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Episode 3: eCommerce Sourcing Models (and Which One is Right For You)

August 09, 2018 / Chris Lema

Description

Description


Creating a great-looking digital storefront is easier than ever before, but the work of launching a thriving eCommerce business doesn’t stop there. You have to fill that store with products that your audience has shown a demonstrated need or interest for.

So, how can you accomplish that for yourself or your clients?


Do you get into the manufacturing business and produce your own goods? Do you hit the market and find products that you can sell as an affiliate? Do you find generic products that you can re-brand or white label?

Each options comes with its own set of merits and flaws, so we produced this episode to help you determine which eCommerce sourcing model is right for your situation. We talk about the most common strategies for creating or sourcing products, equip you with information to help your clients make an educated decision, and share a few resources for getting the process started
quickly and painlessly.

Which eCommerce sourcing model is right for you or your clients? We’ll help you decide in this episode of the Store Builders podcast. Click to Tweet


Key Takeaways

There Are Two Primary Types of Customers You Have to Think About


As a Store Builder, you’re going to be dealing with two types of customers – the Curator and the Creator.

The Curator has an existing audience that they want to leverage to sell pre-existing products that are produced by other people. Think of a men’s fashion blogger who wants to promote his favorite shoes, watches, ties, etc.

The Creator is someone who has a strong brand and/or messaging that they want to leverage to create custom products that will appeal to their audience. Think of a private membership community that wants to put their logo/slogan on t-shirts, stickers, or mugs.

We talk about how to identify which situation your client is in and what implications that might have for the sourcing model you recommend.

Dropshipping Isn’t All It’s Cracked Up to Be


When people talk about sourcing items for an eCommerce store, the conversation usually turns to dropshipping pretty quickly. Chris helps me understand the truth behind the dropshipping model and why it’s probably not in the best interests of you or your clients.

You’ll want to listen closely to this part of our discussion, because it provides plenty of material for your next strategy call or store builder meet-up.

Getting Started Is Quick and Easy


Most importantly, all of the sourcing recommendations we make are easy to integrate with popular platforms like Shopify or WooCommerce. You can plug into existing directories of physical goods and, if necessary, customize them to meet the needs of your clients.

Now that you don’t have the overhead of solving annoying technical challenges, you can have more strategic conversations with your clients and start delivering value in other areas of their business. Establish yourself as a trusted advisor rather than a technician and your balance sheet will thank you for it.

Transcript



Welcome to the Store Builders podcast: the place where we talk to industry experts and successful store owners about what it takes to build a thriving e-commerce business. Every episode, we deliver the raw unfiltered recommendations that will catapult your store to new heights. Ready to get serious about expanding your e-commerce empire? Well then, let's get to work!


Hey everyone. Welcome back to another episode of the StoreBuilders podcast. I have another great conversation with Mr. Chris Lema for you today. If you are a store owner, an e-commerce store owner, or a store builder, eventually after you've developed your store, you'll have to fill it with products that your potential customers actually want. So today is all about a handful of sourcing models that you can use to not only generate that product inventory, but also make sure that they are products that your potential customers actually want. We're going to talk about a couple of popular formats as far as custom products versus white labeled versus just tapping into an existing directory of generic products that have been curated for your specific audience. We're going to talk about how to quickly tap into those existing directories so that you can stand something up right away and begin iterating on that first version so that you can get to that product market fit, that sweet spot that we're always talking about. And then most importantly, we're gonna talk about the criteria and considerations that you should be thinking about as you're evaluating a potential sourcing model to make the definitive decision for which one is the best for you and your client. That's all that we're gonna be covering today. I'm really excited for you to hear this conversation. And as always, I'll be around at the end of the show to wrap up things with final thoughts and include any of the resources that we discussed.


Hey everybody. Welcome back to the StoreBuilders podcast. My name is James Sowers and I'm joined as always by Mr. Chris Lema. Chris, how are things going on your end?


I'm doing good. It's good to see ya.


Yeah. Good to see you too. Looking forward to the conversation we have today, which is all about eCommerce sourcing models and figuring out which one is right for you and your clients. So I think the best place to start for the listeners at home who may or may not be familiar with what's available out there is just the different types of sourcing models. When we say that, what we really mean is that you have this store and you need to get products from somewhere. You're either making them yourself, or you're trying into some kind of marketplace where you can dropship. So let's talk about what's available to people out there as far as getting products into their store.


