A dropshipping supplier is someone who can supply your winning product and fulfill the order for you.
It can be a manufacturer who does this, a wholesaler, or even a dropshipping agent.
At some stage during your dropshipping journey, you might want to switch over to a new supplier for various reasons. We will not get into the specifics of that.
But we have for you some of the most reliable ways to find dropshipping suppliers depending on the size and scale of your dropshipping business.
Let’s dive in.
- Step #1 – Decide where to Locate Your Dropshipping Vendors
- Step #2 – Know Your Situation
- Step #3 – Three Ways to Find Reliable Dropshipping Suppliers/Agents
- Step #4 – Approach Supplier with Right Question
- Step #5 – Prepare to Work with a Dropshipping Supplier
Step#1 Decide where to Locate Your Dropshipping Vendors
Dropshipping is no longer limited to China, although China continues to be the biggest source of dropshipping products. A supplier can be in any corner of the world these days, including the primary markets such as the US & the UK.
However, sourcing from different parts of the world offers its own share of advantages and pitfalls.
That’s why it is important you know where to source your suppliers before getting started. Here are some factors to consider when making this decision:
Domestic Sourcing means you will source your products locally, for instance – in the United States, Canada, or the UK depending on where you reside.
Unlike the past, now there are some great options in these countries as many big ticket brands have set up shop. Sourcing domestically works phenomenally well in some situations which we will touch upon.
Here are the pros and cons for your consideration.
1. Faster delivery times
This is probably the biggest advantage of sourcing domestically. At a time when Amazon and other major ecommerce retailers have made 2-day delivery the norm, smaller brands are scampering to match up.
Sourcing domestically is a huge advantage in this respect. Many domestic suppliers offer same day deliveries within specific regions and next day deliveries across the country.
2. Can dropship products with bigger dimensions
Dropshipping from China and other international destinations can be very cost effective, provided the product dimensions and weight do not exceed a certain limit.
This varies from one country to the other. But for instance, if the product weighs more than 2 kilograms, then it might be cheaper to find a domestic supplier. We did a study comparing shipments from China to the US and those that are domestically fulfilled from the US. You might be interested to read what we found.
The takeaway is this. If your product is large in size or dimensions, compare the procurement cost for dropshipping internationally vs. dropshipping domestically.
3. Can highlight this in advertising
Many dropshipping brands highlight domestic shipping in their advertising because it works to their advantage. Customers like to receive products quicker and when the ad copy mentions that it ships from the US or the UK, it might increase CTR.
That said, domestic sourcing does not always work in your advantage. There are some situations where sourcing internationally makes better sense. Here are some of the disadvantages of sourcing locally.
1. Fewer products to choose from
The biggest advantage of sourcing from a global marketplace like China is the near endless variety of products you will find. Name it and you will be able to find a supplier for it in China.
Sourcing domestically reduces this variety considerably and depending on where you reside, you might not get access to different segments of the market which lead to fewer product choices.
2. Higher sourcing cost
Every domestic wholesaler probably sources the products internationally themselves. Their advantage is that they source in bulk and hence get the product for much lower cost. But they have to pay for sea freight as well as storage and fulfillment, which will be passed on to you.
This does not apply if you are working directly with domestic manufacturers though. However, the rule of thumb is that sourcing domestically is generally more expensive.
3. Limited Reach
The biggest advantage is quicker shipping as we mentioned. But that generally applies only when you are targeting the same country for sales. What if you are sourcing from the US dropshipping supplier & want to expand to the EU or other countries?
Shipping internationally from the United States can drastically increase the procurement cost, eating into your margins.
Overseas sourcing means sourcing from a country different than the one you reside in. This holds true for both your target market and for supplier identification.
The biggest marketplace in this scenario is China. But it’s not the only one. Vietnam & India, are also booming marketplaces.
International sourcing offers many advantages and some drawbacks. Let’s take a look, shall we?
1. Huge variety of products
The main advantage of overseas sourcing is that you get access to millions of products which may not be available domestically. China for instance is one of the largest manufacturing hubs in the world.
In the rare scenario that you cannot find a specific product with a supplier, you can look into the massive manufacturing sector. There’s every possibility that someone can manufacture your product according to your specification.
