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Influencers and Product Sourcing

8.1.2 Influencers
You need to have worked through the product sourcing ideas set out below. Mostly, the plan is not complex; buy wholesale and sell retail.
  • You can trade in a network marketing venture or an affiliate marketing venture.
  • You could bulk up and open an online store that offers many affiliate products in a given category.
  • You can open an online shop and sell physical or digital products.
Once you have the keywords that you feel are relevant and which are popular, then add them to the Search Engine Description page on your website and blog and consider social media marketing, Blog marketing, PPC advertising, e-mail marketing directory listings, e-Commerce store tasters.
The first steps in the evaluation relate to practical matters such as:
  • What are the distribution or delivery costs and options?
  • Is it breakable, fragile, sturdy, flexible?
  • If fragile it will impact upon packaging costs, insurance and returns.
  • Does it have a limited shelf life?
  • If it does delivery may need to be expedited at higher costs.
  • What does it weigh and what are the cubic dimensions (volume)?
  • Weight and size have an impact upon the nature and cost of delivery.
  • Is it durable or perishable?
  • Perishable goods such as roses and foodstuffs may need temperature controlled transportation.
  • Delivery is a cost driver and needs to be fully researched and understood.
  • Understanding the impact of delivery starts with a ratio of delivery cost to product cost and local availability.  As the ratio rises local supply becomes increasing more significant.
  • Is it a seasonal product or a fad that may run the risk of storage costs?
  • If seasonal and the season is near to closing or if it is early there are storage implications.
  • Obsolescence needs to be assessed.
  • Value
    • Hazardous materials, theft andhigh value items cost more to insure.
  • Does it service a passion?
  • If you created a “Game of Thrones” or an “Off road dirt bike”  product, there would be markets with an appetite for it.
  • Research ideas for less popular sports or hobbies.

  • Does it treat aches and pains?
    • Start with the ache or pain and then find or engineer a solution.
    • Is there a cure in another part of the world that is not generally supplied in your market?
  • Does it have a favourable balance between supply and demand that is not generally serviced?
  • Products in high demand are likely to be supplied by national chain stores.
  • An opportunity may exist for a “Wally” that is on the fringes that national chain stores do not supply.
  • Consider “Big and Tall”  or  “Small and Short.”   These are the ranges that could be added to both ends of departmental store offerings.
  • Repeat Buyers
    • If the product or service has a low sales volume expectation but is a consumable or a non-durable product, it is likely to offer the opportunity for repeat sales. This means that you will not have to work, on average,  as hard at sales because a percentage of your customer base will be walk in traffic. Do a good job and they will become loyal to you.

 

8.2 Product Sourcing    
 
The next step relates to the supply chain. There are options that will be decided by sales volumes, sales consistency and the budget available. Meagre budgets will favour options that otherwise might not maximize profitability. Risk too plays a part, and one’s appetite for it will impact the final decisions.  At the core, the supply chain must ensure that the product or service moves from the source of supply to the customer.  Typically a supply chain will involve manufacturers, distributors, wholesalers and retailers.
 
The following matters should be taken into consideration:
  • Manufacturing
    • Ease of manufacture; setup costs, breakeven volumes, working capital and more.
    • Packaging and labelling; availability and design criteria may dictate costs ranging from more than the cost of the product to being only a fraction of the production cost.
    • The cost of manufacture; relative markup margins and the risk of obtaining the market share predicted in the business plans.
    • Mark-up margins will vary widely depending upon the margins and location of manufacture.
    • Will you be one of a few suppliers and will you be able to influence pricing?
    • The location of manufacture will impact distribution, labour, and overheads.
    • Legality of manufacture; patents, controlled substances and other considerations.
  • Wholesaling
    • Alternative wholesale sources of supply.
    • Trying to lead with a low-cost business plan against established vendors needs careful consideration.
    • Typically mark-ups will be about 50% in many sectors of the market.
    • Light vs. Bulk buy requirements; minimum order requirements.
    • Annual volume commitments and scaled volume based pricing.
    • Liquidation wholesaling
    • Location; domestic vs. foreign
    • Touring factory shops and local industrial zones is a great place to start hands-on research on opportunities that most likely are not on the internet.
    • International wholesalers;
    • www.alibaba.com - showcases Asian manufacturers and hundreds of thousands of products.
    • www.made-in-china.com  - similar to Alibaba
    • www.globalsources.com -  you can source by country including African countries.
    • www.tradekey.com  Trade with wholesalers from around the world.
    • The www.Webo.directory Boot Camp offers the use of a dynamic database of hundreds of South African wholesalers.
  • Dropshipping - Great for meagre budgets.
    • Is an approach to wholesale supply whereby the seller orders from the drop shipper for delivery to the seller’s client. The seller never stocks nor sees the product. The sellers client is not aware of the drop shipper who remains hidden to the customer. Where supply issues arise the seller will be at a disadvantage as they have not managed the supply chain.
    • Given that the system requires no stocking nor warehousing of a very large range of merchandise it offers a low working capital alternative albeit at a lower margin.
    • Getting started is easy and-and it enables many businesses to be run from home or on the move which saves on office rentals, etc., an
 
I hope that I have nudged you to reflect upon your plan to go online. If so, please share the link to this topic with your friends on Facebook and with your Business Connections on LinkedIn. To do this log into your preferred social media account and then click the share option at the top of this page.
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