Where to Look to Source Products
The ability to reliably and cost-effectively source products underpin successful selling on Amazon. Many Amazon sellers source products from China. Assuming you aren’t going to tour Chinese factories and talk to suppliers directly in person, how do you best effectively source products to sell on Amazon?
Alibaba, China’s biggest online commerce company, is a good tool to source products for you to sell on Amazon. There are over 15,000 manufacturers, wholesalers, and distributors that sell on Alibaba. In addition, you can connect directly with suppliers and negotiate prices.
Let’s take a look at:
- What is Alibaba?
- Chinese B2B
- Source product search tips
- Assess suppliers
- Connect with suppliers
- Place and protect orders
- Receive source products and avoid costly errors
What is Alibaba?
Alibaba is the world’s largest marketplace, bigger than Amazon and eBay combined, representing a $23.9 trillion B2B international platform. Much like Amazon, Alibaba’s interests extend beyond e-commerce to include cloud computing, technology, and money lending.
Also similar to Amazon, sponsored ads display at the top of Alibaba’s first page. This means Chinese factories bid to be in the top position in your searches. Factories and suppliers that spend to get your attention this way are certainly worthwhile to look at, but keep in mind that, depending on the products you are looking to source and the prices you want to pay to source products, there is more to consider to find the best suppliers.
You can source products on Alibaba to sell on Amazon from a number of different countries. However, let’s focus on China, as many Amazon sellers source products from China suppliers because of their ability to customize and scale quality products at low price points.
Note that the one problem in dealing with Chinese suppliers is the potential for miscommunication. If you don’t speak Chinese and if your supplier doesn’t have more than a basic grasp of English, it’s not uncommon that you don’t get exactly what you thought you ordered. To avoid this, you have to very clearly state your specifications and double-check with the supplier that they understand the specs. Just because something is obvious to you, don’t assume it is to someone who is not a native speaker of English and may be relying on an interpreter or, worse, a software translator. (As we’ll discuss further below, you can help avoid any misunderstandings if you deal with an Alibaba Gold or Verified supplier.)
There are three types of Chinese suppliers to source products:
- Factories. The best choice if your product doesn’t require customization and product specs are detailed and clearly communicated.
- Trading Companies. Intermediaries that deal with multiple factories. You have to pay the commission for their work in selecting and managing to manufacture. However, trading companies provide better communications/translations between English and Chinese speakers, can source a wider product range, and allow for smaller minimum order quantities. One drawback is that trading companies sometimes do not want to reveal factories they are using, which can complicate direct communications if there are any issues.
- Sourcing Companies. The name indicates these types of companies source products, but they also provide such as sample product development, contract negotiation and management, production quality control, and logistics management. Sourcing companies can also help you better navigate international trade regulations.
Source Product Search Tips
To conduct a source product search on Alibaba.com, register for a free buyer account and then:
- Look above the Search menu and change the default Products to Manufacturers.
- Enter the appropriate keywords that correspond to what products you want to source.
- Check out themed pavilions that display top-ranking products as well as the exports of specific countries.
- Send a Request for Quotation (RFQ) for suppliers to bid for your business.
You are likely to get several responses to the RFQ. While price is always a priority, it is not the only factor. To make sure you get a good price and a good supplier:
- Look at the supplier profile and details about their experience. The longer the supplier is in business the better; avoid upstarts with little or no track record of success.
- Check for at least one of the following badges on the seller’s profile:
- Gold Supplier. Verified business with commercial or industrial capabilities.
- Verified Seller. A Gold Supplier that is certified by a third party as to its company profile, management, production capabilities, and processes.
- Trade Assurance Supplier. Gold Suppliers accept payment through Alibaba; this provides you with payment and order protection in the event of any issues.
Connect with Suppliers
Once you’ve settled on a short list of potential suppliers, connect with them to learn more about how they conduct their business. Ask questions about:
- Production capabilities and lead times
- Packaging, shipment dimensions, and weight
- Worker safety and human rights practices
- Minimum order quantities
- Volume discounts
- Certifications (FDA, CE/Europe, and China standards)
Negotiate. Most suppliers are open to discussing their pricing and how they justify it. They might also be willing to meet a competitive offer, assuming the offer is realistic. Ask for product samples. Above all, don’t be afraid to walk away from negotiating; it is not unusual for a supplier to come back with better pricing and better terms. If you can’t negotiate a lower price, try to negotiate other aspects of the contract, such as the amount of the deposit, payment terms, and/or faster shipping.
Place and Protect Order
Whenever possible, and particularly if this is the first time you source products, place your order through Trade Assurance to ensure product quality, on-time shipping, payment security, and dispute resolution. Create a detailed purchase order specifying all aspects of the order and shipping. Request a sample before placing the full order to ensure your specifications are met to your total satisfaction.
Receive Source Products and Avoid Costly Errors
Unless you have the resources to warehouse and fulfill orders yourself, the source products are shipped to a Fulfillment by Amazon (FBA) fulfillment center to manage your inventory and customer orders. For the most part, Amazon takes it from there, but be aware that when Amazon mishandles inventory or orders (mistakes happen!), you are owed FBA reimbursement. Unfortunately, usually, you aren’t reimbursed automatically. In most cases, it is your responsibility to identify errors and submit claims for reimbursement.
FBA reimbursement can add up to between 1% to 3% of your annual revenues. The more you make, the more potential loss if you don’t properly identify the errors and file the appropriate claims.
After all the time and effort spent to source products, do you have the time to do this?
GETIDA makes obtaining your FBA reimbursement simple, easy and cost-effective. GETIDA software reviews the previous 18 months of transactions to flag instances that qualify for FBA reimbursement. With your approval, our team of former Amazon employees file claims for reimbursement.
This is all done for free. The only charge is a percentage of approved claims. And the first $400 in FBA reimbursement is free.
It’s easy to sign up with GETIDA and let us do all the work of getting back your FBA reimbursements while you source products to sell more on Amazon.