2. Easier to find suppliers
Finding suppliers can be difficult domestically as the market is fairly nascent. But that’s where Alibaba and other international marketplaces shine.
With the click of a few buttons, you will have access to thousands of suppliers selling unique products. You can compare and shop, send emails and even get samples.
There are sourcing agents who can work on your behalf doing bulk of the lifting.
3. Lower procurement costs
International sourcing is generally cheaper as compared to domestic sourcing. We are talking about the actual product cost, mind you since the shipping cost can vary extensively.
Also, if you plan to work with an agent, think about the manpower costs domestically vs. internationally.
4. Easier to scale and expand
What if you want to expand into a new niche and you cannot find a supplier for that product domestically?
You’d either have to juggle between two suppliers in different parts of the world, or source internationally where you are much likely to find a supplier for everything under the sun.
Let’s talk about some of the disadvantages that comes with sourcing internationally.
1. Slower Shipping times
Shipping internationally means the product will take longer to reach your customer’s doorstep. While most shipping and logistics providers in China are fast expanding their reach and delivery times, it cannot match the 1-2-day deliveries that are possible with domestic sourcing.
If shipping times are absolutely crucial for you, then you might have to consider domestic sourcing as your sole choice. Or stock inventory in advance and fulfill the order yourself.
2. Shipping Costs
As we explained earlier, shipping costs can increase exponentially depending on the product, the destination and the shipping mode. While there are many factors that can affect it, the rule of thumb is that bigger packages are way more expensive to ship internationally than they are domestically.
3. Language & Communication
Regardless of whether you source from China or from any other international destination, language will be a hurdle that you’ll have to work around. Chinese sellers in particular, have a reputation for poor English.
They generally converse in Chinese and Mandarin. Proficiency in English if any, is pretty limited.
Sorry to sound like a broken record. But this is where a sourcing agent can prove to be invaluable.
Step#2 Know Your Situation
Many dropshipping business consider switching suppliers as a panacea for all things that may be wrong with their business.
Here’s the deal. Not every situation in the dropshipping business warrants a supplier change. Nor will it benefit you to switch suppliers, unless it’s absolutely necessary.
We would like to share with you some common stages of the dropshipping business and how to look for suppliers at those stages.
1. No Sales Yet
This situation is more common than you’d believe. You have just started your dropshipping store, but you are yet to generate sales.
You have been trying with different forms of advertising. But the conversions are either dismal, or not happening at all. Even if you come across a supplier or a dropshipping agent who’s offering the same product at a lower price, this is way too early to be switching suppliers.
Most suppliers and agents prefer working with a dropshipping business that has a proven track record in sales. That’s nothing against you or your current situation. That’s just the way the business functions.
By reaching out to them at this stage, you risk ruining your potential future relationships with them, when you actually have a winning product that’s steadily generating sales.
Instead your focus should be on finding a winning product that will start generating at least 10 sales a day. Hone your advertising skills and get the product in front of your audience.
It will take a fair bit of testing before you can actually start to generate sales consistently.
2. You are Generating more than 10 Sales a day with One Product
This is the nest stage in dropshipping. You are consistently generating over 10 sales a day.
This is the time to scale and you should be focusing on making the dropshipping process as automated and as efficient as possible.
The first step towards increasing the efficiency, is to find reliable sellers, regardless of where you are sourcing from.
Reliability though, is not an easy trait to find. However, this is where technology can be leveraged to your advantage. Log on to the big B2C marketplaces like Aliexpress, eBay and Amazon and sort suppliers by the average rating. Now, you can be as stringent as you want with the filtering process.
But anything below 4.0 for instance, does not even warrant a place in the final list. Now continue to shortlist the suppliers and then compare and shop. That’s one way to find a reliable supplier who can help you when your business scales.
Lastly, you can reach out to a dropshipping agent. A dropshipping agent will have their own network of reliable suppliers that are vetoed and verified. Everything from the production lead times to the pricing will be negotiated on your behalf and in your favor.
All you need to do is communicate your requirements and they will shortlist the best possible suppliers for you. It’s really that simple.
