How I find suppliers for my Ecommerce Stores

Many people always email me and ask me how I pick my niche product and how I find dropshippers or suppliers. There’s no exact science in finding a niche products. Alot of it is trial and error. You may find a decent niche product that has little competition and then find out that the wholesalers will only sell to you for $440 and the product has a $500 retail price. That is not a good product.



It’s hard to explain how to find the product. Sometimes it’s just comes to you while you are surfing the web or shopping in a mall. Other times, you realize you need to buy something and find out that you can’t find many stores that carry it.


Once I find a niche that looks promising I do a google search on it and write down the contact information for all the manufacturers. There should not be too many manufacturers if you are truly looking at a niche product. Once I have the contact info, I shoot out an email like the one below:

Hello,
I am launching a new online store that will sell only WIDGETS. My store will carry about 30-35 total products from various brands of WIDGEST. I would like to carry your WIDGETS in my store.


If you are interested I can fax you my business license, EIN number, etc… I would like to know if you offer dropshipping and if not, what your wholesale order requirements are. I prefer to pay by credit card for my orders, but can purchase on PO’s and pay invoices also.


A little background about me, I create and run online retail niche stores for a living. I purposely target niches because I feel that I can instantly compete from day one and I can concentrate on providing great customer service, aggressive marketing for my products. This is much easier to do efficiently and effectively if I target a specific niche. My store will also all include a very active blog that will be updated frequently. The blog will run promotions, contests and product reviews. All of which will generate relevant, fresh content about your WIDGETS and your brand.


Please let me know if you have any questions, feel free to call me or reply to this email.


Thank you.

I usually get a few responses, maybe about 40%. If the niche has 10 manufacturers, 4 or 10 may be enough to open a store. I usually send a follow-up email a few days later. This usually gets me a few more responses. So if I get enough manufacturers to field a store of 30-50 products, I feel that I can move forward to the next step.


The next step is to evaluate the margins. In most of the responses, the manufacturers include their wholesale price list. I go through and calculate profit margins and wholesale requirements. They also usually tell me if they do or don’t dropship.


If they dropship great! If not, you have to look at their minimums. As long as their minimums are small like $200 order total or 6 total products, I feel that I can deal with it. Let’s say I’m selling a $100 product and the wholesale price is $50 and I only need to order a $200 minimum. I will wait till someone orders 1 and then I’ll order 4 for $200. I sell one for $100 and have 3 in stock. This capital outlay isn’t that bad.


Based on all this data, I decide if I can profitably create a store.


I am moving to a stock and ship type of system now because I feel that I can afford to stock products now. As my ebizes grow and I continually add more, I can sell the same stock in all my stores which gives me a better chance of not getting stuck with stuff. Worst case scenario with stock is that you offload it on ebay at cost.


Questions? Ask away.

Great thread bio. Rep++

I moved the other conversation to its own thread, did not want to lose this info with the other topic going on there at the same time.

Awesome info Rep +

Thanks for the post.

I had a few questions if you don’t mind addressing them.

First of all, you reference going to manufacturers rather than wholesalers. There is an obvious advantage to this, but from what I’ve read, most manufactures will not deal with retailers directly. Did I misunderstand your point or do you actually go straight to the production source?

In your example using $440 wholesale and $500 retail, you say it would not be worth it to you. I understand it is an 8% mark up (minus shipping cost, etc), but to the average Joe a $60 dollar mark up is ½ a day’s salary. What would you consider worthwhile? I’m not trying to be contrary, just remember there are a lot of us currently in the “slow” lane.
Some would say it’s better to sell 3 items at 24% (3 x 8%) rather than 1 item at 20%. What criteria do you use to determine what your time is worth? I realize that would be answered differently by each individual, but how do you balance a “cheaper to the masses” (Walmart) strategy and a “quality is worth it” (Saks 5th Avenue) approach?

I’m fairly comfortable with my source of wholesalers, but could you address the “phony” wholesalers (middle, middle, man) that people are sure to find on the web?


