A Filipino Entrepreneur’s Guide to Product Sourcing
So you want to start your own online business? You’re not alone. Over the past years, more and more people have started looking into online selling, and this trend has only continued to grow. This has become even more evident with the COVID-19 pandemic which has made ecommerce one of the most accessible forms of commerce around the world — a convenience enjoyed even by Filipinos as they remain under various forms of lockdown throughout the country. In 2020 alone, the ecommerce industry accounted for 4.3% of the Philippines’s GDP.
“… the COVID-19 pandemic… has made ecommerce one of the most accessible forms of commerce around the world…”
If you’re going to start an online business, one of the first things you must decide on is how you’re going to source the products that people will be interested in buying. There are two ways you can go about this: 1) you can come up with your own products and manufacture them for mass production, or 2) find a supplier and resell readily available products to an interested market.
“You can come up with your own product and put them into mass production, or find a supplier and resell readily available products to an interested market.”
Luckily for Filipino entrepreneurs, various products and even raw materials are very accessible in the Philippines. With 7,640 islands and a population of more than 111 million Filipinos, it is rich in both natural resources and skilled manpower. In fact, some of the biggest multinational companies like Johnson & Johnson and Unilever manufacture their products in the country. So if you need to find a source for your business’s materials or products, all you really need to know is where to look.
Ways to source your products
There are mainly five ways you can go about sourcing your products in the Philippines: through printed ads, networking, the internet, social media, or government institutions. Which one you’ll choose will all depend on the sourcing strategy you’re most comfortable with and the current resources at your disposal.
Printed ads
Browsing through newspapers, magazines, and other printed materials is one of the more traditional ways to look for suppliers and manufacturers. After all, just like your need for suppliers, suppliers are also looking for businesses that require their services. Hence, many of them will print out advertisements to get the word out about their products and services, especially to those that are not connected to the internet. You can also read the business section of various publications for valuable insights and information from established businesses. Look for interviews or business features that are similar to your business or situation and you might just find the name or location of a trusted supplier in the industry.
You can also print your own ads to advertise your needs and wait for prospective suppliers to come to you instead. This method, however, can be expensive and take an unnecessary chunk out of your budget. Moreover, publications only run for a limited period of time, so consider that in your strategy as well.
Networking
As many in the business already know, who you know is just as important as what you know. Don’t be shy to ask around your network of friends, family, and even colleagues. Look for advice from your business mentors. You might be surprised by what you find out. Perhaps your friend has a business you don’t know about and they can hook you up with a cheap yet trustworthy supplier, or maybe your cousin has a co-worker whose family manufactures the very materials you need. Join business groups and attend trade shows and conventions to learn new things and meet people already in the business. It’s no secret that many successful business owners would not be where they are now had it not been for their connections. After all, not everything is advertised. Some of the best options are only made available through association. There is nothing to lose and everything to gain by getting to know your network better. And in an endeavor as risky as a business venture, you’ll need all the help you can get.
The internet
The advantage of being an entrepreneur in this day and age is that you have access to the internet. Almost all the information you’ll need can be found online. For example, suppliers and manufacturers often have their own websites and merchant accounts online (e.g. Shopee, Lazada, Amazon) that prospective partners can browse through for information. From there, you can also read reviews written by people who have used the products or services you’re interested in.
Moreover, with the internet, not only do you gain access to a large repository of data but also a huge portion of the world’s population from whom you can get business advice. Go to forums like PinoyExchange, Small Business Forum, and BizWarriors to inquire about your specific business needs and get feedback. However, with the sheer volume of information available online, you’ll have to be very picky. Check the validity of the information. Ask yourself: Is it recent? Is the website reliable? Are the reviews biased? Are there any mistakes on the website and does it seem like it’s written by an actual expert?
Social media
Filipinos spend around 4.15 hours on social media every day according to a Statista report published for the third quarter of 2020. It’s no surprise then that suppliers and manufacturers who want to advertise their products and services can be found on various social media platforms as well. Use this to your advantage. Browse through marketplace posts on Facebook and other social media websites. Follow business pages and join industry groups for relevant updates. View the official social media pages of suppliers to see their contact information and view their offerings. You can even hit them up directly through messaging apps which will often be manned by their very own customer service representatives. If you don’t know where to start, crowdsource and ask your network and followers for ideas. They may just link you to a supplier that fits your business needs. Using social media merges the previous two strategies — networking on the internet. And when you know how to maximize both, the possibilities are endless.