3. You are consistently generating more than 100 sales a day
100+ sales a day is generally the hallmark of a successful ecommerce business.
What you should do now, is streamline the entire supply chain to ensure that it ticks the two boxes listed below.
- Lowest procurement cost without cutting corners with quality
- Most efficient fulfillment process
There are three ways in which you can achieve this.
1) Working Directly with Manufacturers
Dropshipping Manufacturers may sometimes have listings on bigger marketplaces like Alibaba or their own website. But there are many, who are just not existent on the internet. It boils down to finding them through word of mouth or networking.
If you find a manufacturer who can fulfill your orders, then it’s like eliminating a large hassle from the supply chain.
But, it is very rare that manufacturers agree to handle order fulfillment because it’s not their main business. They are just good at production. But if you are lucky enough to convince them, then your job is much easier.
2) Working with Dropshipping or Sourcing Agents
Dropshipping agents are individuals or companies who help with sourcing and fulfillment in the country that you are trying to source from. In simple terms, they act like middlemen who will handle the messy part of the business, allowing you to focus on your core business – generating sales.
Dropshipping Sourcing agents use their decades of experience in sourcing, negotiating and order fulfillment to find the best possible supplier for you. They have an extensive on-ground network of manufacturers, which includes manufacturers who are impossible to find anywhere on the internet.
That said, many sourcing agents also prefer to work with businesses who are generating some amount of sales already. Also, a lot of them (us included), take on limited clients only to ensure that they can maintain a minimum service level.
So, you’d have to reach out to the top guys to know whether they are accepting new businesses at the moment.
3) Work with Manufacturers and Fulfill the Orders Separately
The last option gives you the best of both worlds. Maybe the manufacturer is unable to fulfill the orders for you . But their pricing is the best that you can find. There’s a way in which you can get the pricing advantage and not have to fulfill the orders manually.
This is by transitioning into branded dropshipping, if you still haven’t. 100 sales a day is the perfect stage really to turn your unnamed dropshipping business into a branded one.
Branded dropshipping is a business model where you brand the products before reselling them. So, you acquire the products from the manufacturer, brand them with your logo, colors and packaging and resell.
A sourcing agent handles the fulfillment. The only difference to the current model that you are following is that you’d have to stock up the inventory and store it in a warehouse in China or domestically.
Don’t let the upfront investment deter you though. Branded dropshipping is the future of dropshipping. In fact, most successful dropshippers these days are built on the branded dropshipping model. It’s a much cleaner and scalable business model.
Once you transition to this model, your margins will improve exponentially in a very short time. And it is very easy to get started too – simple branding is not rocket science after all!
You control the price and the inventory. No supplier can hold you ransom during peak business season.
Step #3 – Three Ways to Find Reliable Dropshipping Suppliers/Agents
Let’s talk about how you can find the best dropshipping companies to work with on a marketplace like Aliexpress or Oberlo.
This is the stage where many beginner dropshippers hit a roadblock. But it’s actually pretty straight forward. When you are not making sales, the idea should be to find a company that’s reliable, trustworthy, has a track record of working with other dropshipping businesses and has good communication skills.
There are two primary ways to find good companies like this.
Domestic Sourcing – For dropshippers looking to target the USA, Amazon & eBay are great platforms with tons of options. Unlike in the past, where every seller listed on Amazon or eBay were retailers, a lot of them are dropshipping companies now.
The prices are pretty reasonable and they offer one-day, or two day shipping across the country. This will be much easier than trying to source internationally, like a supplier in China and negotiating with them.
International Sourcing – If you are unable to source domestically for whatever reason, then you can always expand your search into the international marketplaces. The top options are Aliexpress and Alibaba.
At the time of writing this, there are more than 100 million products being sold on Aliexpress alone. So there’s no dearth of options to select from and test. But the pros are not limited to the wide selection. There’s more.
How to filter the companies you come across on these marketplaces
Filtering suppliers/companies on marketplaces is vital to weed out the unscrupulous and unreliable ones. We all know how important time is in the dropshipping game, so it pays to be efficient with this stage of your list building process.
With Aliexpress for example, you can filter suppliers by different types of criteria including their average review score, amount of positive feedback responses, how long they’ve been in business and so on.
