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Module 3: Source Wholesale Products

What we'll cover in this module:

Introduction

In Module 1 of this free online store building course we chose a niche to build our online store around, and here in Module 2 we'll source wholesale drop-ship products to feature in our store!

HINT: Just like in Module 1, each step below contains a 'Learn' section (indicated by the icon) that teaches you why the step is necessary, then an 'Execute' section (indicated by the icon) that indicates how to actually complete the step. We'll again indicate the differences between model 1 and model 2 stores, and if you need a definition of each you can see that here.

There's no time like the present, so let's dive right into sourcing wholesale products...

3.1 Do You Need a Business Entity?

LEARN

A business entity is really a necessity for those doing a model 1 store, but it's not really needed at this point for most of those who are building a model 2 store. The reason for this is that in order to source true wholesale prices on brand name products to have them drop-shipped for a model 1 store, you need to set up a "dealer" account with a manufacturer and/or distributors, and at least 95% of them require an official business entity with reseller permit.

Those of you doing a model 2 store will almost certainly be sourcing your products from a factory oversees or a POD (print-on-demand) service, and very rarely do those outfits require an official business entity or reseller permit. That said, you still may want to consider getting a business entity once you start making sales, as this can add a layer of liability protection between you & your business.

(If you're doing a model 2 store and don't intend to get a business entity at this point, jump down to section 2.2 and bypass the rest of this section.)

Registering a Business Entity (model 1)

model 1 store builders should register a business in the state they intend to headquarter in (typically the state you reside in). Generally an LLC is the most logical business type to start with, and in most states it costs no more than one hundred dollars and can be done online (look up the requirements for your state here).

HINT: If you are located in one of the highly populated states you may want to consider registering your business & reseller permit in one of the low population states (like Wyoming).

Reseller Permit

To go along with your business entity (probably an LLC), most states will require you to also get a reseller permit (aka seller's permit or resale tax permit) through that state's tax commission. The purpose of this permit is to make sure you remit sales tax that's collected for orders received inside of that same state your business is registered in.

Generally when you register your LLC online it will link you to the reseller permit application (that's hosted by your state's tax commission). If it doesn't link you from where you register your business entity, simply do a Google search for your state's tax commission and you should easily be able to find the application there (i.e. Google search for 'Idaho tax commission').

EIN (Employee Identification Number)

To go along with your business entity and reseller permit you will also want to get an EIN (also referred to as your "Tax ID"). This is free and literally takes a few minutes when you use this online application.

EXECUTE

Look up & execute the steps to set up a business entity (with reseller permit & EIN) for your state (look up your state here), or follow the steps in this guide to register a Wyoming LLC. Our 'Do I Need a Business Entity?' article is also loaded with information about your options when it comes to business entities.

HINT: The main reason we're getting a business entity (and accompanying certificates) at this point is so we have it in place before we reach out to suppliers later on in this module!

3.2 Choose Your Store's Branding & Domain Name

LEARN

It's typically easiest & best to have your made up brand name also be the domain name for your store. So as you brainstorm possible brand names, I recommend checking for domain name availability at NameCheap. (We typically try to get the .COM of our branding, but it's not totally necessary or all that important!)

Simply think about the topic or category of the product(s) you will be testing and try to think of a catchy, simple branding to use.

Choosing your branding

DOs:

  • Be descriptive: use words that describe your product niche
  • Keep it short: 4-16 characters is ideal
  • Use a non-sensical word or pun

DON'Ts:

  • Use a branding that's extremely similar to a successful brand in that market
  • Include the domain extension (in your logo or in mentions of your brand on your site)
  • Use a branding that's already been trademarked for use in that same market (search for active trademarks here)

Examples of good brand names:

  • 'Let's Go Cuckoo' for a cuckoo clocks store
  • 'Adored By Design' for a jewelry store
  • 'Everything Birds' for a parrot products store

As you can see, your branding doesn't have to be anything revolutionary or innovative, you can keep it very simple and to the point. All that really matters is that it's believable to your visitors.

Once you think of a good one that can also be registered at NameCheap for under $20, snag it.

