In this newsletter, we answer 6 essential questions about product sourcing and teach you how to find and work with genuine suppliers and avoid the scammers!

Question #1: Where Do I Look For Suppliers?

You have several options here. Most carry a couple of risks and each has their own pros and cons.

Google searches: If you are lucky, you might be able to find the perfect supplier with a simple Google search. The great thing about Google is that it's free to use and it will give you access to pretty much every supplier that has a website.

But there are a couple of serious downsides.

1. Some of the best suppliers don't appear on the first pages of Google search results, so you could easily miss them.
2. If you don't know what you are looking for, you may inadvertently fall into a scammers trap! Many of the 'suppliers' you might stumble across could be scammers. This means that they are pretending to be suppliers with stock to sell you, when in reality, they are waiting for you to send money, which they will take and run!

Supplier Directories:

You might notice a few of these popping up when you are searching the web for a supplier. Using a supplier directory is one of the most popular ways to find a supplier, so make sure you check them out.

Alibaba, World Wide Brands, Global Sources and SaleHoo are all examples of popular directories, each offering different services. Before you sign up to a directory, make sure you do a quick background check to ensure they do everything they say they do.

To do this, simply run a quick Google search using the name of the supplier directory and 'review' as the search terms. For example, to investigate Alibaba, search for 'Alibaba + review' into the search field. Alternatively, see what people are saying on forums by searching for 'Alibaba + forums'.

Although there are some very good supplier directories around, there are also some very bad ones. Be especially wary of anyone selling a supplier list - these are often full of broken links, links to scam sites, or links to suppliers who will charge you a fee to become a client. This kind of defeats the purpose of a directory!

A good supplier directory will:

• Offer thousands of suppliers. Anything less and you are unlikely to find what you are looking for.
• Have a system for verifying their suppliers and keeping the information current. This will ensure that each of their suppliers is safe to use, and not out to scam you. This service is crucial.
• Offer regular blogs and information to help you learn all about online retail and avoid making mistakes.

Trade Shows:

Trade shows are exhibitions that bring together top suppliers in the industry and showcase new products. Visiting a trade show is a great way to stay ahead of trends and find new niche items to sell.

Trade shows are also a superb way to build relationships with major suppliers for the products you want to sell. They are a great place to negotiate good deals and access new, hot-off-the-conveyor-belt products.

Best of all, trade shows only contain real businesses who meet the organizer's strict requirements, so there is pretty much zero chance you will encounter a scammer when you meet suppliers at a trade show.

How To Find Trade Shows In Your Area

To find trade shows in your area, you can use the free SaleHoo Trade Show Directory. Our Trade Show Directory allows you to meet suppliers face-to-face by listing all the upcoming trade and wholesale events in the globe. 

You can use the free SaleHoo Trade Show Directory to search for trade shows in specific categories such as electronics, leather goods, furniture, or sports equipment.

You can also search for trade shows near you by clicking on your country and state or city.

Finally, don't forget what we mentioned in last week's newsletter about using flea markets, estate sales, thrift stores and yard sales to source products! These are excellent ways to begin product sourcing, and find additional inventory to supplement what you source from a wholesaler.

Question #2: How Can I Avoid Being Scammed?

We get asked this all the time - and we are so glad we do! Nothing is more heartbreaking that hearing about a new seller having their money taken from them, and their dreams crushed by a filthy scammer.

Luckily there are some simple steps you can take to help keep yourself safe.

5 Tips for Safe Sourcing

• Only pay suppliers via safe payment options. This means avoiding wire transfers and Western Union payments and using safe options like PayPal, Paymate, MoneyBookers, Escrow and credit card payments. These payment methods are safe because they offer buyers some protection should the transaction go pear-shaped.
• Check that the supplier has adequate contact details. A cell phone number and a Hotmail address are not enough to prove they are legitimate. Most genuine suppliers will have a domain-based email address, for example, john@nevadapottery.com. A physical address and landline phone number are also essential.
• Use DomainTools.com to see how long the supplier's site has been registered by its current owner. If it has been online for less than 2 years, be very cautious using that supplier. Using Domain Tools is easy, simply enter your supplier's URL into the search tool and click Search to view the results. This is a free service.
• Do a Google search for "[supplier name] + forum", this will bring back any feedback about the supplier from wholesaler forums, and help you get a feel for the supplier's reputation.
• Ask for a product sample. Legitimate suppliers will usually be more than happy to do this (you will have to pay for it, but it's certainly worth it). If they sound hesitant, it could be because they don't have any products to provide samples of, which is a definite sign that you should avoid using the supplier!

Important Note: When you are dealing with suppliers who are listed on the SaleHoo Directory, you do NOT need to perform these background checks. Suppliers on the SaleHoo Directory are 100% safe to use and have passed our strict standards to ensure that you and your money will be safe when you deal with them. You only need to take these mesures when you considering using suppliers outside of the SaleHoo Directory.

