When running a business, one of the big choices you must make is where to get your goods or services. Do you stick with suppliers from your own country, or do you look for deals worldwide? This is the choice between domestic suppliers and global sourcing.
Each option has its own set of pros and cons that can affect your business in different ways. So, let’s take a closer look at both choices to help you determine what might work best for your business.
What is a Domestic Supplier?
A domestic supplier is like a local store. It’s a business that provides raw materials, products, or services to other businesses or customers in the same country.
Pros of Domestic Suppliers
Here are the main reasons to choose to work with domestic suppliers:
- Cost-effectiveness: Generally, the cost is lower than importing from other countries due to the lower shipping fees.
- Shorter lead time: With no customs delays or issues with quality control, you can be sure that your product will arrive on time and in good condition.
- The same time zone: Domestic suppliers are more likely to be available during your business hours.
- More options to get support: You may even be able to visit their offices in person if you have a complex issue. If they’re not able to help you immediately, they may be able to refer you to someone who can.
- The benefits of local knowledge: If you’re working with a domestic supplier, chances are they know the area very well. This can come in handy when navigating government regulations or finding out about new developments in your industry.
Cons of Domestic Suppliers
Now that you know what benefits opting for domestic sourcing can bring, let’s turn to the risks that it involves.
- Insufficient level of expertise: Domestic suppliers generally don’t have the same level of specialization and skills as international companies in their field.
- Potentially poor customer service: They may not be able to provide the same level and multichannel options of customer service.
- No global reach: This is one of the major cons of working with domestic suppliers. If you are looking to expand your business globally, then it may not be a good idea to work with domestic suppliers as they will not be able to cater to your needs. They may also lack experience in the industry’s global trends.
- Poor quality control: Another reason why it isn’t always advisable to work with domestic suppliers is that they tend to have poor quality control systems in place. So, there’s no guarantee that the products or services they deliver will live up to your expectations or standards when it comes down to quality control.
Given these advantages and disadvantages of sourcing locally, you may be wondering what the other option entails. Here we go.
What is Global Sourcing?
Global sourcing is like shopping around the world for the best deal. Companies use it to buy goods and services from different countries. This is often done to save money, as some countries may offer cheaper raw materials or labor. For instance, a company might buy materials from a country where they’re cheaper or hire workers from a country with lower wages.
But it’s not just about saving money. Global sourcing can also give companies access to skills, resources, and technology they can’t find at home.
Think about it like this: some companies set up their call centers in countries like India and the Philippines. This type of global sourcing is called Business Process Outsourcing (BPO). These countries have many skilled workers, but their wages are often lower. This means companies can provide good customer service at a lower cost.
Pros of Global Sourcing
Why would you opt for sourcing internationally?
- A wide product range at competitive prices: Global sourcing offers a great variety of products. You can choose to work with suppliers from low-cost countries that offer unbeatable product prices (like China, Bolivia, Indonesia, India, Brazil, or Eastern European countries).
- Potentially better customer service: Some companies have outstanding customer service no matter where they’re located. Moreover, most international suppliers are used to doing business with customers from around the world and may be able to provide better service as a result.
- Enhanced production capacities: One of the biggest benefits of using an international supplier is that they tend to have more flexible production schedules than domestic companies (especially if you’re buying in bulk). If your company needs products faster than your local vendor can deliver, an overseas provider may be able to supply them in line with your schedule. And this brings us to the next point.
- Scalability: By partnering with an international company, you can provide for increased product demands and expand your business.
- Diversity: You get access to a wider range of products and services, which means you can have exactly what you need.
After all these benefits, where’s the catch?
Cons of Global Sourcing
There are some drawbacks to partnering with an international supplier.
- Cost of shipping: Shipping costs can be a significant part of the cost of goods, especially when importing from a distance or from multiple suppliers in different geographic locations. It’s important to factor these into your pricing model, so you can accurately compare costs with other suppliers.
- Longer lead time: It may also take longer to get the order delivered. The time taken depends on the mode of shipping and customs clearance procedures, if any. Note that you may not be able to get your product on time or at all if there is a problem with customs or shipping.
- Risk of scams: You need to make sure that you have done your research well before choosing a supplier from another country so that you don’t end up with the wrong product or service at an exorbitant price.
- Challenges of operating in different time zones: Communication, scheduling meetings, and receiving customer support may be difficult due to time zone differences.
So, taking into account all these advantages and disadvantages of working with a domestic and international supplier, you can decide which is the better option for your specific needs.
Product Sourcing FAQs
Can I source products from the USA?
Yes, definitely. As we mentioned above, ThomasNet and Worldwide Brands are USA based, so you can contact them and source from them.
How long does it take to ship products from China?
The answer depends on where you’re shipping to and what kind of goods you’re shipping.
If you’re based in the US, it will take:
- 1-2 weeks for a package to arrive when sent by regular post,
- 3 days for air express freight,
- 8-10 days for air freight
- Up to 40 days on the high seas with ocean freight.
The product type also affects shipping times. Smaller items that are easy to pack and ship typically take less time than larger items.
Where do online sellers get their products?
Online sellers can get their products from a number of different places. Here are some of the most common:
- Manufacturers: Many online sellers work directly with manufacturers and have close relationships with them. They may even be able to visit the factory to inspect products before they’re made available on their websites. The advantage of this is that you can get exactly what you want in terms of size and color, as well as how it’s packaged.
- Distributors: Distributors are companies that buy large quantities of items from manufacturers and then sell them to multiple retailers at once.
- Wholesalers: Wholesalers buy from manufacturers in large quantities and then resell these products to retailers or other wholesalers. They also might sell directly to the public, but this is less common.
What are some of the best products to sell online?
The best products to sell online are the ones that people want and need.
The best way to figure this out? Set up a survey and ask your customers.
Also, doing eCommerce keyword research can go a long way in helping you feel the pulse of buyers. You can use tools like Google Trends and Trendhunter to see how popular certain keywords are. Trending product blogs can also be a source of valuable ideas.
To learn the ropes of the art of finding the best products to sell online, check out our dedicated guide.
How can I sell my products online?
Before you start selling, you need to have a clear idea of what you want to sell and how you plan to sell it. In short, there are several steps that will help you get started.
- Decide where you’ll be selling your products. For example, you can start with online marketplaces like Etsy, Amazon, or eBay.
- Build your online store with platforms like Shopify, Bigcommerce, Magento, and Squarespace.
- Choose the right shipping method.
- Choose which social media you’ll be promoting your products.
- Set up payment processing. The most popular option is Stripe.
- Continually work on the quality of your product and make it better for your customers.