What has worked the best for our clients is this checklist:
- Companies that have been in operation for 3-years at least. This shows that they are reliable, have expertise in the market and are likely to stick around.
- Companies that have an above average review score, like say 4.8. This shows they are trustworthy and have very few negative reviews despite their long operational time.
Every now and then, you’ll also come across companies that have a product you want to test. But do not meet this criteria. In this scenario, you can also try this.
Send them an email asking “Do you support dropshipping?”
Marketplaces are an easy and sure fire way to find a dropshipping company. But it’s not devoid of its pitfalls. Let’s take a look at the pros and cons.
- Most marketplaces are designed for 1-click integration with dropshipping platforms like Shopify & Woocommerce. This means you will spend much less time setting up the store. Aliexpress for instance has Ders App, which makes it effortless to connect it with Shopify.
- You’ll have access to thousands or millions of options which you can test for your niche with almost no additional effort.
- Fulfillment is automated.
Most marketplaces allow you to place up to 20 orders at a time. Aliexpress, we believe caps it at 30. So, you can actually continue this way until you start to steadily generate 10-20 sales.
- Prices are generally higher on marketplaces like Aliexpress as compared to sourcing directly from manufacturers or suppliers. You see, Aliexpress has many resellers who source the products from the suppliers and then sell them to you. These resellers mark up the prices considerably.
- Aliexpress is a mixed bag of good and unscruplous sellers despite all your attempts at filtering. We have heard of situations where a seller takes your money for fulfillment and then uploads dummy tracking numbers. The onus to veto sellers is on you.
- Once you start generating more than 20 sales a day, it can be very tedious to place the orders every single day. It will eat into your valuable time.
2. Find Suppliers from Dropshipping Directory/Platform
Dropshipping directories are very underrated when it comes to finding suppliers. They list verified suppliers and also allow you to quickly filter them based on the type of product they offer.
For example, SaleHoo, the New Zealand based online directory has exploded in popularity. It currently lists 8,000 trusted wholesale and dropshipping suppliers with over 1.6 million branded products that you can select and dropship.
Now, Salehoo is a subscription-based service as are, most other directories. But for just $67 a year, think for a minute about the sheer value they bring to the table.
You set up an account and based on the subscription tier, you get access to their supplier listings. You can narrow down further by filtering the suppliers based on different criteria.
- What products do they offer?
- Where do they deliver to?
- What is the minimum quantity you can order?
- What is their product quality like?
Once you filter them down to a manageable number, select those suppliers who meet your standards and also offer products that fall under your niche.
Shoot them an email and see if you are a good fit for each other. That’s it. It certainly eliminates a lot of the hassles that you face while trying to find suppliers on Aliexpress and other marketplaces, which as we said, is a mixed bag of good and bad guys.
Let’s take an objective look at the pros and cons of using a service like Salehoo.
Verified directory of suppliers. You don’t even have to filter them by review. Every seller on the platform has been vetted and verified.
- Very hands off approach to sourcing.
- Very affordable. It’s just $67 a year.
- Very low MOQs.
- User friendly
- Limited suppliers and products. 1.6 million sounds like a lot. But if you compare it with the actual marketplace, it’s nothing. There are more than 100 million products in the Chinese dropshipping marketplace.
- Most of the products on Salehoo are branded. This means that if you are looking to transition into branded dropshipping, the opportunities are scarce.
Private Dropshipping agents as we mentioned earlier are people with access to (usually) Chinese suppliers and who will source products for you based on the criteria you outline. They handpick them and negotiate better prices with the manufacturers.
Finding a private agent is fairly easy, but finding one who actually isn’t out to make a quick buck is difficult. Like we mentioned earlier, there are many agents who lack the expertise that it takes to handle a fast-growing business.
There are many places where you can find these agents, but you need to weed out the unreliable ones.
It’s quite likely that you might have friends who are also dropshipping. Colleagues maybe? Someone that you partnered with along the way? Someone who mentored you?
That’s your #1 source to find a reliable dropshipping agent. People that you know and can trust. Just ask them which dropshipping agent they have worked with and can recommend.
Plain and simple.