It seems you are niche specific (one product line and accessories). As you progress from drop shipper to light bulk retailer, do you plan on consolidating all products on one website, or having several independent websites that have links to the others?

Final question, how many product lines did you have and how much time elapsed before you considered yourself “in the fast lane”?

Sorry to ask so many questions, but you did offer. I think there are several here that could benefit from your insights.

Thanks again.

Have you ever looked at worldwidebrands.com? I'm thinking about giving up the cash so i can try it out.

Yes, I've been member for about 2 years. Chris Malta and Rob Cowie seem to be honest and respectable people. The free resources coupled with the services they provide make membership well worth the price. Good luck if you go that route.

Yes, I'm a member. Their list of dropshippers is pretty extensive but I haven't been able to find a niche product using it so far. I think its worth the price but they basically give you a list and you have to do alot of research yourself.

Great post Biophase!

I've had good luck finding suppliers by contacting the manufacturers directly. If I'm looking to sell Wilson tennis rackets in my store, I dig up relevant phone numbers on the Wilson site and call whatever number seems most appropriate. Then I explain that I work for a retailer and we're very interested in carrying some of their products. I ask if they offer wholesale pricing directly, if not, I ask if they can give me contact info for their distributor(s). This has worked perfectly almost every time. At first I would send emails, but found that responses took forever, if they came at all. Once in a while a company will say that they're not currently looking for any new retailers. In that case I politely thank them and call back about a month later to see if anything has changed.

I did sign up for a Worldwide Brands membership, but was pretty disappointed. In the niches I'm interested in, the products available have been very slim. Lots of cheap knock-off accessories too. I wish I would have realized earlier that even better info is available almost for free by making a phone call.

Biophase, I was wondering if you could talk about your marketing strategy a bit. Once an ecommerce site is up and running for a while, pulling in a few hundred to a few thousand dollars in profit a month, how did you make the jump to the next level? Aside from SEO, Adwords etc, what else would you recommend? I always read that blogs should be started, join social networking sites etc, but are strategies like that really enough to go from an obscure, minor player in your niche to a market leader? Also, do you feel that there is a sweet spot for advertising / marketing spending, and how do you arrive at that point for your different sites?

Thanks!

Nice post, thanks. I know this was directed to Biophase, but if I may comment. It seemed like it was either boom or bust on world wide brands. I think the main issue is that their search feature is not as good as it could be. I was unable to find some items using their search box, or if I did it was cheaper quality. However when I started going through the suppliers one by one, I was finding more of the name brands and better quality items. For example, I used to be in law enforcement and was able to find the same exact items that our agency used. Sorry Biophase, I'll try to quit jumping in on your thread.

Getting High PR Backlinks from Forums
More info that Kenric has posted. And be sure to follow his blog! Great stuff.

Another thing you might be interested in attending and/or purchasing the videos from the Fastlane Meet-ups. Kenric has participated in each. Fastlane Get Together

With niches I think the main limitation is your niche. There is only so much traffic you can squeeze from it. If you are selling tennis rackets only, your customer base is very small. In a perfect world, your store is ranked #1 on all search engines for any tennis racket based search. Let's just say its searched for 50,000 times a month and you get all 50,000 clicks. At this point your site is pretty much at its max potential, as is.

You can certainly SEO for terms like tennis balls, tennis courts, but do you really want this traffic?

To expand you sell decide to sell tennis balls or tennis shoes. Once you do that, a whole new niche and set of keywords develops and you start from square one again.

Blogs should be started from day one on an ecommerce store. You need your store to be dynamic and your products and their descriptions don't change. Therefore, you need a blog to keep up with content. For example, your blog can cover a major tennis tournament by writing your opinion of the players, the matches, etc... Trust me, you will get a ton of visitors searching for that tourney coverage. They will visit your blog and hopefully click into your store.

I don't use social networking at all. I guess I don't feel that they are buyers. People who join a facebook group about tennis rackets aren't really looking to buy a tennis racket IMO. My stores have myspace friends and FB friends, but I don't do much for it.

One important thing is to get the myspace, facebook and twitter URLs of your stores. You don't want someone else getting them.