That's great. So if you're a software developer, if you're a freelancer, or an agency, if you're building stores, people will often show up saying, “I have this great idea for a store.” And the very next question you ask them is, “tell me about your products”


And they say, “No, I heard I could create a store without having all the products, right. I thought I could create a store and create the product.” And so, you realize there's really two kinds of customers that you have to think about when you're recommending solutions. And it's understanding those two kinds of customers that will impact how you think about what solutions you want to look at.


So one kind of customer is the one who says, “I wanna build a store with other people's products. I want to sell pre-finished, pre-created products, and I would love it if I didn't have to worry about fulfillment. If I could just collect the orders and ship it out and you go, okay, that's one model.


The other being when someone says, “I wanna create custom products that are pre-existing products with my customization,” which is different because now you're not talking about selling the latest jewelry or the latest watch. You're saying, “No, I wanna sell a mug or a t-shirt or poster or something, but with my slogan on it.” Last year in the middle of politics and Congress and testimony, someone said, “Nevertheless, she persisted.” And then suddenly someone went and created a t-shirt that said, “Nevertheless, she persisted.” That t-shirt didn't exist before. So it's not like you could have gone to someone and said, Hey, I want to source that product and then sell it. It's being created by you deciding what color shirt and maybe who the shirt manufacturer is, and then taking your slogan or your design and putting it on and shipping it out. I think overnight, the guy who created that t-shirt sold thousands, because he had plugged it into Teespring and was just like, I put it up there. I put it on my side. I put it on social and who knew it would happen.


So two different models. One model is someone else's product that's just getting delivered, and the second model is a co-created or co-design product where you are customizing something pre-existing and then getting that out. How your customer tells you what they want and how you hear that will then impact the kind of choices that you're thinking about now.


I will say this, there's a lot of people out there that have been told or have been shared with the promise of just dropshipping will solve it. And when you hear drop shipping, what you're talking about is that first case where you go, I can connect up to someone's catalog. I can pick the catalog items, put it into my store, have people buy it and have that vendor automatically package it and ship it to the customer because my store sends the data to them. They do the automatic fulfillment. That means I don't have to do anything and it's super fast and easy. Except in order to win that game, when everybody is selling the same thing, you are gonna have to get creative.


So imagine you're selling the blue sweatshirt that's super soft. But 10,000 other people are also selling the blue sweatshirt that's super soft. Then the question is who has the most marketing budget to buy the most Facebook ads to be the one that they see. If you're a store builder and a customer comes in and says, “I wanna use this stuff.” One of the challenges is that you have to push back. “Well, do you have an infinite marketing spend or do you have a strategy for how you're gonna do it,” because choosing Oberlo or AliExpress or any of these guys, will solve the technical part. It won't solve the marketing part. And you may think, “Well, my job is just to make sure it exists,” but really when you're building stores, you're building stores that are businesses and that means you're building stores and businesses that function, that succeed. And to that end, you want to make sure that you understand what's going on.


So, when you're looking at one of the options, you can go to Oberlo.com and you will find that they have a very, very simple system. Like I mentioned, you can pick the products that you want. You can bring those products in. You can see which products are featured and that they're recommending to you, but you can pick these products. You can get them in your store. And you can deal with and you can evaluate how you wanna process the shipping settings. You bring that into your store, get it configured. And then it goes out.


Here's the problem though. Amazon has kind of hosed it for us. And, I wanna be clear. This is not an Oberlo problem, because if you use AliExpress, same kind of thing, you can go to AliExpress.com and you can take a look at the ridiculous quantity of products that they share, that you could put on your store. Pick the products you want, put 'em in your store, make 'em available, let customers come buy ‘em. The challenge is of course there's no exclusivity dynamics here. Anytime you get stuff put on your store or the store you're building for a customer, your customer’s competitors can put the same products on there.


The other dynamic is we've all been spoiled as consumers by Amazon. When you've been spoiled by Amazon, you tend to think of things like, “Can I get it in a day or two?” That's not what's gonna happen. If you are working with a vendor, who's gonna ship it from another country and it's going to take 14 days to get to you.


So the challenge is not the partners. You can use Oberlo, you can use AliExpress. ShipBob has a whole other plan. ShipBob, you can look at those guys and their model is a little different, because they're trying to get fast shipping. They're trying to solve Oberlo, AliExpress with, “let's figure out how to choose these things to get shipping faster.” But the problem at the core is when you're working with fulfillment partners from another country, it's gonna take a long time to ship. You're gonna have customers struggle with buying those products.


