At some point every online retailer needs to go to the source and complete their first buying trip. It can be daunting, but if you’re prepared, not only will you source the right products for the right price, you’ll have some fun along the way – so what are you waiting for?
Shipping technologies have been improving since the invention of the wheel. With each new adjustment, goods and people are able to travel from A to B faster than ever before. It is only in the last century that information technologies have surpassed the speed at which a person can travel, eventually resulting in the culmination in the internet.
Today, online retailers are perfectly positioned to make the most of both shipping and communications. As part of the fulfilment process, merchants might develop a drop ship arrangement with suppliers. In this scenario, orders go directly from the factory to the customer’s door. In other cases, you may need to organise a number of solutions.
However, none of this matters if the time hasn’t been taken to really get to know the businesses you are partnered with. In the case of suppliers, this can mean travelling internationally to see how your products are manufactured, stored or distributed. In the previous Power Up, we discussed researching and contacting suppliers. This article provides insights on how to develop those contacts and begin ordering products.
First Opportunity – The Buying Trip
One of the first international ventures many young retail companies make is the buying trip.
“Communicate clearly with everyone,” said Capps. “Give people roles and autonomy.”
The ability to develop a good buying team can significantly alter your ability to success on a buying trip. The main reason behind this follows the age old concept that many hands make light work. Even two people will be able to perform better and more efficiently than just the one.
There are several key areas that must be considered when selecting team members. Here are the sorts of areas that any thorough business would cover. It’s important to note that one person can potentially take on more than one role.
- The Local Expert: translator, cultural and geographic guide
- The Product Person: in-depth product knowledge – quality, function and price
- The Bursar: budgeting, company finances and cash flow guru
- Team Leader: decision making, initiative and listening experience
- Trip Organiser: organisational talent, booking travel, transport and accommodation
“Having multiple people can lead to lots more being achieved,” said Capps.
Any trip requires some time spent ensuring you have the right equipment, funds and knowledge to return home successful.
“Technology can be an awesome help for cross-border communication,” said Capps.
This generally requires the buying team to stay connect with each other and online. Mobile devices with an internet connection can prove themselves priceless in ways you might not predict before setting out, so don’t forget the charger.
Capps said he was able to consult with his colleagues in Australia whilst on his trip in China.
“I was able to get their input and make rapid decisions on a couple of surprises,” he explained. “I just took photos and emailed them back to our Chinese and Australian offices.”
Capps also remarked on how useful the most basic equipment can be, adding redundancy to a high-tech team.
“The most important too was a well laid out list of what we needed to do, by location and with appropriate photos attached,” said Capps. “It’s easy to see and discuss what’s done and what’s still to do – and its batteries don’t run out!”
Budget for many small purchases
Even if the plan isn’t to meet with potential suppliers at a market or trade show, it is recommended that buyers compare lots of product from competing suppliers during the early stages. This means making many small purchases from different sources.
“We tried to make too many decisions on the fly with suppliers looking on,” explained Capps. “We were trying to save money by not buying samples that we didn’t need. It’s best to buy a lot of samples (which are normally refundable), then make your final decision in the peace of your hotel room.”
Depending on the type of product being sourced, and the region it’s being sourced from, a buying team will sometimes have to deal with fake products, or products of questionable quality.
In these situations, the skilled buying team will be able to sort the good product from the bad product, avoiding any potential to get ripped off.
Jethro Marks, CEO of online bookstore TheNile.com.au explains how some products can be legitimately branded, but not necessarily of the highest quality.
“Sometimes a product run will occur at a factory in the morning, and this will be the high-quality, legitimate product,” Marks says, “but then someone else will come on in the afternoon to make another batch that isn’t exactly be the same. This results in varying degrees of authenticity.”
Having completed the initial sample buying phase, it makes sense to begin solidifying a relationship with those suppliers who can provide the required product at a desired price.
Be sure to research as much as you can about your suppliers before offering to meet with them. Make it clear that you are a prospective buyer looking for a supply partner and have a good idea how much product you will need initially.
Marks recalls how hard it is for a pureplay online retailer to partner with suppliers who may not have dealt with the channel before. Many have reservations, requiring the merchant to work harder to instil confidence in their business model.
“Approach suppliers in a similar way to presenting a website to customers,” Capps said. “The larger part of retail requires the ability to convince someone that they should do business with you. This is the same with suppliers. It’s a slightly different sales scenario, but the philosophy behind the process is exactly the same.”
In many cultures, prospective business deals are rarely discussed before the two parties sit down to a meal together. Be aware of local customs and don’t be afraid to invite your suppliers to a business lunch or dinner.
Finally, go to business meetings prepared to place orders. Many suppliers will continue to harbour doubts up to the point that you agree to spend money with them.
“Negotiating, especially in foreign countries and languages, could fill an entire blog,” said Capps, “but I’d like to highlight one thing I learned: our suppliers became more accommodating after we placed an order. Stock appeared, prices changed, customisation become easy.”
Now that stock supplies have been confirmed, it is time to start thinking about the nuts and bolts on how to get it from the warehouse to your customer. In a physical sense, this will require fulfilment solutions to be researched and arranged.
Seeking more information on how to get an online retail venture off to a flying start? See our complete A-Z guide, Power Up: The Online Retail Entrepreneur’s Guide.