min read
Written by: 
Nikolaus Hilgenfeldt
Ecommerce Basics

Full Guide to Product Sourcing for an Ecommerce Business

Did you know that in 2023 it is predicted that 218.8 million people in the United States will shop online?

Considering these numbers, it goes without saying that your ecommerce business's core basis is the products you sell. 

Plus, if you're not producing the products yourself, sourcing is a crucial part of running an ecommerce business, especially for the marketing and sales industry.

What’s more, this may even be one of the first steps you take when starting your online business.

The good news for online retailers is that obtaining products from reliable suppliers is much simpler.

Read on as we break down what product sourcing looks like for an ecommerce business.

You’ll learn about the various available options and the factors to consider when deciding on the best sourcing route for your enterprise.

Let’s dive in!

What is Product Sourcing?

Product sourcing is the process of finding and purchasing goods or services for an ecommerce business. 

It involves researching potential suppliers, negotiating prices and terms, and selecting the supplier that best meets the business’s needs. 

Product sourcing is essential to any business as it helps them to find quality products at competitive prices.

However, there are tasks that you need to accomplish in the sourcing process, such as:

🎯 Identifying the need – Realizing the organization's standards and the demands of the task at hand.

🎯 Market research– Market research is essential after identifying a need to find suppliers who can meet it.

🎯 Vendor selection – Evaluate and choose the best based on quality, price, reliability, and delivery time.

🎯 Negotiation – Negotiating with the chosen vendor for the best price and terms is crucial to the sourcing process. This may involve bargaining, compromising, and reaching an agreement.

🎯 Contracting – Finalize the vendor contract with a legally binding agreement that specifies delivery dates, payment terms, and warranties.

🎯 Order processing – After signing the contract, the vendor will process the order, including order confirmation, production planning, and scheduling.

🎯 Delivery and acceptance – The final step in the sourcing process is delivery and acceptance by the company. This involves ensuring the product or service meets specifications and is delivered on time and on budget.

Now that you've finished all the necessary preliminary work, let’s go over the top 3 options for product sourcing in the following section.

Top 3 Methods of Product Sourcing for Ecommerce

As we established at the outset, retailers have limited primary options for obtaining the goods they sell to customers.

The best course of action for your company will rely on several variables, such as the nature of the goods you intend to sell, the size of your initial investment, and your ultimate vision for the company's future.

Let’s check them out!

1. Make Your Own Products

The first and simplest choice is to make or do-it-yourself (DIY) products instead of buying inventory.

Someone who already possesses a certain skill set and would like to use it to start their own business may find this option the best fit for product sourcing. 

Review the following guidelines if you want to start producing your own goods for an ecommerce business.

1.1. Source Raw Materials

The term "raw materials sourcing" is used to describe the practice of acquiring the primary components required for the production of a good or the execution of a service

The raw materials used can differ depending on the sector and the final product. However, some typical methods of obtaining primary ingredients are as follows:

✔️Agriculture - Raw materials in agriculture can include anything grown for human consumption. Animals raised for food production, such as cows, pigs, and chickens, can also be considered raw materials.

✔️Manufacturing - Metals like steel and aluminum, along with plastics, chemicals, and textiles, are just some examples of the raw materials used in production. Without these raw materials, products like automobiles, consumer electronics, and apparel would not exist.

✔️Construction - Lumber, cement, and steel are all examples of raw materials used in the construction industry. Homes, businesses, and public works like roads and bridges all use these materials in their construction.

These are merely the first three types of raw materials that you can begin sourcing. That isn't to say you can't begin with something much simpler, like making your own candles, right?


1.2. Calculate Production Time

Now that you have a steady supply of raw materials, it's important to think about how long it will take you to manufacture a new batch of products to put back on your website's shelves. 

This is crucial information to have at hand as you manage inventory to guarantee a steady supply. 

But, if you opt to make items on demand rather than maintaining a stockpile, things could be different.

1.3. Decide Where You’ll Store Inventory 

If you're making your own products to sell, chances are you have some of that product stashed away in your house. 

While this could get the job done initially, it will limit your company's potential for growth in the future.

In addition, the scale of your production will determine how realistic this option is. Therefore, you may want to consider alternatives for storage and order processing.

To track, maintain, and report on your equipment, for instance, EZOfficeInventory and MaintainX both provide reliable solutions.


What are the Ups and Downs of Product Sourcing with Making Your Own Products?


✅ Totally unique and extremely challenging for competitors to replicate.

✅ Full control over product quality.

✅ Capability to swiftly switch to new products

✅ Full control over the amount of stock on hand.