So those are two options in that first category. Let's jump to the other category that runs way faster, or can run way faster if you're using the right partners. That's when you're creating products. And actually, before I get to that second part, here's where the first group does work, not when you're trying to create a big product catalog but when you're running a regular site. So if your customer has a very high-performing blog or marketing site that talks about all sorts of fitness or coaching or psychology for example. If you have a regular blog, that's got a tremendous amount of traffic, and then you create a store with three products, like now it's the fact that you've hand chosen very specific products to your space. Then people will wait two weeks. They'd wait six weeks, they'd wait 20 weeks. Because it's the right product in connection with the rest of the stuff you're offering and that you are recommending and then the right gym bag or the right calculator or the right whatever makes sense. So that first group can work.


It just works a lot better when it's tied to the rest of what a company's doing and not just a big, I have a store cuz people can just go look at other stores for that.


So you need that existing authority and that trust you've already built up through educating them about the niche. And then when you kind of plug the product, they already trust you. And they say, I'm willing to wait two weeks because Chris said, this is great and I trust it.


Exactly and that model does work. So if you are in men's fashion and you write a men's fashion blog. And then you click on the store and it has one wallet, one belt. And you're like, “Everything they've described, they've been picking on all these things over and over again. And now I come over here and they have one pair of leather boots. I've read so many articles that now I want those boots.” And if they tell me these leather boots are going to take two weeks to get here, I'm like, I don't care. I want these leather boots. So in that authority driven dynamic. Working with a partner can be very, very helpful, even if they're remote and will take a while because authority is what carries that trust dynamic.


So that's one half. For stores when you have customers that are showing up and saying, “Hey, I wanna store and I have this idea and I wanna just get this going.” There is a great way to do that with platforms, Shopify, WooCommerce. Great way to integrate it with someone who's going to not only create the product, fulfill the product, produce the product, but they're gonna also ship it. And then you look at companies like Printful and ScalablePress, and both of them have this model. The original models were just like the technology to print on material. Now, some of these are going to embroidery as well, custom stitching. So you have some options there. And you can look at each of their catalogs. Each of their catalogs are a little different. But when you look at these catalogs, you have things from t-shirts to sweatshirts. You have hats, you have beanies, you have tote bags, backpacks, iPhone cases, posters. So you get a lot of different options. But in this case, you go to that store and you upload your designs. You upload the “nevertheless she persisted”, or it might be a logo. And you put the logo there and then you say, “put this logo on these products, these sites, whatever. And then it will do a connection back to your e-commerce platform and load the products up.”


And then the beautiful thing is, it'll integrate taxes. It will integrate shipping costs, it'll integrate stickers, or change the label on the actual invoice or change the sticker on the box. You can give that to them, give them what they wanna print. They'll print that. And they will take care of not only the order processing but they'll also ship everything. So you literally don't have to do a thing, other than create the designs and then publish it over to your site. So that's a second model. And for if, when you have a customer who says, “I have this idea, I wanna do this.” Oh, it could not be easier and faster to really create a custom store using someone like Printful or ScalablePress.


And the beautiful thing is when you're just getting started, when you're working with that customer and the customer says, “Yeah, I don't know if I like that hat or I don't know if I like that shirt or I don't know if that shirt is soft enough.” You can go straight into their platforms and say, “Send me a sample,” and it'll be a significantly discounted product. They'll ship it to you so that you can go, “This is something I thought, or this is the size, the way that I thought. And yes, now I'm ready to put it in my store.”


So in those two models, it almost sounds like the first model is really built on that authority and trust that we talked about, but the second model is better for a client that maybe their value proposition to their audience is the brand and the messaging they have. I have this brand and this personality to what I do that people love. And I want to start putting that on products or use that to create products that are unique to me, and I want to put those products in front of my audience. So that sounds like maybe that's one of the determining factors that a store builder would have when they're talking to a client about which way to go.


And I can't tell you the number of people who have blogs, websites, courses, physical regimens and they have enough brand equity and you just look at 'em and you go, “So how did people carry your brand around? Like do you offer hats or t-shirts?” And they're like, “No, I never have, it's just too complicated.” It doesn't have to be.


