Product Sourcing for Home Business: Drop-Ship Wholesale Product Supply Survival

Product sourcing. Home business. Here we have two inseparable twins. Starting your own online business is an attractive proposition. After all, there is a lot of money flowing on the Internet. Even in troubled economic times, money continues to gush non-stop through Internet pipes. Start up costs for online business are relatively low, and the opportunity to prosper seems to extend itself to all who have access to an Internet connection.

For many people, the entry point to online home business is the selling of retail goods over the Internet. This is an alluring strategy as it appears to offer relatively easy access to online commerce, commonly known as ecommerce. However, anyone in business for any length of time understands the importance of product sourcing, and for the home business, product supply is of crucial concern due to the wafer thin tolerance for error or economic fluctuation in budgeting and inventory.

Consider: over supply resulting in stock left sitting in storage is almost a sure loss just as is undersupply in the face of rising demand. For the small, home business, it is not only more embarrassing to have customers catch you empty handed, but a large company's financial tremor may be an earthquake for a work at home mom or small family enterprise. For the home, micro business product sourcing reliability and stability are crucial.

Product Sourcing for Home Business, Wholesale, and Drop shipping

For many online businesses, product supply success means having a clear understanding of the basic characteristics of wholesale supply and drop shipping. It is important to understand that although drop shipping may in principle make it easy for someone to start an online home business without owning and storing products, it is not the same thing as wholesale product sourcing. Home business success may depend on entrepreneur's awareness of this.

There are three identifying characteristics of a legitimate wholesale supplier. A true wholesaler has authorization from one or more manufacturers to sell their goods to retail sellers. A true wholesaler has a business license allowing the sale of goods without charging sales tax. A true wholesaler must require proof of your sales tax permit (sometimes called a resale certificate), a document from your state of residence allowing you to purchase goods from a wholesaler without paying sales tax. The assumption is that you will charge your customers sales tax and then remit those taxes to your state at designated tax times, usually on a quarterly basis.

What is most important for you in determining whether a business is a true wholesaler is whether it requires proof of your sales tax permit. If a supplier does not demand proof of your sales tax permit, it is not a true wholesaler. It may have great prices, it may sell products at far lower prices than other true wholesalers, but if it does not ask for your sales tax permit, it does not have the business license necessary for it to be a true wholesale supplier. This is important to understand because not all legitimate businesses in the product supply field are wholesalers.

Price depends on quantity. Although wholesalers sell below the manufacturers recommended retail price, the price per unit you get depends on the quantity you purchase at time. Do not expect to get the same per unit price for one product as you get if you purchase 50, or 100 or more. Price may also depend on your relationship with your sales rep and your purchase record.

Drop shipping is a service provided by some wholesalers who agree to send out your products on a per unit basis to your customers. In other words, a visitor to your site purchases a product from you. You, in turn, pay the wholesaler, who then ships the product to your customer. When the wholesaler sends the product out under your business name only, that is called blind drop shipping. This is an attractive business model as you do not own or store your inventory, but there are a few points to keep in mind.

Drop shipping is generally more expensive than other kinds of product sourcing because the profit margin is smaller. Even though you may be buying your items wholesale, you are buying them at their most expensive rate, the single item price. This is important to keep in mind when you consider how and where you plan to do your selling.

Another point to keep in mind is that businesses who advertise drop shipping but who do not require proof of your sales tax permit are not true wholesalers. Instead, they are retail businesses-perhaps selling at a steep discount-using drop shipping as a selling point. Real drop-ship wholesalers are generally difficult to find, but the advent and popularity of Internet marketing has nurtured the growth of a niche of drop shipping businesses that promise wholesale prices but who themselves are not true wholesalers. The point, here, is that when product sourcing for home business, take the time to know who you are doing business with.

How to Find a Product Source for Your Home Business

Finding legitimate wholesalers may at first seem difficult. You can find some through Internet search, but generally speaking, wholesalers do not need to have a prominent Internet presence. Although some, such as DBL, WYNIT, and Petra do, most do not. The reason for this is that most online businesses are tiny, micro businesses, mom and pop businesses, and if that describes you, then know that you are not the target customer of most wholesalers. Wholesalers make their money by selling in as large a quantity as possible, and most online home businesses do not fit into their category of buyer.

So, how do you find wholesale and drop-ship wholesale suppliers? You can, of course, search on the Internet, but there are more direct means. First, try the phone book. Next, contact the manufacturer for the product or products you want to sell and ask who their authorized wholesalers are. This next suggestion is very important. Attend trade shows. Trade shows allow only registered product vendor's entry, so you know you will be meeting real suppliers. To find information on trade shows, you actually can Google the term, "trade shows" or the term "trade shows" plus a city name and find numerous resources. For example, trade shows Denver. For local shows, you can also talk to your Chamber of Commerce, or the Chamber of your nearest big city. Trade magazines are a valuable source of information. If you are serious about understanding the major sources of products in a particular industry or field, try to read the trade magazine for your particular area. This final suggestion is a potential gold mine. Become familiar with the Thomas Register. This resource is available online at no cost and is a directory of nearly every manufacturer of any product line you can think of from heavy industry to arts and crafts.

There is no doubt that easy access to wholesale product suppliers and wholesale drop-shippers offers an attractive entry into online business. However, unless you plan on manufacturing your products yourself, reliable product sourcing will be crucial to your success, and that in turn may depend on your knowledge of how to find legitimate product sourcing. Home business is important business. It is your life, after all, and the advice offered here will help ensure that you find trustworthy, professionals to handle your product needs.

Resources

Proproductsourcing.com

Simpleocity.com