✅ Growing market for handmade/artisan products.


⛔ Expenses related to producing and selling a product may add up to a larger COGS.

⛔ Constantly necessitating access to raw materials and production facilities.

⛔ Reduced expansion and productivity.

2. Purchase from Wholesalers

The wholesale market is another option for stocking a store's shelves. If you want to start selling online but don't have time to make your own products, this is a good option to consider. 

This means that you are not involved in creating the goods you sell, but rather that you are purchasing them in bulk and then selling them at a profit.

There are many examples of purchasing from wholesalers, including:

✔️Buying products for a retail business - To stock your shelves and reduce your per-unit cost of goods sold, you may decide to buy in bulk from a wholesaler.

✔️Purchasing inventory for an online store - A wholesaler is a good option for online retailers looking to stock up on products to sell in bulk through their websites and marketplaces.

✔️Purchasing clothing or accessories - Wholesalers are a great resource for boutique and fashion business owners, who can stock up on merchandise at deep discounts.

Working with wholesalers allows you to quickly increase your inventory of popular products and brands, allowing you to serve a larger customer base.

You can also find out everything there is to know about anyone you're thinking of getting serious with.

Check out some of the beginning actions to take when buying from wholesalers.

2.1. Find a Supplier

Locating suitable wholesalers to begin ordering from is an initial step in using wholesale pricing. Some examples of this are:

  • A local business or handicraft that makes their own goods
  • Local or global small business or recognizable brand
  • An existing company interested in going B2C
  • A wholesale company that sells to resellers.

eBay, Costco, and Alibaba are just a few examples of respectable wholesalers(e.g. suppliers from China) to get you thinking about your options and relying on good practices.


Do some digging to find a reliable wholesaler with a history of selling high-quality goods at reasonable prices before making any purchases

2.2. Explore the Conditions

Assuming you have identified several reliable wholesalers, you should now perform a thorough price and terms comparison across these businesses to ensure you are receiving the best deal possible.

For instance, before purchasing from a wholesaler, you should:

  • Verify whether or not you can meet the minimum order requirements.
  • Check wholesalers' shipping and delivery times.
  • Investigate their return policy and any fees or conditions that may apply. 

Keep in mind that some wholesalers may have more stringent return policies than shops that sell directly to customers.

On the other hand, buying in bulk can help you save money over time, but it could cost you a lot initially.

In simple words, consider how it will affect your budget and long-term financial goals if you're thinking about making a wholesale purchase.

What are the Ups and Downs of Product Sourcing with Purchasing from Wholesalers?


✅ Lower cost per-unit cost.

✅ A wide selection of products across categories makes it easy to find what you need.

✅ Businesses buying in bulk benefit from volume discounts.

✅ Access to hard-to-find products.


⛔ Large upfront investment to buy inventory before sales.

⛔ Inventory risks of stockouts of popular items.

⛔ Paperwork, contracts, and negotiations.

⛔ Minimum order quantities.

3. Dropshipping

One distribution model, known as "product sourcing with dropshipping," involves a retailer forming a partnership with a dropship supplier to handle inventory management, transport, and customer service.

In simple words, you can sell products online with as little involvement as possible. Using this strategy, you'll have another supplier meet the needs of your clientele in full.

This model is not only useful for sourcing products but also for fulfilling customer orders.

Here are some examples of product sourcing with dropshipping:

✔️Electronics and gadgets - Dropshipping is used by many electronics retailers. They might work with a supplier that sells smartphones, laptops, tablets, and other tech. To attract customers, the retailer can list these products on their website at competitive prices.

✔️Beauty and cosmetics - Dropshipping can also benefit cosmetics retailers. A retailer may partner with a supplier that sells a variety of skincare, makeup, and haircare products. They can then promote these products online.

✔️Home goods - Dropshipping can also supply home goods retailers. They may work with a supplier that sells furniture, home decor, kitchen appliances, and other household items. To attract customers, the retailer can list these products on their website.

Product sourcing with dropshipping can be used in almost any retail niche if a dropship supplier sells the products you want to sell.

Here are some essentials to consider when sourcing your products using this method:

3.1. Find the Right Dropship Supplier

There are many good dropshipping suppliers out there, but finding the right one can be a challenge. 

Here are some factors to consider when evaluating dropshipping suppliers and how to recognize the good ones:

👍 Quality of products - Find suppliers with high-quality, compliant products.

👍 Range of products - A good supplier should have many relevant products for your business.

👍 Pricing - You can offer competitive pricing to customers if the supplier's pricing is competitive.

👍 Shipping times - Check the supplier's shipping times to meet customer expectations.