Government assistance
As part of a government initiative to improve the economy and quality of life in the Philippines, the government is offering assistance to Filipino entrepreneurs by providing information, education, and even funding for those interested in starting their own business. By checking websites of trade-related government branches like the Department of Trade and Industry (DTI) and the Department of Agriculture (DA), you can find the latest information on various industries and local produce, including annual performance figures for your own business considerations. You can even find a list of registered local suppliers to help you in your search.
Considerations when choosing a supplier or manufacturer
Once you’ve come up with a list of possible suppliers or manufacturers, the next thing to do is to compare and contrast. In doing so, you’ll have to take the following considerations in mind to choose the most viable option for your business.
💡 Capital and payment terms
💡 Location and storage
💡 Quality of materials and service
💡 Regulations
💡 Business intent
Capital and payment terms
Decide how much of your capital you’re willing to put into supply or manufacturing. Remember that in order to get your product out to the market, you’ll still need to spend some money on the upkeep of your website, payment for ads and marketing, etc. Your budget is an important factor when choosing a fitting supplier. Do take note though that each supplier will have its own order requirements and payment terms. Even if a supplier has the cheapest materials or goods, if they require you to buy in bulk and pay for it in full immediately, you can still go over budget and not have enough left over to cover your other operating expenses. If that’s the case, it might be better to choose a slightly more expensive supplier that has a smaller minimum order quantity and more flexible payment terms.
Location and storage
Consider the location of the supplier or manufacturer with regards to your store or warehouse. Location will affect your shipping and packaging costs, so the farther the supplier or manufacturer is from you and your market, the more expensive they will get. Moreover, you’ll have to consider the capacity of your warehouse or storage space. Make sure that they’ll be able to accommodate the supply you’ll be receiving and the form (i.e. raw materials or finished products) they’ll be in. If you’re just starting out and can’t afford a warehouse or appropriate storage space, you can consider dropshipping where products are sent directly from supplier to customer, all without any physical handling on your end.
Quality of materials and service
Do your market research and find out what the benchmarks for your products are. If possible, visit suppliers or manufacturers personally to see the actual products they’re offering and how they are made. Look for historical evidence when it comes to supplier output and customer service. Find out if other clients, both past and present, have had a good experience with them. Check for red flags and any possible cover-ups like suspicious complaints that were suddenly retracted or overly positive reviews that trace back to anonymous individuals.
Regulations
Knowing the laws that regulate your industry, products, and the materials that comprise it is an important part of your business upkeep. For example, producing a subpar product based on regulatory standards just so you can spend less on production may cost you more in the long run if it is pulled out of the market. When communicating with suppliers, ask for their permits and other necessary proof of legitimacy to avoid any legal hiccups for your business. You can also check out government websites that share information about various industry standards.
Business intent
What kind of products are you going to sell? Do you want to manufacture your own products or are you going to resell them? Do you want to manage a big business or a small side hustle? Your business intent sets the parameters for what you’ll need in order to get started. Take for example Mark Ho of Vision Auto Parts who sources his hard-to-get car parts and accessories internationally to meet demand in the Philippines but only buys three to five items at a time in consideration of shipping expenses.
The ecommerce economy is brimming with possibilities
As the country continues to tackle the pandemic, people have begun to use ecommerce as an effective way to push back against the declining economy. Thanks to ecommerce, thousands of jobs have been created amid company closures and business fallout. As such, ecommerce is now being supported by various institutions and government bodies. Businesses now offer ways that allow consumers, as well as other businesses, to carry out transactions online. Shipping services have become more popular than ever and providers have increased dramatically in number.
If you’re thinking of starting an online business, now is the best time. You can source everything from materials to equipment more conveniently than ever before and work with business partners and customers alike all online. In a country that has opened its arms to ecommerce to much applaud, you can achieve your business goals in no time.
Set yourself up for local and international success
Sourcing products is just the beginning of your journey. But don’t worry. With Cafe24, the rest will come easy.
As the past years have proven, modernization has become almost equivalent to digitization. And for businesses, this means selling online. Ecommerce has become the priority for many local and international businesses to become (and remain) relevant in their markets. This is where Cafe24 comes in. As the №.1 ecommerce platform in South Korea, Cafe24 has all the tools entrepreneurs will need to establish and grow their business online. Having gone global, Cafe24 now offers Filipinos an international advantage. Through its free-to-use platform, Cafe24 lets users create multiple online stores in multiple languages as well as sell on various online marketplaces. With various ecommerce tools, both free and paid, from the Cafe24 Store, you can extend your store’s reach and improve user experience in order to garner sales from all over the globe. With Cafe24’s proven excellence, you can build your brand and set your business for success.