Also keep in mind that with Shopify (the store platform we'll be using) you can easily change your domain name (aka brand name) in about 2 minutes, so it's not by any means the end of the world if you come up with a better branding later on!

EXECUTE

Verify that the branding of your choice has no trademarks registered within your general market. Then check for a NameCheap coupon code and register your chosen domain name.

HINT: Any coupon code you find on the NameCheap promos code will not work until you're signed into a free NameCheap account. So create your free NC account before you register your domain name.

3.3 Get Organized

LEARN

It's important to start off well organized. Between the usernames & passwords for new accounts you're going to set up, and the number of documents you will end up with here soon, it can get a bit overwhelming if you're not well organized from the beginning.

We'll start by setting up a free Google account. It's an absolute must because several tools we will use in the future are all contained within a Google account. For example, just off top of my head, we will use the following inside of a Google account: GMail, Google Drive, Google Docs, Google Analytics, Google AdWords, Google Search Console.

Once the Google account has been set up, we will then set up a simple "MASTER" spreadsheet within Google Sheets that contains a tab where we'll store our usernames & passwords for every account we set up. That "Master" sheet can then be expanded to contain tabs for everything important that you'd like to store, like an order log and details about your product suppliers. Then any physical documents can be stored in a Google Drive (another tool contained within your free Google account) folder.

EXECUTE

Create a Google Account

Create your Google account - There's also a video that walks you through this (which is part of our Watch Coach Build series, a video series on how to build your Shopify store, which we will be referencing a lot moving forward).

Create a "Master" Sheet

Then you should go to Google Drive and create your "Master" sheet following the steps in this video. This master sheet is where you will store your usernames & passwords, and other extremely important info about your business & store.

HINT: You should note the login details for the NameCheap account (that you created in the step above) within the Usernames & Passwords tab of this new master sheet. You can also move your niche/product ideas spreadsheet (that you created in Module 1) into a tab within this master sheet. Then also create a new tab in this master sheet for each new sheet we recommend creating in the remaining modules (i.e. your order log or list of suppliers).

3.4 Identify Suppliers & Establish Accounts

LEARN

Since the process of getting wholesale products from suppliers is a totally different process for each of the two store models, we will need another fork in the road here.

(If you are doing a model 2 store you can jump down to the steps for that store model here.)

Identify Suppliers & Establish Accounts - model 1

Step 1: Identify the brands being sold in your niche

Identifying what suppliers to attempt to set up with is pretty easy for model 1 stores, and it starts with determining which brands are most popular within your specific niche.

Start off by going to Google.com and doing a search for your main niche phrase (i.e. 'parrot cages') and look at the results. From there our goal is to identify the top 2-3 retailers that are selling that specific product type. We're talking specialty stores that rank high in Google and specialize in this specific product type!

Once you identify the top 2-3 retail niche stores that specialize in selling your selected niche products, jot down the names of all the brands those top retailers are selling. We will be using those brand names in the next step...

HINT: Typically niche retail sites will list the brands they carry in their main navigation menu or in a sidebar with their filtering options within the catalog section of the store. Occasionally you'll need to visit a bunch of products on the site and find the brand name of each on the actual product page, but this is rarely necessary.

Step 2: Identify the makers of each brand

So now that you have a list of the brands that are most popular within your niche online, we need to determine which manufacturer makes each of those brands. That's our starting point when it comes to sourcing, contacting the manufacturers of each brand directly.

Probably two-thirds of the time the brand name of the products matches the manufacturer's name, but sometimes the manufacturer's name is totally different from the brand name on the products (i.e. Avian Adventures, the popular brand of 'parrot cages' is manufactured by Midwest Homes For Pets).

Sometimes finding the manufacturer can be a bit tricky, but typically one of these Google searches (with a bit of reading through the websites that come up in the results) will uncover it:

If none of those searches uncover the manufacturer, try looking on the product pages (for that brand of product) of the top retailers in your niche. You will often times find a link to a warranty, manual, or sometimes you'll even find the manufacturer's website listed on images or graphics.

