suppliers, even those located overseas, easier than ever before. The social media phenomenon has especially made it simple to vet and get to know suppliers. And this is just one of many tools available online today that help you to connect with suppliers. The Internet has provided the stage for momentous leaps in technology that have simplified the product sourcing process.
Megy Karydes, board member of the Fair Trade Federation and founder of www.World-Shoppe.com, agrees that product sourcing is more manageable than ever before:
I started my business in 2004, and although it wasn't really that long ago, there weren't as many resources online for sourcing as there are today. Now technology has made it a lot easier to find great products from all over the world. We aren't restricted to going to trade shows or ordering from trade magazines.
The shrinking digital divide gives entrepreneurs worldwide the ability to start their own companies. Today millions of people run home-based businesses selling products through personal websites and sites such as eBay and Amazon. Product- syndication solutions (provided by companies such as Channel Advisor and Commerce Interface) have made it easy for resellers to market their products to hundreds of the largest e-commerce retailers through software and services that enable you to market and list products on multiple online venues.
With smart phones, tablets, and high-speed Internet connections, we are able to stay more connected than previous generations. Global trade is now as easy as entering a website address into your browser's search bar. Shipping logistic tools such as shipwire.com, online sourcing platforms such as TopTenWholesale.com, online accounting tools such as Quicken Online, and e- commerce website builders such as volussion.com make it simple for entrepreneurs to inexpensively set up a successful business and enter the market.
Starting your own business is now much more feasible than ever before. Today there are fewer restrictions on who can start their own business and achieve success. As Dominique Castro, cofounder of Twistlets (a fashion-accessory company for tween girls), explains, "It's a matter of starting with a vision and then following through with the right tools and research."
Importance of Research for Sourcing
One of the most important things you can do as an entrepreneur is research innovative trends and tactics. For product sourcing purposes, the best tools to use (and the ones that will help you to meet the best suppliers) include online B2B trade platforms, trade shows, and B2B trade magazines. If you go into the business without understanding these resources, then your chances of becoming the next Sam Walton should be exchanged for a lottery ticket.
Don't be concerned if you already have a business and have not yet mastered these tools. It's never too late to learn. Once you are finished reading this book, you will have a knowledge advantage over many of your peers. Lots of people in this business are not savvy about the latest technology and resources. And they certainly don't have all the information and tips that I am about to give you. You, on the other hand, are in a good place because you are seeking out the right resources.
Scott Steele, publisher and CEO of Canadian Merchandiser magazine, confirms that doing research will put you in a great position to enter this business:
When you start your own company you will run into difficult situations and areas of business that you haven't dealt with before. Seeking out the right information (from the right people) is a means of support that can help you navigate through the tough times, and achieve multifaceted rewards further down the road. You will eventually have more control of your own destiny and life. Initially, your new venture is your entire life, and it needs to be viewed and worked that way.
(Continues...)
Excerpted from WHOLESALE 101 by JASON A. PRESCOTT, TARA GLADSTONE. Copyright © 2013 McGraw-Hill Education. Excerpted by permission of McGraw-Hill Education.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
Introduction ix
Acknowledgments xv
1 The Changing World of Product Sourcing 1
Evolution of the Sourcing Scene 3
Technology and Product Sourcing 7
Importance of Research for Sourcing 9
The Entrepreneurial Attitude 10
Going for It 14
Conclusion 16
Looking Ahead 16
2 Stepping Out of the Silo 17
Using Social Media, News, Events, and Other Resources to Stay on Top of the Sourcing Game 19
The Importance of Opening Your View to All Sourcing Resources 36
How to Diversify Your Approach to Sourcing 38
Conclusion 46
Looking Ahead 46
3 Sailing Your Boat in a Flooded Marketplace 47
Finding the Right Sourcing Resources for You 48
Types of Suppliers 55
Domestic versus International: Should You Source Products from Suppliers Overseas? 63
Questions That Help You Determine the Right Suppliers for You 74
Conclusion 75
Looking Ahead 76
4 Sourcing Online: TopTenWholesale.com and Manufacturer.com 77
Importance of Using Vertical Search Engines for Sourcing 78
Benefits of Online Business-to-Business Trade Platforms 80
Safety and Business-to-Business Trade Platforms 82
Finding the Best Suppliers for You on Online Business-to-Business Platforms 89
An In-depth User Exploration of TopTenWholesale.com 93
Conclusion 116
Looking Ahead 116
5 Trade Shows: Where Do I Go? 117
The Value of Finding the Right Show 117
How to Find the Right Trade Shows 120
Trade Show Recommendations, Innovations, and Technology 126
Insider Strategies to Getting the Most Out of the Show 133
Conclusion 149
Looking Ahead 149
6 Working with Trading Companies, Manufacturers' Reps, and Suppliers That Drop Ship 151
Definitions of Trading Companies, Manufacturers' Reps, and Drop Shippers 152
Are Trading Companies the Right Option for You? 154
Collaborating with Manufacturers' Representatives 163
Understanding the Pros, Cons, and Various Types of Drop Shipping 177
Conclusion 182
Looking Ahead 182
7 Better Supply-Chain Management through Building and Nurturing Strong Relationships with Suppliers 183
Managing Your Supply Chain Effectively 185
The Importance of Choosing the Right Partners from the Start 186
How to Choose Reliable and Strong Suppliers over "Price Is Right" Suppliers 188
Establishing Key Performance Indicators and Benchmarks 193
Relationship-Management Guidelines: How to Raise Issues, Know When to Drop Suppliers, and Protect Yourself 201
Top 10 Recap: Ways to Cultivate Relationships and Get Past Cultural/Language Barriers 205
Conclusion 207
Some Parting Words While Looking Ahead 207
Appendix A Resource for Global Trade 209
Appendix B The Jargon behind International Trade 217
Index 237