There are two main ways to get products for sale on marketplaces: to produce these products yourself or to purchase them from third-party suppliers.
In-house production. The entrepreneur uses his own resources to create the product — that is, he creates it with his own hands or in production. For example, micro and small businesses can create jewelry, cosmetics or furniture using their own workshops. Or they can order their production at factories.
In both cases, the entrepreneur himself regulates the quality of the product, its quantity and characteristics. This method also allows you to sell products that other sellers do not have.
However, in-house production is not suitable for everyone: it requires more financial investment and time than when purchasing from third-party suppliers.
Third-party purchase. The business purchases goods directly from manufacturers or from distributors and other intermediaries. This is a faster way to start a business on marketplaces — the entrepreneur immediately receives finished goods that can be resold.
Working with suppliers has its own risks and features, which I will discuss below. But this method is the main one for entrepreneurs who want to enter marketplaces without their own production.
Where to buy goods for marketplaces
You can buy goods from manufacturers, distributors, importers; you can also use specialized services. The conditions depend on the chosen method of procurement – let’s figure it out.
Manufacturers. These are factories and plants that produce goods themselves. They ship supplies in large batches, so they usually have the lowest price. The exception is small manufacturers that supply goods in smaller quantities or by special order. In this case, the cost of the batch can be high.
If you choose this method of procurement, I recommend maintaining good relations with manufacturers. In the future, this can help you get a discount or order the production of goods on special terms. For example, develop and launch a product with your own packaging and logo or change the standard configuration.
Distributors or intermediaries. Not all large factories and plants are ready to supply goods to small businesses directly. It is often easier for them to sell to distributors. Intermediaries purchase huge quantities of various goods and then resell them to small wholesalers or retailers.
It is convenient for entrepreneurs to work with distributors. In this case, it is not necessary to order large quantities of goods at once – you can start with a small purchase, test demand and sales, and then decide whether to sell this product further. However, purchasing through distributors and intermediaries will cost more than direct delivery of goods from production.
Importers. Abroad, you can cooperate with manufacturers or intermediaries. In some cases, such purchases can be cheaper than those mentioned above, but you need to be prepared for difficulties – I will talk about them in more detail below.
Specialized services. These are platforms that deliver goods from abroad. The cost of their services is higher than that of direct suppliers, but the services take on all logistics and customs processes.
Such platforms make the purchasing process easier and faster. For example, some services independently process goods and attach all the necessary documents, check each unit of goods, deliver the batch to your door, process VAT deductions and closing documents.