HINT: The following depends on how pliable your "moral compass" is... If you get desperate enough you can always reach out to a retailer of that brand of product and ask for the manufacturer's info for a warranty claim. Most of the time retailers are more than happy to give up that info rather than dealing with a problem themselves. :)

If you're not okay with that approach, you can always just purchase one of the manufacturer's products from a retailer. It'll almost certainly come with inserts that contain the manufacturer's contact info. You can even sell that product on your site later as an "open-box" item just to recoup most of what you spent!

Once you do finally determine who the manufacturer is, gather all the contact details you can gather for them. Typically it's as easy as cruising their site and looking for a contact us or about us page, and you can also enter their domain name at who.is and see if the company's contact details are published there.

Step 3: Prepare to reach out to manufacturers

So at this point you should have contact details for the manufacturer of each brand you'd like to attempt to source.

It's important to note that just because you know who manufactures a product doesn't mean they also wholesale the products that they manufacture. Often times a manufacturer doesn't work with retailers directly, they sell in bulk to distributors and those distributors are who sell to retailers like you & I. So keep that in mind as you prepare to contact a manufacturer.

Reaching out to a manufacturer for the first time can be a bit intimidating, but just remember that whoever is on the other end of the phone is just an individual (like yourself) who's simply doing their job. They don't feel like an "intimidating professional" at all, they are just punching a clock and doing whatever they're told to do each shift.

All of that said, it is smart to get 100% prepared before reaching out to potential wholesale suppliers for our store. The key prerequisites to have in place (as discussed in that guide I just linked to) are:

  • You should have a biz entity in place (or at least be registered as a sole proprietor in your state
  • You should have a resale tax permit from the state tax commission of whatever state you're registered in
  • You should have a business checking bank account (locally or online) for your new business entity
  • You should either have a debit card (Visa or MasterCard) in your business's name from the bank account or you should get a credit card in your business's name (it's also usually just fine to use a personal credit or debit card to begin with)
  • You should have a store name and domain name you can reference during the call and/or in the wholesaler application they provide
  • (Optional) It's smart to have a toll-free number in place (as discussed earlier in this module)
  • (Optional) It's smart to have an @storedomain.com email in place (as discussed earlier in this module)

I'd also recommend reading through this article with advice on contacting wholesale drop-ship suppliers, it's loaded with great advice that will make you feel more prepared to take that next step!

Time to get on the phone!

Now that you've gotten fully prepared to reach out, it's time to pick up the phone and call the manufacturer. I know it's a bit intimidating the first time, but I promise it's one of those things you'll look back at and laugh at yourself for being so intimidated once you've done it a few times!

It's important to note that you will not bat 1,000 here! I'd say at least 50% of manufacturers either do not work with retailers directly (they only sell to wholesale distributors) or they "aren't currently setting up dealer accounts."

The worst that can happen is that they tell you "no" - so you really don't have much to lose! So pick up that phone and make it happen! :)

HINT: It's not always 100% necessary to call the manufacturer to begin with. If their website lists a 'dealer application' or details on how to get wholesale prices you can utilize that to attempt to set up a wholesale account. That said, even when you fill out an online application, I recommend calling and following up. It shows "drive" on your part, and makes them more likely to get you set up.

If the manufacturer's rep denies you, be sure to ask for contact details for any & all distributors (aka "wholesalers") that buy in bulk from them. If you're able to get contact details for a distributor from the manufacturer, call them using the exact same approach discussed above.

HINT: Working with distributors is not all bad, it has its perks. The margins are typically about the same or a little worse than what you'd get by working with the manufacturer directly, but distributors often times carry all (or several) of the top brands in your specific niche market. So you can source multiple brands from a single drop-ship supplier.

If the manufacturer won't give you contact details for any of their distributors, you can always search for them yourself. Just head to Google and use search phrases like 'wholesale distributor of [BRAND_NAME] [PRODUCT_TYPE]' and comb through the results. Just beware of retailers who "pose" as wholesalers to get more traffic. You can tell because their "wholesale" prices will be about the same as retail prices.

Step 4: Establish an account

Setting up an account looks a bit different from supplier to supplier, but the basics are always the same. They'll always want your business details, a copy of your state resale tax permit, and your Tax ID (aka EIN).