This way, you do not have to do the heavy lifting, like interviewing the person, doing a background check, verifying their credentials and so on.
Facebook can be a treasure trove of information and leads, if you are able to navigate through tons of spam that is. Groups in particular, can be teeming with fellow dropshippers who can provide references, as well as experienced dropshipping agents, who are looking to partner with stable businesses.
You might find more leads on Facebook groups than you can on Google and YouTube combined together. That’s because not every agent might have an independent website (the best ones usually do).
But almost everybody will definitely have a social media profile. Also, there’s no dearth of dropshipping-related groups on Facebook. Right from small groups with a few thousand members to massive groups with hundreds of thousands of members, you can post your requirement on as many as you want.
However, you are likely to be inundated with messaging requests after you post on Facebook groups. But a lot of them will be spammers looking to fob you off. References can be fake or compensated as well. So you’ve got to be extremely careful about who you interact with on social media.
Good old Google search is one of the easiest ways to find a Chinese dropshipping agent. Just search for dropshipping agent, or best dropshipping agent, or best sourcing agent for dropshipping, and hit search. You will get hundreds of results for each one of these terms. If I were you, I’d stick to the first three-five search results pages. That’s about 50 websites to screen and closely scrutinize. Narrow down on a list of say 5-10 agents from that and start interviewing each one to find a person that you can work with.
It’s convenient. You can do it anytime and anywhere.
The caveat is that it’s a lot of work. It’s not like every person that you find will be a good fit for your business. You will have to screen, verify the information and speak to each person to know about their experience and their way of working.
- Sourcing agents will take off a huge chunk of responsibility off your shoulders. Right from sourcing products to negotiating with the suppliers, they do the legwork for you.
- They have access to wholesale marketplaces and sellers that may not even be listed anywhere on the internet.
- They are more experienced than you and therefore, can negotiate better prices with the suppliers on your behalf. Experience is the key here.
- With this taken off your shoulders, you can actually shift focus towards other important bits of your business like building a reliable customer base and generating sales.
- Not all sourcing agents have the expertise you may seek. If you are not careful, they can even get you stuck in a bad deal. That’s the last thing you want at the beginning of your journey.
- Finding reliable sourcing agents is difficult and sometimes it comes down to luck. You need to have some connections or be able to filter out unreliable ones from trustworthy ones on your own.
- Many experienced sourcing agents will only work with limited businesses, which have a fair bit of experience in generating sales.
Step #4 – Approach Supplier with Right Question
One of the most important parts of finding a dropshipping supplier is verifying whether or not they are the right fit for your business.
On marketplaces, you practically see what the sellers want you to see. There can be fancy images, reviews even, but it might not necessarily be true.
When you are sourcing them, you have to assess whether or not they are the right fit for your business, because most of the common problems with dropshipping begin with unreliable sellers.
Common Issues of Dropshipping Suppliers
Dropshipping has exploded in popularity. So much so, that there’s a huge demand for reliable suppliers. Naturally, to meet this demand, there’s been a surge in the number of suppliers with little or zero experience, who are trying to sell their products online.
Well, more is not merrier in this case. Here are some of the challenges that new dropshippers generally face.
1. Inventory is Not Guaranteed
Inventory problems are one of the most common complaints among dropshippers who rely on marketplaces. You might work for weeks to get the right advertising combos and prices. Then, you come to know that the inventory is out of stock.
Just when you are starting to generate some sales that is. In other situations, the seller can hike up prices during peak season claiming that the inventory is short.
When you are sourcing generic (unbranded) products from the marketplace, the sellers are not bound by contract to you. This means that they are trying to sell the product to as many people as possible.
Dealing with inventory problems is one of the most frustrating things that you can ever go through with your dropshipping business.
2. Quality Complaints
Even if the seller has stock, but does not meet your quality standards, there’s nothing much that you can do about it. This means that you are stuck with an unsatisfied customer and a product that does not meet your quality expectations.
These types of suppliers can severely hamper the progress of your dropshipping business, which is why it’s important to assess their reliability when you source them.
3. Limited option for personalization
When you are sourcing generic products, it’s hard to look for any customization options. Since the product is supposed to be sold to multiple dropshippers, most suppliers do not entertain customization requests.
