Sourcing products from overseas is extremely popular especially for new e-commerce business owners. While it can seem like a cheap and easy way to buy inventory there are many pitfalls that can take business owners by surprise. In the long run, sourcing products from overseas can actually cost your business more.
Here are just a few of the benefits that you can take advantage of when sourcing locally.
1. Be More Agile
E-commerce has made business more competitive than ever. It’s essential to get ahead and stay ahead of your competition. How agile your business is plays a huge role in your ability to do just that. What does it mean to be agile? Business agility refers to the ability of a business system to rapidly respond to change.
When your suppliers are spread out across the world, responding to change becomes extremely difficult. For example, if demand for your products exceeds your expectations you’ll need to get another order shipped out quickly. Will you be able to meet demand or will you stock out? Overseas lead times can range anywhere from six weeks to six months!
Not only do you want to be prepared for a change in demand for your current product offering you also want to be prepared for a change in trends. Having the ability to offer trending products quickly can put you head and shoulders above the competition.
Sourcing products locally instead of overseas allows you to remain agile. A closer knit supply chain means
- Shorter lead times
- No juggling time zones
- Fewer miscommunications
- Easier shipment coordination
- Better responsiveness
Your ability to be agile plays a big role in growing and scaling your business. Sourcing products locally can help give you the leg up you need to do just that.
2. Stay in Control
We touched on this above but let’s dig in a bit more. There are a few big issues when it comes to sourcing products from overseas. Some of these problems stem from miscommunication other times it’s a straight up scam.
If you’re sourcing products from overseas, there’s a good chance that you’re doing business with people that don’t speak your language, literally. Not only are you in different time zones but there are details that can easily get lost in translation.
When you’re trying to get samples of a product or make tweeks to a prototype, these details are important. Each round of samples you receive can take weeks to receive and provide feedback on only to turn around to do it all over again. This process can stretch on for months if important details are being ignored or misunderstood.
Worst case scenario? An overseas supplier isn’t who they say they are and you get scammed. Someone can lead you around by the nose with no intention of actually sending you the product you’ve paid for. Doing your homework can help but there’s not greater reassurance than visiting the facility in person. This is much easier to do when the supplier/manufacturer is local or at least in the same country.
3. Cut Costs
Shipping and logistics can get very expensive very quickly. When your supply chain is spread out across the globe you’re likely spending a lot of the money you “saved” by going overseas on shipping and logistics.
According to Thomas Net, “The amount of money companies spend on logistics every year is staggering, with North American companies shelling out over $1 billion every year.”
Cutting down on shipping costs isn’t the only way to cut costs though. You can also reduce your inventory which also allows you to cut costs. How?
Well we’ve already established that local supply chains allow for shorter lead times. Shorter lead times mean that you can place smaller orders. Smaller, more frequent orders mean…
- Better cash flow
- Lower warehousing costs
- Less risk of accumulating product that doesn’t sell
- Increased inventory turns
The Takeaway
Many e-commerce business owners (even seasoned ones) can be drawn in by the “low costs” of sourcing products from overseas. But while the unit prices might seem cheap there are a lot of other unseen costs that can add up. In fact, sourcing products overseas has a much higher price than many business owners realize.
Sourcing products locally can give your e-commerce business the boost it needs to stay competitive and get ahead. Between the ability to be more agile, stay in control and cut costs, sourcing locally can actually be a much better deal in the end.