Here's advice on how to handle challenging questions that frequently arise:

Question: Do you have references of other businesses you've worked with?

Answer: If this isn't your first store, provide the details for other wholesale suppliers you worked with in the past. If this is your first store, either provide the contact details for other suppliers you've just set up with or say "No references in this market yet, but I'm not looking for credit terms and am more than happy to give you a credit card that you can bill for each order prior to it leaving your warehouse."

Question: What is your current sales volume?

Answer: Say something like "This will be our first store in this market, but we've had very successful niche retail stores in other markets."

Question: What's your Tax ID?

Answer: This is confusing because it sounds like they're asking for your state tax resale permit but they are referring to your EIN when they ask this. (Often times they will want to see your state tax resale permit, but they typically want a copy of the scanned version.)

Question: What's your name & job title?

Answer: Since you are technically a member of your business entity, it typically makes the most sense to refer to yourself as 'CEO' or 'Manager'.

HINT: If anything comes up on an application that you are unsure of, ask about it in our FB Group and you'll definitely get input from some of our savvy, experienced e-commerce store owners (and maybe even one of us coaches!).

As previously mentioned, after you submit your application you should follow up the following business day (or ate that same day if you sent it in the AM) and verify that your dealer app made it to them, and simply ask if there's anything else you can do to get set up as quickly as possible (show excitement without being irritating!).

Step 4: Gather info necessary to verify margins

Once you establish an account with a wholesale supplier, it's time to gather the vital info you will need to work with them, starting with the what you'll need to verify that there are acceptable margins.

We start by verifying margins because if there aren't decent margins (good cash netted per order) there's really no reason to spend any more time on the supplier!

Here's what's needed to verify margins:

#1 - Product prices: that shows what your cost is on each product they offer

#2 - Shipping costs: that shows what you will have to pay to get product to your customers

#3 - Drop-ship fee: (or other fees) that are charged for each order they ship out on your behalf

Better suppliers will provide all of this info in the price list they give you (either a download or via access to a "dealer portal" on their site) right up front when you're approved. Less organized suppliers will need to be asked for this!

Step 5: Verify margins

Once you've gathered the vital info needed to verify margins it's time to just that. This supplemental training guide explains exactly how to determine what to sell your sourced products for and verify that there are margins.

Step 6: Remaining info needed

Now that you've verified margins and know you will be working with the supplier, we recommend adding a 'Suppliers' tab to your Project Master Google Sheet and use it to track all of the following info about each supplier:

Is the cost of shipping included in the product cost? Some suppliers include shipping in your wholesale cost, while others charge shipping separately. Like a drop-ship fee, this impacts your profit margin, and should be clarified before doing pricing analysis.

How and when do I pay you? Either you will be charged each time you place an order, or you will have credit terms with the supplier, allowing you to pay only every couple of weeks.

How do I place orders? Is email, website, phone, or fax their preferred method of order placement?

How are defective items handled? First, find out what the defect rate is. If it is more than 5%, this supplier might be one to pass over. Defective items should be replaced by the supplier at little or no cost to you or your customer. Make sure this is the case, and find out how it works and how return shipping is handled.

How often do products get damaged during shipping? Also ask if shipments are insured, and how the insurance claims are handled if the item is damaged during shipment.

How quickly are orders processed and shipped after the order is placed? With an eCommerce store, you are responsible for customer service. If you’d like to avoid frustrated customers, you need to ensure that orders are shipped within a reasonable time frame.

How is tracking information handled? Whether they send the shipment tracking information to you, or directly to the customer, make sure that this information is being provided within 3 business days of receiving your orders.

How are returns handled? Make sure the supplier accepts returns, and find out what their policy is regarding them. You’ll want to reflect their policy on your website to avoid being stuck with unwanted merchandise.

You will learn more along the way, but that should give you plenty of info to move on and start building your store's catalog.

Identify Suppliers & Establish Account(s) - model 2

Compared to model 1 stores, it's an absolute "piece of cake" to source products for model 2 stores! Unlike with model 1 where you're trying to talk traditional offline brand manufacturers to "drop-ship" products for your online customers, suppliers for model 2 stores are typically begging online retailers (like you) to work with them!