If you want to personalize it, you’ll have to stock up in bulk and then transition to branded dropshipping.
There are just three things to look for in every dropshipping agent/supplier that you choose to work with.
You want to make sure that they have relevant experience in your industry. This is all the more important in certain industries which require an astute understanding of the nitty-gritties. Electronics for instance. Leather is another one. An inexperienced agent or supplier might just nod in agreement to get on board with you. But they will botch up the sourcing because they do not understand the in and out of the industry.
Responsible or Accountability is the thing that’s lacking the most in the dropshipping industry. You need someone who looks at your business as their business too. If something goes wrong (and it will), the agent or supplier must be proactive enough to take action, while keeping you in the loop. That too, as early as they possibly can. If the supplier/agent just looks at it as a transactional relationship, it’s not going to be very fruitful for you.
Dropshipping is a very dynamic business with multiple services and touchpoints in the entire supply chain. This means that things rarely go as planned and charted. You need partners who are flexible and who understand this. Contractual terms might say one thing. But as long as both parties are willing to extend some leeway, the business works great.
Here’s a list of questions that you should be prepared with while vetoing dropshipping suppliers.
What happens if a product is returned by the customer? A one-off return is not a huge deal. But don’t discount the possibility that you might deal with multiple and repeated returns.
That’s why, it’s always better to clear this upfront. Does the supplier refund for damaged/missing products? What about products that are of lower quality than what was promised/shared during the sample evaluation?
The last thing you need is a supplier who refuses to entertain the warranty and asks you to pay out of your own pocket for returns/restocking.
In what circumstances will the supplier refund the cost of the product? Do they go by what you have written in your agreement or do they get the final say?
What if they don’t like it? What if they think that you are trying to scam them out of their money- how will they act on it? All these things need to be clarified so there is no ambiguity.
Dropshipping agents have different pricing models depending on the scope and size of the project. Some of them charge an hourly fee, while others charge a percentage of the total order. Some like to get paid on a project basis, which is a monthly fee.
While it is up to you to pick one that works for your business, make sure you know what you are signing up for.
Suppliers on the other hand will have more straightforward pricing which is generally the cost of the product and the shipping charge. However, you need to watch out for hidden fees or ongoing subscription costs if any.
Goes without saying that financial terms need to be discussed, agreed upon and communicated before you sign the dotted line. The supplier might request for payment in advance or require a letter of credit to ensure that you do not misappropriate their funds. Make sure that the payment schedule is made clear at the beginning itself.
#Step 5 – Prepare to work with a Dropshipping Supplier
Once you have dotted the I’s and crossed the T’s, it’s time to get to work. You now have a supplier that you trust, or an agent who’s working on your behalf.
The next step is to integrate the supplier/agent to your store. Again, this depends completely on what process/system the agent/supplier uses.
At Sourcingbro, we have an ERP that integrates with the backend on Shopify and other ecommerce platforms. This allows us to update orders as well as shipment status.
But different agents follow different methods. Once you generate a sale, the order details should be sent to the supplier/agent. This can be automated or you can manually send them a CSV file with the order details.
They will then fulfill the order, which means pick and pack and dispatch. They will also update the tracking numbers which will be shared with the customer.
That’s just a rough workflow for your understanding. There are many more processes in between.
Aliexpress sellers are the easiest to work with because the platform is so user friendly and compatible with most software.
You can sync Aliexpress with your store using Ders app or similar tools. Everything else is practically automated. You can post bulk orders in seconds and even automate that.
All you need to keep an eye on, is the timely updating of tracking numbers.
Most dropshipping platforms like Spocket & Cjdropshipping have automated fulfillment integrated into it. All you need to do is sync your store and import the products. As you start to generate sales, the fulfillment happens on autopilot.
Once again, updating tracking numbers might be a manual process in some of these platforms. So, you’d want to confirm that beforehand.
The dropshipping supplier is one of the most important cogs in the wheel, in an ecommerce business. But there are so many pitfalls while trying to find a reliable one.
We hope that this article helps you understand the many factors involved in it, and also in finding the right supplier for your business. Good luck!