Learning to Source

January 23, 2021

There are so many questions when you decide to start an online business. So many business models. Most important is what are you going to sell? Is it a service? Is it a product? If I choose a product, where do I source it from? Do I keep inventory, or do I dropship? Should I just become an affiliate? So many questions!

Through researching this week, I have learned many pros and cons to each method. I have also learned how to go about finding a source for each of the models. Let's talk about each model.

The first model we are going to call an e-tailer store. This is where I could order and stock inventory for an online store. The pros to this method are that I have the product in stock, and therefore know what I can sell. I control customer service, shipments, all of it. The cons are that there are money and space tied up in inventory.

The next model is a drop-ship model. This is where you market your e-store, but do not carry inventory. Instead, when a customer orders something, you then order it from your wholesaler and they ship it directly to the customer for you. The pros of this method are that you save on shipping by only shipping once (instead of once to you and then once to the customer). It also frees you up from having space and money tied up in inventory. The cons are that you never actually see the product, so quality monitoring is gone; you are at the mercy of the drop shipper to actually ship the product, and you may lose money if the product needs to be returned.

The final model is to become an affiliate. There are a few options to be an affiliate, but the most common is blog advertisement. You create a website with content that brings viewers in. Then, you link to someone else's website that you are an affiliate for. If the consumer buys something, you get a percentage of that sale. The pros of this model are that the responsibility of customer relations and product management are taken away from you. The con is that there is a significantly less profit margin.

There are more business models, but these three are the ones I feel are most related to the type of online business I am looking to start. I have also found that once you decide on the model type and what you want to sell, it is not difficult to find a wholesaler, drop shipper, or affiliate with a simple google search, as long as you use proper keywords.