The vast majority of private label (aka "PL") products for model 2 stores are sourced via factories, so that's what we're going to focus on here in this section.

HINT: Keep in mind that you can also source PL products via other sources (i.e. POD (print-on-demand) services like Printify & PL bottlers like this). Most of the following will still apply to you if you go a non-AliExpress/Alibaba route for sourcing, but you'll have to use some common sense to determine which steps apply to you and which ones do not.

AliExpress or Alibaba

Most "hard goods" that can be private labeled are available on AliExpress.com and/or Alibaba.com, and that's why we're focusing on these websites for sourcing PL products. These two sites basically contain every product that can currently be manufactured by all of the factories in Asia (which, like it or not, is where most of the world's goods are made!).

If you want to private label a "hard good" it'll most likely be found at one of these two mega-sites. Almost all listed products are posted by factories and most of those companies have customization capabilities (or access to that!). If you find a product on one of those sites and reach out to the factory that posted it, they will almost always be willing to work with you on customizations & packaging.

What's the difference between Alibaba & AliExpress?

Alibaba contains all the products that are made by virtually every factory in Asia, and the purpose of the site is to basically be a "directory" where manufacturers (mainly in the US & Europe) can look up products they'd like to have made and then negotiate customizations & bulk orders. Most of the brand name products in the USA today were found by the US manufacturers on Alibaba originally, and the modifications (improvements & added branding) were made after the manufacturer-factory relationship was formed!

AliExpress (aka "AE") was originally built for the purpose of those same factories in Asia retailing one item at a time to the general public (mainly in the US & Europe) - basically as a way to move more product. However, it hasn't ever really taken off as a "retail" site with the general public and has now basically become a drop-ship superstore for retailers like us.

The two sites are "sister" sites and a single account can be used to go between the two of them. Virtually every product listed at either site can be purchased at "wholesale" (which is the price products are listed at already) and almost everything can be drop-shipped direct to customers as well (everything at AE can be!).

So why not just have these factories drop-ship everything direct to my customers?

Well because a) the products will be super generic and not unique or "improved" at all (and the unmodified products are typically terrible to begin with!), and b) shipping from China to the US takes a very long time (when the products make it, which isn't always the case!).

HINT: This is what virtually every other "drop-shipping course" on the web today teaches, and the model is deeply flawed! You will learn why this is not a good long term solution in the upcoming training here.

Every once in a while you'll find a truly amazing factory in China that will custom make products for you and drop-ship them 1-by-1 to your customers. And if you find that, that's great, but do not bank on it. For virtually every model 2 store we do we buy in (at least) "light bulk" and bring the product into our own fulfillment center (aka "FC").

Why? What advantages does bringing product into a FC give you?

Many, but these are the biggest...

  • You can make "tweaks" to the generic products and create something that's truly unique (and worth more to your customers!)
  • You can put your own brand & packaging together for your products
  • You can include inserts (with coupons and such) in the product packaging
  • Shipping takes days (rather than weeks!)
  • There are no stock outages or manufacturing delays when you monitor your own stock
  • You can create custom photos & videos of your products to make your ads more successful and your product pages convert better!

Our private label process flow

Before we get into the steps of sourcing private label products from factories, let's discuss the process flow we typically follow for this model of store. It obviously varies a bit from store-to-store, but we typically break the launch & marketing into these three general phases:

PHASE 1: Test for "winners"

We aways start off by selling the "core" (unmodified) product and having it drop-shipped by the factory (or source) until we're ready to move into PHASE 2. We give the illusion that the product is private labeled (by getting video & photos of a sample w/ our logo on it), but we don't actually make any modifications to the products being drop-shipped to customers yet.

We run limited pay-per-click advertising for each product (covered in Module 4) for about a week to see if it's a winner or not. We eliminate products that don't perform well during this "ad test", and we move into PHASE 2 for products that are winners.

PHASE 2: Bring in "light bulk" & start scaling ads

Once a product appears to be a winner (by performing well in ad tests) we immediately get the factory working on a small bulk order (i.e. 100 units). The products in this light bulk order should include some improvements and our brand logo (either on the product itself or the packaging the product is wrapped in).

