Your business profits will largely depend on the cost of sourcing your products. Lowering product sourcing expenses will result in bigger profits if all other factors remain constant. For this reason, it is in your best interest to lower product sourcing expenses.
So, how should you go about reducing the costs of sourcing for your business products? What tactics should you implement?
1. Research and Compare
When it comes to product sourcing, doing your research and comparing prices is important. You shouldn't just select the first supplier that you come across. Doing so could have very severe financial repercussions on your business in the future.
Research allows you to know what your supplier options are. You can then compare the prices of the supplier products relative to time before making your decisions. That is how you get to keep more money in your pocket!
2. Cut the Middleman
Where possible, you should try to go straight to the source for products for your business. While it can be a challenge to get your products or materials directly from the manufacturer, it is not impossible. If your business can guarantee the manufacturers a steady demand and large volume orders, you are more likely to get your products straight from the source. If you sell those products at retail prices, you stand to make bigger profit margins.
The only intermediary that you should be willing to work with is the wholesale supplier. Wholesale prices of products are usually significantly lower than the market price. For that reason, the wholesale stock that you purchase can reduce your product sourcing expenses significantly.
3. Buy Larger Volumes
The larger the volumes of products that you buy from the source, the more likely you are to receive discounts. This will go a long way towards helping you cut down on product sourcing costs.
Therefore, if you have warehousing facilities, and intend to sell non-perishable and time-independent products, do consider buying huge volumes of stock from your business suppliers. The savings that you make cannot be underestimated.
Bargaining and effective negotiation is a skill that you must develop if your business relies on trading. You should not be ashamed of negotiating with your product suppliers and manufacturers, especially if you have, or intend to have, a long-term relationship with them.
It never hurts to ask for discounts – sometimes you can get lucky and the price of the products that you intend to buy may be lowered significantly by the sellers. In any case, what is the worst that can happen? If the sellers say no, there will be no harm done.
5. Be Opportunistic
Fortune favors the bold. This saying holds true for entrepreneurs. One of the opportunities that you should always be on the lookout for is an overstock-buying opportunity. If you are aware of companies that are looking to sell their stock for the previous season, and you have a market for those products, buy them. In fact, take advantage of the sellers’ desperation and negotiate for lower product prices before buying what you need.
If you see any other opportunities for obtaining products for sale at much lower prices than usual, take advantage of them. While such opportunities may be one-off, they will help your business lower the expenses of product sourcing in the end.
As long as what you do is ethical and legal, do not be afraid of using any method to lower your product sourcing expenses. Your bottom line will certainly benefit, which will in turn ensure that you get to laugh all the way to the bank.