Sourcing from Alibaba
Alibaba is China’s biggest e-commerce company. This makes it a highly convenient resource for Amazon FBA sellers to research and finds verified and reliable product suppliers from Alibaba’s huge database of 15,000 manufacturers, wholesalers, and distributors.
To understand how Alibaba helps you make informed decisions about buying products to sell on Amazon in 2023, let’s take a look at:
- What is Alibaba?
- Advantages/disadvantages of using Alibaba to source products
- How to source products using Alibaba
Table of Contents
What is Alibaba?
Alibaba is a bigger global marketplace than Amazon and eBay combined. Of specific interest to Amazon FBA sellers, Alibaba provides a directory of manufacturers and suppliers to source customized products and eliminate middlemen that eat into your profit margins.
While Alibaba is a Chinese company, it does provide listings from manufacturers from a number of different countries. Product sourcing from Alibaba can be a key building block of your business. This is because the low price of products sourced from Chinese and other Asian suppliers translates into profits gained by selling at higher prices on Amazon.
There are basically three kinds of sources listed on Alibaba:
- Factories. Best choice for products that don’t require customization; detailed product specs are a necessity.
- Trading Companies. Intermediaries that deal with multiple factories. You pay a commission for their efforts in selecting and managing manufacturers. Their key advantages include:
- Provide clearer communications/translations between English and foreign speakers
- Can source a wider product range, and allow for smaller minimum order quantities.
One potential drawback is that trading companies sometimes do not reveal the factories they are using; this is a potential problem if issues arise about product quality or incorrect fulfillment when you are forced to work through the trading company rather than directly with the manufacturer to resolve.
- Sourcing Companies. In addition to sourcing products, these companies also provide services such as sample product development, contract negotiation and management, production quality control, and logistics management. Sourcing companies are also helpful to navigate international trade regulations
Advantages/Disadvantages of Using Alibaba to Source Products
Alibaba is a well-known and well-established marketplace. There are a number of safeguards in place to ensure both buyers and suppliers are protected on Alibaba. Specific protective features include:
- Trade Assurance. Money-back guarantee in case your order is not satisfactory in terms of quality and shipping time.
- Verification. Suppliers earn a badge according to the level of verification they pass. Gold suppliers, for example, provide are verified for high product quality.
- Direct communications to make safe buying decisions. You can ask suppliers for business licenses, verifications, and contact information as well as request sample products and factory photographs to assess legitimacy.
- Anti-fraud programs. Alibaba works to prevent buyers from getting scammed. In addition, Alibaba has a reputation for dealing with any reported supplier problems.
While Alibaba is a highly reputable business and sourcing option, there are certain risks:
- Miscommunication. If you don’t speak Chinese (or some other language native to the supplier) and your supplier speaks fluent English, you might not get exactly what you thought you ordered. You can avoid any misunderstandings if you deal with an Alibaba-verified supplier.
- Possible inconsistent product quality. If you don’t request product samples, or the source doesn’t provide them, the product may not look or perform the way you want. This is why insisting on product samples and tests should always be a condition of a contract.
- Scammers. Be wary of any quotes that seem too good to be true, because they probably aren’t. Look for detailed quotations and obtain references. If anything seems odd about a quotation, ask for further details and if you aren’t getting them, you are probably dealing with a fake manufacturer trying to scam you.
How to Source Products Using Alibaba
Before even looking at Alibaba, you need to do your product research first. Once you’ve decided on what products to sell, register an Alibaba account (there is no fee to create an Alibaba account).
To conduct a source product search on Alibaba.com, make sure you change the Search menu default from Products to Manufacturers. Then enter the keywords for the products you want to source. It’s also a good idea to review the themed pavilions that display top-ranking products and the exports of specific countries.
After you’ve made a list of potential product suppliers, send them a Request for Quotation (RFQ). Based on the responses, you want to look for the best combination of:
- Lowest price
- Verified badge on the seller’s profile:
- Gold Supplier. Verified business with commercial or industrial capabilities.
- Verified Seller. Gold Supplier certified by a third party concerning such factors as company profile, management, production capabilities, and processes.
- Trade Assurance Supplier. Gold Suppliers accept payment through Alibaba, which provides payment and order protection.
Once you’ve developed a short list of potential suppliers from the RFQs received, connect with them directly using Alibaba’s chat tool to learn more about their:
- Production capabilities and lead times
- Minimum order quantities
- Packaging and shipment requirements
- Worker safety and human rights practices
- Volume discounts
- Certifications (FDA, CE/Europe, and China standards)
Keep in mind that the RFQ is not written in stone: most suppliers are willing to discuss their pricing and negotiate new terms. In addition to lower pricing, you can also negotiate such conditions as the amount of the deposit, payment terms, and/or faster shipping.
Before you finalize any contract, request product samples. Once you are confident you have selected a reliable product source at a reasonable price that you can resell on Amazon for a profit, create a detailed purchase order specifying all aspects of the order and shipping. Place your order through Trade Assurance to ensure product quality, on-time shipping, payment security, and dispute resolution.
Avoid Costly Amazon FBA Errors
Products sourced from Alibaba are shipped to an Amazon fulfillment center. Be aware that when Amazon mishandles your products, you are owed reimbursement for its errors. Unfortunately, in most cases you aren’t reimbursed automatically; it is your responsibility to identify errors and submit claims for reimbursement.
How much reimbursement might you be owed? Generally speaking, between 1% to 3% of your annual revenues. The more you make, the more potential loss is 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 files claims for reimbursement. And you pay nothing for this service.
The only charge is a percentage of approved claims. And the first $400 in FBA reimbursement is free.
Sign up with GETIDA for free and with no obligation and let us do all the work of getting back your FBA reimbursements while you source more products from Alibaba.