The world of CPG (Consumer Packaged Goods) is full of options, offering buyers a wide array of items! Many suppliers, both big and small, are eager to bring their products onto store shelves. But this competition is making it hard for buyers to manage things. It’s important to know where your products are coming from and how that affects your business. Therefore, retail businesses need to understand product sourcing to make better choices. 

Here’s a simple guide to help you understand the process of sourcing products.

What is Product Sourcing?

Product sourcing is simply the process of finding and purchasing products to sell in your store. As a retail buyer, this means identifying the right products, buying them from suppliers (which can be big or small companies), and offering them to your customers.

Six Steps to Successful Product Sourcing

It's not as simple as it looks! Product finding involves a few crucial steps that the retailer can take to make the process flow smoothly.

1. Research your Product

It is also very relevant for the retailer to gain adequate product knowledge. Market research is very important to carry out, and a lot of times, when research is not conducted in the market, sourcing the product can turn out to be a big mistake. The research should not be biased.

i. Store Data

Numbers given by specific stores? Is there enough interest to increase sales and overall expansion in your retail stores? Or would some product be more appropriate for some store than the other?

ii. Consumer Demand

Understanding where and how your consumers fulfill their needs is essential. Consider these key points:

Consumer Behaviors:

• What are your customers discussing on social media?
• Do survey forms reveal their specific concerns and preferences?
• Are their expressed needs reflected in their purchasing behavior?

Feedback and Reviews:

• What are customers saying in reviews across various platforms?
• Which topics or products engage them the most?

Trends:

• Which product categories are trending right now?
• Which companies are driving these trends?
• Are any trends expanding into other categories?

Having the above research data in place, buyers are in a better position to make appropriate decisions concerning contact with suppliers. Thus, the more information that any given product sourcing company has, the better the result.

2. Contact Any Potential Suppliers

Before contacting the supplier, be sure about your needs. Research is also part of being clear about your requirements, but you must be sure about what demand you initially contact the buyer. Like whether you need information only? Or need samples or specific products? Knowing your requirements will help the process go smoothly.

3. Ask for Samples

Samples are crucial as you don't buy a car without a test drive! Similarly, you won't keep a product on your store shelves without sampling. When contacting the supplier, the product sourcing company communicates about samples to get feedback from team members and decide whether the supplier handles the product wisely or not. 

Asking for samples is an integral part of your sourcing strategy and an excellent way to test the quality of products.

4. Choose a Supplier to Trial-Run an Order

They also should order a trial run once a retail buyer has identified a product that fits the criteria. This can be that the buyer will request a specific quantity to run across a retail store or it also can mean that the product is tested in only a selected number of outlets. A buyer may choose only to pilot some of the total products the supplier has to offer.

Product sourcing companies should set limitations and key performance indicators around the trial process, including duration of the trial, sales ratios, and consumer reviews.

5. Evaluate Supplier

If you want to move on with the supplier and have a formal long-term contract, it depends on the trial performance of the supplier. The parameters mentioned above should be kept constant and assist you in determining the performance of the suppliers at the end. If these questions are answered well then you are good to go with the vendor in consideration. 

Here are key questions to address during this evaluation:

Performance and Outcomes:

• Did the product meet the intended objectives?
• Was it profitable, or did it generate less return than expected?

Reception and Quality:

• How well did the stores receive the product?
• Were the products intact and undamaged upon delivery?

Communication and Delivery:

• Did the supplier communicate effectively throughout the process?
• Were deliveries accurate, timely, and aligned with expectations?

Cost and Pricing:

• Was the quoted cost accurate and competitive?

These analyses can significantly influence the success or failure of the buyer-supplier relationship. If a buyer is not willing to proceed with a relationship with a supplier, then positive and negative feedback is essential in knowing why the relationship cannot progress.

6. Keep Other Supplier Options!

Business always comes with lots of troubles as companies may combine or even close down; there can be instances when it becomes hard to acquire certain supplies, or at times, the quality of the products being produced is reduced. 

Such things are characteristic of the world in which products and trends can change as the wind blows as often as it wants. And when consumers always run into the aisles looking for the product in the stores all of a sudden, it is nowhere to be seen. It can be a significant setback to the consumer's confidence in the retailer.

Benefits of Having Multiple Options for Your Products

Retailers are most curious about getting the product as per the consumer demand and having one or more suppliers always gives more opportunity for the availability of the product.

But that’s not necessarily a bad thing. Think about it. A multiple-supplier situation can provide:

• Better Prices: It also means that they can be able to drive the costs down on the products each time there are several suppliers in the chain.

• Insurance for Supplies: A single supplier, which could be an outcome of experiencing a gap in seeking a particular part or input for an item, gives way to a cascade of product delays, higher transportation costs, or even more. However, due to more than one supplying company, the retailers should never run out of stock of this particular product.

• Quality Control: Where the retailer has multiple suppliers for a particular source of supply, it becomes easy and fast for the retailer to benchmark the two (or more) products in quality to establish whether they are still meeting agreed-upon quality requirements from time to time.

Conclusion

Purchasing items in CPG retail is never always very easy. Even after selecting capable suppliers or after a retail buyer has built a good relationship with this supplier, there is still a lot more to do. Product sourcing does not end after the product has been sourced. Sustaining the quality and dependability of the product is also essential in cultivating or continuation of the relationship with the supplier.