Look for dropshipping companies that have a history of satisfying customers with their high-quality products, prompt deliveries, low prices, and helpful customer service agents.

You can find out more about the supplier by looking into their background, reading reviews, and contacting them with questions and gauging how responsive they are.

One place where people with similar interests can find useful information is the Quora platform.

It's a good place to begin your investigation.

3.2. List the Products in Your Online Store

You can start selling dropshipped products once you've established a relationship with a supplier.

However, all of your marketing efforts should focus on enticing customers to buy your products. 

Thus, make sure to put a lot of effort into advertising and marketing if you want people to visit your website or online store.

You can boost site traffic in a number of ways, including promoting products on social media, creating and sharing interesting content, and contacting customers via email.

Furthermore, the vendor will handle shipping and delivery when you use a dropshipping service, but you'll be on the hook for any customer service issues that arise.

Because of that, you must also be prepared to address customer concerns, whether they be questions, returns, or other issues.

If you already run an ecommerce store on Shopify, here you can find some guidelines on how to connect it with Amazon.

3.3. Track and Analyze Sales Data

In order to make educated decisions about product sourcing and marketing, it is crucial to track and analyze sales data.

This kind of information is invaluable for figuring out what kinds of products sell well and which kinds of advertising campaigns produce the best results.

Take Woopra, for example – it's a platform that can give you analytics on the performance of your product as well as insights into the customer journey.

Moreover, it's totally costless to join them.

What are the Up’s and Down’s of Product Sourcing with Dropshiping?


✅ Large variety of products to choose from

✅ Eliminates the need for warehousing and shipping.

✅ Reduces startup costs.

✅ Low barrier way to enter the ecommerce market.

✅ No inventory risks or management.


⛔ Lower margins.

⛔ High competition.

⛔ Little control over the quality of the products.

Product Sourcing for an Ecommerce Business With Myos

We hope that this list of 3 top strategies of product sourcing for an ecommerce business can help you establish a solid foundation for your online store.

However, whichever you choose to start from, you must understand that all of them share a stable cash flow as a critical element of success.

Why is that?

Unfortunately, many budding ecommerce stores are constrained by their lack of working capital when it comes to sourcing products. 

As a result, asset-based financing has become increasingly popular among startups looking to expand their businesses through product investment.

One of the reasons is that, in contrast to traditional bank loans, it offers much more appealing terms for funding.

But how do you choose an asset-based company today?

The answer is simple. Rely on the trust-and-tested solutions, such as the one we’ll introduce to you now.

What is Myos?


Myos is a growth funding company that offers funding that is solely based on collateral, assisting store owners and merchants in expanding their businesses.

It provides 3 forms of asset-based financing to help you launch and grow your business, including:

🎯 Cross-finance – Boost your capital as you wait for a sizable client payment.

🎯 Purchase financing – Receive funding for your upcoming purchases.

🎯 Stock financing – You can use the stock you already own to finance your company's growth.

How Does Myos Work?

Myos, unlike traditional banks, doesn't require your credit history to determine the loan terms.

This is because it utilizes machine learning and artificial intelligence to assess the value of your inventory and determine how much money to lend you. 

As a result, Myos can use an unspecified portion of your stock as collateral without assuming any personal risk.

To initiate the loan application process with Myos, you must first complete their 3-step application form.

Step #1: Identify the type of loan you'd like to apply for. 

Step #2: Provide the file format of your sales data or manually add products that need financing via the app. 

Step #3: To complete the order, enter your account information and confirm the request.

The application review process typically takes between 24 and 72 hours

In addition, if you borrow from Myos, you'll have control over the repayment terms and conditions for 24 months.


What are the Basic Requirements for Getting the Loan from Myos?

  • Your business is registered in one of these countries: Estonia, Cyprus, Germany, Austria, or the United Kingdom (UK).
  • Your company has been doing business for at least six months.
  • You’ve been selling products for at least 50 days.

What Can You Expect From Myos?

👍 Only goods are collateral.

👍 Flexible repayment term .

👍 Avoid paperwork (AI will analyze your products).

👍 Purchase, stock, and cross-funding are available.

👍 Borrow £10,000–£2,500,000.

👍 Three simple steps application.

👍 Fast response (24-72h).

Get your first non-binding offer to unlock your ecommerce business growth with Myos’s asset-based financing. 

‍Keep Learning

What Is Asset-based Lending - Everything You Need to Know

Ecommerce Crowdfunding: The Complete Guide for Online Sellers

8 Reasons Why Ecommerce Businesses Fail & Ways to Avoid It

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