Question #3: Will Suppliers Want To Work With Me?

Yes! Many sellers think that because they are new to online retail, suppliers won't be interested in dealing with them - but that's such a myth. The truth is, as long as you can meet a supplier's minimum order quantities, they will be more than happy to deal with you.

Of course, from the wholesaler's point of view larger clients are ideal as they have more spending power. However, most suppliers are happy to deal with smaller clients... who may someday soon be larger clients!

The only exception to this is that some wholesalers do not sell to eBay sellers. This is usually because the brand owner of the products that the wholesaler distributes is worried about their products being sold on eBay for less than the manufacturers recommended retail price (MRRP).

Question #4: What Are Suppliers Looking For In A Retailer?

Essentially, suppliers want to know that you are serious about selling their products. They get a lot of orders and account requests from newbie sellers every day, but many of these newbies never come back for a second purchase because their business wasn't well managed, or they ran out of time to even run an online business.  

The problem with this is that it costs the supplier money to set up a new wholesale account and get you on their books. Often all the admin involved means it can actually cost them money to supply you the first time around, especially if your order is small.

Therefore, when you sign you up as a wholesaler's client remember that they are essentially investing in you, so you need to prove to them that you are a worthy investment.

To do this, it helps if you have all your paperwork in order. This might be the first you have heard of paperwork as part of an online business, so allow me to explain.

For most sellers, there are two important steps to take. Number 1 is getting a tax ID and number 2 is registering your business. These aren't essential steps for dealing with suppliers, but they sure do make it a heck of a lot easier.

US Sellers: Get a sales tax ID

You can apply for a sales tax ID and reseller certificate/license with your state tax department or your local county clerk's office.

For instance, if you are in New York, then you would go to the New York State Department of Taxation and Finance (either online, by phone or in person) and fill in the appropriate form.

Registering Your Business

While this isn't strictly necessary, it certainly goes a long way in showing suppliers that you are serious about your business.

The steps you need to take to register your business vary from country to country, but generally you will need to decide on the structure of your business, choose a trading name, pay the relevant fees and complete the relevant forms.

For more specific information see the free SaleHoo business set up guides.

The best way to show a supplier you are serious is simply by being as professional as possible.

If you are negotiating with them, do not suggest they sell you items at outrageously low prices - you will come off as amateur. To get the best prices from a wholesaler, you need to put in the time to develop a relationship with them first, which means making a few orders and gradually building up the quantity you order each time. Always respond to their emails promptly and be courteous in all your communications with them.

Question #5: Where Can I Find A Supplier For iPods/Louis Vuitton/Tiffany and Co. Jewelry?

Wow, slow down! If we had a dollar for every time someone asked us this! OK, first of all it is very difficult to source these products, and even more difficult to be competitive enough to sell them online.

This is because you need to be a licensed reseller in order to sell most big brand name items, and becoming one is not easy!

For example, to become an authorized reseller for Apple products such as iPods or iPhones, you need:

•   A business license
•   A general liability insurance certificate
•   A brick and mortar store and photos of each sales location (interior and exterior)
•   A tax exemption certificate (if your entity is exempt from state/provincial sales tax)

And that's just the pre-application check list!

The reason why it's difficult to sell these products is that the brand owners do not want the market value to go down - which is what would happen if there were too many resellers all competing against each other.

Selling your favourite branded products can be achieved by purchasing liquidation, but if you want to be an authorized reseller, it will take time to work up to being able to being able to place an order and sell alongside the other Power Sellers selling the same items.

Some brands, like Louis Vuitton, are so exclusive that you need to have a physical retail store in a premium location, and a certain turnover each year, before you can become a reseller.

Question #6: What Should I Do Once I Have a Supplier I Want To Work With?

If you have found a supplier who you know you can trust and has the products you want to sell, well done, you're nearly ready to place an order and start selling!

You might be wondering what your next best move is - how do you approach the supplier? Should you just send them a quick email? If they are local, should you stop by the warehouse?

First of all, don't be afraid of suppliers! Most will be more than happy to hear from you and will be pleased to know that you want to buy from them.

Usually the best first point of contact is an email, or a contact form on the supplier's website. In the email, it's a good idea to introduce yourself and tell them a little about your business's history. If you are just starting out, tell them this.

Now is also a good time to ask about pricing of the products. What is the minimum order quantity and how many items do you need to buy to get a discount? These are a couple of good starting points, depending on what information they have already provided.

Phew! We hope that answers some of your questions.

SaleHoo member Carolyn quit her job in the busy, stressful world of working in the not-for-profit industry, but now she and her sister have built a full-time living selling online, and life is better than ever! Discover how they turned their passion into success in our next newsletter.