When you look at someone like Printful, when you integrate it to your store, you will charge the customer. So let's say you set the price of the t-shirt at $20. You'll charge 20. The order will go through automatically in the background to Printful, who will charge you whatever its cost base is. So let's say 14. And so it'll go like you get in 20, you pay 14 and you keep the 6. At ScalablePress, you collect the 20, then they ship the product at the end of the month and they invoice you for however much you sell. So you also potentially keep a little bit of the benefit of holding that money in your account a little bit longer. You don't have to put your brand as the main part of the shirt. Let’s say you are a blogger that did reviews of diets, and so you create a t-shirt that says this year is my cheat year. People who know cheat days. They would immediately grasp that this is my cheat month, or this is my cheat year, so they would laugh. But then you have right below it the website or the logo for the website. And now people are wanting that shirt, and now you're sending the traffic to the website per person, by person. They see it cause they like it, that's a funny design. “I like that.” They go, they take a picture, they go look it up. Now they buy the shirt. Now they're proselytizing the same message. And all the while you're getting paid for this. So it's a very, very powerful model even if you are just getting started as a store builder, and if your customer is just getting started in e-commerce. Creating a branded store where they can just buy products that have the brand can be a very easy first step into eCommerce.


I think that's really the teaching point here. The learning point is that, regardless of which of these two paths you end up going down, there is an easy to use solution for either one and gone are the days where you have to go hit the street and knock on doors and try to find a manufacturer and a fulfillment, and storage and inventory management software and all that. It's all kind of packaged up for you and whatever you decide is the right path, you can get something spun up today or at least over a weekend. You can be off and running and iterating and improving and trying to grow that. So, I think that's the good news here.


And I think really what we wanna make sure that we go into is: How do you talk to your clients and evaluate the different criteria that might help you make the decision between which platform and which sourcing model might be right for you and your client?


So the beautiful thing is if you're using a larger known eCommerce platform. The two that I point to as two slightly different models, one is a platform and one as a DIY product. If you're using WooCommerce or Shopify, for example, you will be able to go to Printful or ScalablePress, and they will have the connectors, the API calls to do it. So that as a store builder, you're like, “This is easy. They gave me the instructions. I set it up and I'm done.” So that's the good news. It's really easy to do that. And in the Oberlo or the AliExpress, there are plugins, there are code bases that you add in or sites that you connect to do that as well. So, if I'm talking to your store builder and saying, “Hey, do you need to be scared of this?”, the good news is you do not. Unlike other things, if someone said, “I wanna create a whole B2B marketplace inside of either of those platforms,” you're like, “This is gonna be a lot of development work.”


But if you're a store builder, who's looking at sourcing the product, alternative models to get stores started, whether you are using Oberlo or AliExpress or whether you're using ScalablePress or Printful, the reality is this is lightweight for you. So the real thing you spend time on here is not the technical underpinnings of this. The real dynamic is talking to your customer and understanding what you're trying to do now, The kind of person that says I'm authority, and I wanna create, I wanna sell a couple products that are tied to that authority. Now, the things you're trying to sell, are they things you can find at another store? Are you using your authority to isolate the specific product that you want to sell? Are you doing that or are you saying, “I want to create a hat and I want my brand because I'm an authority on the hat.”


So as an authority, what are you trying to do? Are you trying to filter out and get your unique product out or as an authority, are you trying to leverage your brand? That's if you're an authority. If you're not an authority in a particular space, you're not writing an authority blog. You're like, “I'm just popular.” I have a product and I wouldn't say I'm an authority in fitness, but my fitness calendar seems to work or my calendar app. Like these things just work and you go, “You have a strong brand. Do you want to filter out and get to a core product that you recommend because of your audience? Or do you want to leverage your brand to create a product?” The question is the same in both cases. It's just how you start that off. Some customers will say, “I sell blenders. This is what I do.” And you go, “Great. If you sell blenders, what about all these accessories for blenders? Can you create a little store that has a bunch of accessories?” Like you can go and isolate these and put your logo on it, and sell it on your store, or you can go create branded products.


I think really what we're talking about is once you have that strategic discussion with your client and you figure out what business outcome do you want to generate from standing up an e-commerce store, then I guess some of the next things would be a little bit of those logistical items. Like you said, you can get a sample and make sure the product quality is where you want it to be. And look at those shipping times and look at the selection of products that they have and make sure that they have those three items that that authority figure is trying to recommend. So that might be the final decision factor. And then as far as the integration goes, it's lightweight. You don't have to worry about development time or any kind of technical concerns as far as plugging these things in. They're really something that you can spin out in a day. And a lot of times they provide a lot of the creative for the products as well, like product images and descriptions and specifications. They kind of port those over for you. So you really can deliver outstanding results for your clients in a day or two, and really look like a seasoned expert, as long as you do that front end work to figure out what the final outcome your client's looking for is.