HINT: It's easy to determine what improvements any given "base product" needs. Simply find the product (or an extremely similar one) on AliExpress.com, Amazon.com, or eBay.com and look at the negative reviews. You will find people complaining about the same issues repeatedly within the negative reviews on a product, and that's what you should focus on fixing.

We also recommend getting a sample of each product you intend to test out up front, and you can generally find ways the product (or its packaging) could be improved just by unpacking and using it.

Once these arrive at our fulfillment center we start to increase ad spend and test out additional paid advertising to drive even more targeted traffic to the winner products. If the product is continuing to sell well (aka positive ROI even with increased ad spend) it's time to start moving into PHASE 3.

PHASE 3: Go big!

Phase 3 is when we make an additional set of improvements (based on customer feedback and your own site's customer reviews) and begin ordering in larger volume (i.e. several hundred or even 1,000+ units at a time).

At this point we generally go full scale on PPC (pay-per-click) advertising and expand into Amazon with the product by creating an Amazon Seller profile and sending a major portion of our bulk orders from the factory to FBA (Fulfillment by Amazon).

The sky is the limit in Phase 3, you can continuously make improvements to your product with each bulk order, and you can test every known advertising portal and product marketplace. We've had single products clear 6-figures monthly in PHASE 3.

I get it, so how do I get started?

Step 1: Identify the factories that make your product

To identify factories that make the product you would like to private label, simply go to AliExpress.com (you can try Alibaba.com if the results aren't good at AE!) and search using words from the product's title (this is the product title for the product you originally saved in your product ideas sheet in Section 1.4 of Module 1).

Using an example search for stainless steel apple cutter at AE gives you results that look like this:

AliExpress.com search results for stainless steel apple cutters

Step 2: Gather data on the factories

find the factory's name on an AliExpress search results pageNow start a new tab in your Project Master Google sheet and label it 'suppliers' or 'factories'. Add a row for each factory listed that makes the same product (or extremely similar ones).

The name of the store (aka the Factory's store name on AE) is always listed below each product on the AE search results pages. So you can snag the factory's name and the URL of their store page on AE from here. (This should be the first two columns in your new sheet in your Project Master: Factory Name (column A), and AE Store URL (column B).

For column C you can list the product name and hyperlink the product name to the product page on AE, and for column D you can list the price (with shipping) to you (determined by opening the product page and selecting any necessary options).

I'd also note the # sold for each product you add to your sheet (this is shown directly above the factory's store name), the customer rating (out of 5, if applicable), and the feedback score the factory has on AE (this is found at the top of the page when you click the factory's store name).

HINT: If you're able to determine what keywords bring up only the product you're researching in the AE search results, it's quite helpful to sort by 'Orders' and see the products in order of most-to-least orders placed (which you can do by clicking the 'Orders' link in the 'Sort by' selector at the top of the page). If certain factories are selling the product far better than the others there's typically good reason for that!

Step 3: Reach out to your 4-5 favorites

Once you've compiled a list of all the factories that produce your product, it's time to reach out to the 4-5 that look the most promising to you. You don't need to overcomplicate this, just choose the 4-5 that seem like they have the best combo of factory feedback rating / units sold / product price delivered / product rating (although it's usually faked so don't put too much stock into that metric!).

Once you've selected your 4-5 favorites to reach out to it's time to send a message to each of them. (You can find the 'Contact Now' link by hovering over the factory's name at the top of the factory's store page on AE. It should also be available on the product page within the store's bio box.)

The goal is to a) introduce yourself, b) make sure they drop-ship, c) see if they can go lower on the price, and d) just to see if they actually reply in a reasonable amount of time (this says a lot about how organized they are, and how reliable they'll be to work with!).