I've started using youtube to market. I make little videos and post them under my store youtube accounts. The videos are informational about my products. If you did a video of you holding a new racket, showing all angles, details and explaining features, people interested in purchasing that racket will watch it. I add the videos to my blog also.

My goal is to spend no money on advertising in the future. A few of my stores have no marketing expenses. On my new store with the yoga bags, I'm going to try something new. I'm going to spend $0 on adwords or PPC and spend it all on SEO. I think I can rank high on the front page within 2 months.

WWB makes the search hard on purpose. If it was easy, it would be in an excel file. Problem is that people would just download it and send it to all their friends.

I've found decent stuff on WWB, but you have to understand that there are manufacturers and there are wholesalers and distributors. You won't get good prices from wholesalers or distributors because they are another middleman in the supply chain.

In niche markets some manufacturers will deal with you. If they don't just make your store the best store out there and they'll contact you later wanting you to carry their stuff.

Remember that a $500 sale will be $490 in your pocket due to credit card fees. Depending on how your store does shipping you may have additional costs. If you are doing PPC and paying $1.00 a click, you need to make a sale every 50 clicks to break even.

A $50 profit on a sale is very good. But a $500 product is not going to be flying off the shelves. How many do you think you'd sell a month? It's much easier to try to make $50 on a $100 product.

You also have to account for chargebacks and fraud. If the buyer uses a stolen credit card you are out $440. You have to sell 9 of them just to break even.

I do carry $20 products in my store just because I want my stores to have the largest selection possible. But I would not want to box and ship a product for a $4 profit. I may do that if I use a dropshipper, but can you imagine packing 25 boxes for $4 each and then driving them to the post office? I guess I can see it being worth $100, but over the years I've gotten lazy.

I'd rather sell fewer at higher margins than more and low margins. Less paperwork and aggravation.

Off the top of my head I can think of doba. Any place that comes up when you type in dropshippers in Google I pretty much avoid.

I can be a phony wholesaler too. It's easy, I just put on my site that I am looking for retailers. Then people call me and I just give them a price inbetween my manufacturer's price and my retail price. It's easy to figure out eventually. You'll know the people you are buying are getting it from somewhere else.

I think that you need synergies in your stores. They go through a natural progression. So imagine that I start with ghillie suits. Then I open up a new store selling knives. Then a store selling scopes and firearm accessories. Then outdoor gear. All these products are related and at any time I can decide to put scopes in my ghillie suit store. I would never close down my niche sites to consolidate. Why do that? I can see opening up a hunting superstore but why shutdown a profitably site that ranks high?

Many online stores have 3-10 stores selling the same thing. If you search for bats, I think the top 5 stores are all owned by the same company. Do a search for tool shed, I believe the 3 of the top 10 were the same company. Online, you can multiply businesses like rabbits.

Snowbank gave me the idea to open more than one niche store at a time. I thought why not? Why not just start with 3 niche stores in the same niche? Why not dominate the niche from the start. I can probably have 10 stores blanket the front page of google in a niche if I wanted to.

I dont consider myself fastlane moneywise. If you look at my other posts you'll see that I value time alot more than money. I'll give up money to spend my time how I want to.

My niche stores usually are profitable from day one. You can tell real quick how they will go. Sometimes I find out that I don't care about my product in a certain niche. This will definitely make the store a pain and it won't be successful.

This is all great stuff. Thanks for taking the time to respond and clarify some points. Speed + for mentoring.

Great info here! Speed +

Thanks for all the great information. Biophase, so have you completely migrated from Volusion to the shopping cart software you mentioned in your blog. I was thinking of using Volusion for my ecommerce store.

Thanks!
Speed+

The problem with Volusion is the bandwidth fees. Your store can easily cost you hundreds of dollars a month in bandwidth. You also cannot easily add a blog or forums to your URL with Volusion because you have to point your domain to their DNS. To me, the software was limiting in that fashion. I think the software and usability of the store is fine. But the bandwidth costs makes it a very expensive ecommerce package.