That's exactly right. And I will say there's a caveat. There's a third kind of person who says, “I build my own product. I have my own stuff.” Just to say ShipBob and Amazon fulfillment are both players that play in that space that are trying to store your stuff, hold your stuff and do the fulfillment and ship it out so that we can get that tight turnaround to one or two days, to compete with what essentially Amazon has said is a standard for everyone. If you build your own products, you can get it all over to ShipBob, or get it all to fulfillment by Amazon, and you have another way to integrate stores to do that. It's slightly different because you have your own product, but those two play a little bit differently. But you may be in a place where you've sourced and gotten everything in bulk and then you're like, “Let me go put it to one of these guys so that I can get out of it and just let those guys handle automatic fulfillment.”


So I think we covered just about everything that you could ask about sourcing models today. I mean, we talked about this authority model where you're kind of curating and making recommendations to an existing audience. And then we talked about the customized model where it's your brand, your voice, your message that your audience already knows and loves. And you're taking that and kind of productizing that and putting that into items, tangible items that they can purchase and bring into their own possession and use it to promote your brand.

And then we talked about some of the platforms like AliExpress, Oberlo, Printful, and some of the ways to quickly make that decision and find out which one's right for you and integrate it with the platform.


Man, I think that's just a ton of value we delivered for our listeners today. Chris, thank you so much for your insight. Is there anything that you wanna leave folks with and otherwise we'll look forward to the next episode and I'm sure we'll have something great for 'em.


I think the biggest deal is to test it out, to try it out. If you're a developer and I talk to store builders all the time, who are like, “Well, I just didn't know. I didn't know if that would work or how that would play out.” I'd say in the last two or three years, I've helped probably a hundred developers create sample Printful stores. And then they're like, ‘Oh my God, this was so crazy.” And you go, “Yeah, because it was that easy.” We took an image, uploaded it to Printful. They will automatically create your sample product images for your website. So we just uploaded the image, picked the product, color, size, and loaded it all into WooCommerce. And then we said, “Hey, let's go buy one.” And then, a handful of days later, I was wearing the shirt.


So my encouragement to store builders is to try it. Test it out before your customer ever shows up. Try it out so that you're comfortable and you realize, the fear factor here is mostly just the unknown. And when I get rid of that, I'm able to have a good conversation with my customers.


Perfect. I think if nothing else, go back and listen to this episode, take some notes, check out the show notes for the links to the resources and take action and get comfortable with it so that when a client comes calling, you have that confidence and expertise to deliver on their expectations and just go above and beyond.


So, Chris, thanks so much for your time today. We're gonna wrap it up there and we'll look forward to seeing you on the next one.


So there you have it. That wraps up my conversation with Mr. Chris Lema about sourcing models for e-commerce stores here in 2018, we talked about two of the primary setups for how you would source these products.


The first being that of the curator, where you have a platform with people who have a shared or common interest, and you are basically. Curating the best products for people who have that interest. So let's say that you run a men's fashion blog and you would be curating a store for the best watches, the best loafers, the best chinos, whatever the case may be and you're taking someone else's product. You're curating that into a highly vetted selection of materials and products and presenting that to your existing audience and letting them make their purchasing decision based off of that.


And then the second model would be where you are actually producing custom products that are designed specifically for your audience, and this is one that is much more prevalent among somebody that has an established brand. And then you're slapping something like your logo, your phrase, some kind of inside joke or some kind of, common reference that's made for the people in your specific audience who trust you and already know, and like can trust you.


So those are the two common models we talked about. We also talked about some of the tools and the plugins and the directories that you can use to quickly get tied into a store platform and put together an inventory of products that people could start to use. And then beyond that actually handle the fulfillment and the distribution of those products to your customers.


So just a handful of things that we talked about. We've got ship Bob Printful scalable press and overlo, and we've covered a bunch more. I'm sure they'll all be documented in the show notes. And then finally, we talked about some of the criteria that you're gonna want to consider. Whenever you're trying to make a decision about what is the best option for you or for your client.


And those are things like quality shipping time, price points. We also talked about the diversity of the selection. All those things are factors that you should be considering when determining which one of these paths is the best for you or for your client. So I think there was a wealth of information in the conversation we had today.


And as always, we're gonna link up all of these resources in the show notes. So, if you're looking for a way to quickly get to one of the products or the directories or the communities that we recommended, then you can go ahead and go to the show notes and we'll have that all linked up for you. So as always, thank you so much for listening, your support means the world to us, and we'll be back to you with another great conversation about an eCommerce related topic in the next episode until then take care and drive on.


Resources

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