You can use this template if you'd like:

======SAMPLE MESSAGE START======
Hi _FACTORY_NAME_, my name is _YOUR_NAME_ and I'm the owner of _YOUR_STORE_NAME_, a retailer of _PRODUCT_TYPE_ in _COUNTRY_YOU'RE_IN_. I'm interested in adding _PRODUCT_PAGE_URL_ to our online store. If sales go well and the margin is good, we will order these in bulk from you in the future, but for now while we are testing sales we would like you to drop-ship them to our customers here in _COUNTRY_YOU_MARKET_TO_.

Are you able to provide drop-ship service for my company? If yes, please confirm that you can ship all drop-ship orders via ePacket (or similar) for fast delivery, and also please confirm the very lowest price you can provide per unit with delivery included to my customer.

I look forward to working with your company, and I will provide my email in my signature below if you'd like to speak directly about this arrangement.

Thank you for your time.

_YOUR_NAME_
Owner: _YOUR_STORE_NAME_ Email: _YOUR_BIZ_EMAIL_
======SAMPLE MESSAGE END======

Note: Everything in red needs to be updated from message-to-message.

HINT: The reason we bring up "ePacket" shipping in the message to the factory is because that's the fastest shipping method (2-3 weeks) on AE that doesn't cost an arm and a leg! If you let them ship via 'standard' or 'sea' shipping, it'll literally take 6-8 weeks for your packages to make it to your customers in the US, so this is an absolute must!

Step 4: Solidify relationship with factories

Once the factories reply and you're in communication with them, make sure to cover the following:

  • Ask for a free sample of the product to be sent to you so you can take photos & video (with your logo on it) for your website. (FYI, they typically won't do this for you but it's worth asking!)
  • Ask how they'd prefer that you place orders with them. (If they are giving you better pricing than what they have published on AE you will need to ask for either a hidden (i.e. not public) AE website address that shows the better price or a coupon code to get the discount on their public product page.)
  • If they don't assign you one, ask for contact details (email & Skype username) of the person you should speak with regarding problems, customizations, bulk orders, etc.

All data that you acquire from the factories should go into the "suppliers" tab that you previously added to your Project Master Google sheet. I'd also recommend highlighting the factory (or factories) in your sheet that make it through all of this questioning and seem promising.

Ideally you'll have at least two factories you can buy the product from, just in case one stops producing it or temporarily runs out of stock (it's smart to have a back up!). It's also important to note that if the product you've sourced is a winner and you're ready to customize it and order in light bulk, it's nice to have a couple factories to get quotes from (and to play against one another!).

Step 5: Order samples & gather media

Before you delete the factories you aren't going to work with from the "Suppliers" tab you added to your project master Google sheet, I recommend cruising through the AE product pages for all suppliers and saving any & all worthwhile media (photos, videos, explainer graphics, etc.) to your computer or a Google Drive folder (within the Google account you created for this project). The more you have to choose from when you go to build your product page in Shopify, the better!

If none of the factories were willing to send a free sample to you, place an order for one and get it headed your way. You need to get a sample in hand so you can get custom photos & video of the product with your logo on it (for your paid ads and your store's product page). We do this because it greatly increases the chances of your product passing the "ad test" you do in phase 1. You really cannot build your product pages out (in the next module) and start your paid advertising (in Module 4) until you have these custom photos & video.

HINT: Use a shipping method no slower than ePacket when you order your sample from the factory or you'll be waiting an eternity for it! In fact, if you have the funds you may want to pay for FedEx or DHL shipping to get it within a week!
EXECUTE

Establish Supplier Accounts - model 1

  1. Identify the brands that are available in your chosen niche
  2. Find the manufacturers that manufacture those brands
  3. Contact the manufacturers (or their distributors) and establish dealer accounts
  4. Verify that there are margins on the products you source from manufacturers and/or distributors you establish accounts with
  5. Gather price lists and get a good understanding of the policies for each supplier you establish an account with

Establish Supplier Accounts - model 2

  1. Identify the factories that make the product you'd like to private label
  2. Determine which 4-5 factories seem most solid and reach out to each of them
  3. Establish relationships with at least 2 factories who will drop-ship the product
  4. Get a sample and create custom photos & video of it with your brand logo attached
HINT: It's important to note that with a model 2 store you must go through thee steps for each and every product you plan to have in your store's opening catalog.
NextModule 4: Build Your Online Store

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