Do a google search on Volusion bandwidth or monthly costs.

If you sell something for $500shipped and have $440 into the product alone, you're not going to be making much. Once you figure shipping, shipping materials, payment processing, storage, paying to have the item packaged etc. you will be looking at a very minimal profit.

Say you have 8 product all using those numbers:
Min. order is 4 each $440ea shipped
8*4*440=$14080 will be needed just for the min. order

Say you pay 2.5% fee on the payment each item is now at $487.50
Now well will say shipping/packing/storage etc runs $12(with shipping prices these days, that gonna be a pretty small item...$500 insurance alone isn't cheap, assuming you purchase it. If you use paypal you will need sig. confirmation, another couple dollars) You will also probably being doing the packing/shipping yourself at this price asl well as storing the items at home.
$487.5-$12=$475.5-440=$35.5 Say you sell of the inventory in 4 weeks, 1 of each per week.
So in 4 weeks you have sold all 32 items for a total net of $1136. Nowhere near enough for most people to even think of quitting their job.
This also doesn't include many other things. Are you going to need to purchase any items now or in the near future? New comp, printer, packing supplies(tape gun, peanut dispense, bubble wrap rolls etc), are you going to be spending any money/time on marketing etc. These will have to come out of the profit somewhere. What if you get ripped of on one of them? There goes almost half the profit for the month as well. That would affect you much more than someone making $20k/month.


Say you had $140k+ to use, what if you now sell 80 products a week instead of 8.
Your four week "profit" is now at $11360. Of course you still have the other expenses above, but do you need more computers, printers, etc to sell 8 products/week vs. 80? I doubt it. Also, say they hire someone to do all shipping and customer service for $400/week.
They are now making (11360-(400*4))=9760 or about $117k/yr and they are only using their time to locate new items and market the site.

Of course some items will move faster than others and so forth, but for an apples to apples comparison I left all variables the same, for the most part.

What I am trying to say is that as your networth increases, so will the value of your time. Well, at least the way I see it. It's also about balancing your time:money. If you're making $100/hr but only have enough products to work 4 hours a week, you're still only making $400/week. Of course you could spend the rest of the time at a job, making $15/hr for 40 hours($600). That would be $1k a week.
Now what if you were to find enough low/mid end products to supply you with work for 45 hours a week @ $25/hr. That is an extra $625/week or about $2700/month. You may be "buying a job", but if you are currently working a normal job, then why not? Once you have built up enough capital, you should know this process like the back of your hand and have no problem finding an employee to do 95% of the work while taking 40% of the pay. Your S has now become a B.

How much free time do you have? How much cash do you have? What are you goals and the timeline for these goals? All of these will play a part in figuring out what type of return you feel necessary.




Assuming the items are of similar value, consume the same amount of time and have a similar turnover rate..then I can't see why you would want to sell 3 times as many items for a 25%(20% vs 24%) more money. Unless your labor is cheap enough and you have a huge sum of money, it just doesn't make sense to me. If I am missing something please let em know.

As for Walmart and Saks, that is up to what the business is trying to accomplish. Walmart will never have the markup that Saks does, but Saks will also never have the turnover Walmart does. I don't think either is "wrong", it more about what you are trying to do with your business.

Thanks! I will do! I am thinking of creating a store for members only! I have several suppliers (manufacturers) that should give me a wide range of merchandise for my store. I am thinking of charging a membership fee and selling the products at my cost (plus shipping and other associated fees).

I think that SL of yours begs otherwise

But I feel this is what most of us here are shooting for... time more so than money, especially if done properly it looks like Ecommerce is a low-risk/high-reward vehicle, in comparison to the other major avenues(real estate, stocks and B&M business), not to mention how many great free or low-cost resources there are such as the 30 Day Challenge, these forums(including most of your posts ), 4HWW and its forums, etc, etc.

With that in mind it can also be deceiving as with anything worthwhile it takes making wise decisions and hard work sprinkled with a little bit of luck which I feel discourages most, but the positive of that is less competition and a more rewarding feeling when you've achieved success!