Ultimate Guide To Sourcing Products and Engaging Suppliers On Alibaba
Alibaba is one of the most popular ways to source for private label suppliers as there are tons of factories in China manufacturing everyday products from garden supplies to phone accessories. Apart from a huge variety of products, suppliers on Alibaba also provide reasonably good prices due to high competition.
Maybe you just started selling on Amazon and this is your first time importing, or perhaps you are new to the Amazon business? Or you have no experience dealing with suppliers on Alibaba? Don’t fret, this article will give you extensive details on how to contact suppliers on Alibaba, how to present your business, and how to avoid scammers on Alibaba. Plus, I will also include questionnaires and email template that you can adapt and use yourself making this process easy and enjoyable.
Alibaba Supplier’s Business Type
But first, here’s a basic understanding of supplier business types on Alibaba. There are 3 types of businesses and you will be able to find that out by navigating to ‘Company Overview’ under ‘Company Profile’ tab as shown in the following image,
In the company overview page, you will be able to view the listed business type, location, main products, and other company details as shown in the following image,
- Manufacturer – This type of business indicates that the supplier is only selling products it manufactures. Manufacturers are highly specialized in their field of products manufactured and usually have only a few specific products that they focus on due to limited tools and machinery. For instance, manufacturer shown in the image below focuses on tempered glass and they only sell 3 types of products which makes them a specialist in the tempered glass field.
- Trading Company – This type of business indicated that the supplier is independently run and does not manufacture, store or own any goods. They act as middlemen between manufacturers and importers who want to buy their products. Keep in mind that trading companies offer higher cost compared to manufacturers and they have a variety of products marketing multiple manufacturers.Pro Tip: Always cross check the company profile and product categories. Some companies might say that they are the manufacturers but if they sell a variety of products then you know they might not be legitimate. The image below is an example of how to cross check the business type and product categories. Being a trading company selling a variety of products show that they are legit. However, there are other aspects to look out for when sourcing for reliable suppliers and not fall into scammers’ traps of which I detailed later in this post.
- Manufacturer And Trading Company – This is common in the industry where suppliers expand their operation by selling and marketing products manufactured in their own facilities and trading complimentary or products within the same industry. For instance, a company manufactures only yoga mats also sells complementary products such as yoga towels and essential oils.
The golden rule is to find a supplier that specializes in manufacturing or trading a certain product. Product specialization comes with a number of benefits (i.e. higher quality, product consistency, etc) that will have a large impact on your Amazon business.
Contacting Suppliers On Alibaba
The first step when contacting new suppliers on Alibaba is, of course, sending the first email/message. I personally prefer to use Alibaba’s live chat simply because it’s more convenient to speak to suppliers and I know the fact that I will get a response within minutes. Be sure to contact suppliers during their time zone (UTC+8) to get a quicker response even though they provide worldwide live support 24/7.
An important point to remember is that most suppliers on Alibaba will likely be using a translation program like Google Translate or Baidu Translate to translate your email/message as well as their subsequent replies to you. Remember, most online translators are still imperfect so expect some errors and possibly a few misunderstandings.
From my personal experiences, a huge bonus if you can read and type in Chinese as that will certainly speed up the sourcing process and you might get more privileges from suppliers.
Pro Tip: Always have a list of pre-qualifying questions ready before contacting suppliers to be more efficient and effective.
List of Questions to Ask Alibaba Suppliers
Carefully crafted below is a list of questions you can use when contacting potential suppliers on Alibaba. Use these as your reference point and print it out if it makes it easier for you.
- Do they have the product(s) you want? – Always good to double check with the supplier just in case.
- Are they able to label your product with your own branding (OEM options)? – There is no point ordering from the supplier if you cannot create your own brand and product line. There are plenty of sellers sourcing on Alibaba and you don’t want to be selling generic products.
- How does the private labeling process work with them? – This may vary from supplier to supplier so ensure that you understand the process to avoid any hiccups along the way.
- What are the price tiers for the product? Do they provide samples? – All suppliers have a different price tier depending on the quantity ordered. Generally speaking, bulk orders always produce a lower cost per good, which will allow you to retain more profits. Also, you can request for samples.
- What is the MOQ (Minimum Order Quantity)? – Let them know that you are “testing them out” before asking them about the MOQ.
- What is the estimated time until products are ready to be shipped to Amazon’s warehouse? – Product manufactured and delivery time will adversely affect your cash flow position and BSR (Best Seller Rank) on Amazon.
- Orders covered by insurance? – Particularly important for high priced and fragile products such as power banks or beer glasses.
- What are the payment terms? – Suppliers usually accept payments through credit card, Escrow, PayPal, Western Union, and bank transfer. You might want to also ask if they provide payment terms on future orders. Be aware that payments through Western Union and direct bank transfers are very risky as suppliers might collect your payment and not deliver your products. I will further discuss due diligence to avoid scammers on Alibaba later in this post.
Below is a sample template you can use when contacting suppliers whether it is using their live chat tool or email. A good rule of thumb when reaching out to suppliers or anyone else is to have only ONE goal in mind. We live in a world where people’s attention span is shorter than goldfish so focus on only one goal when contacting suppliers so you get the response you need. Our goal for this initial contact is to obtain more information in regards to the product for comparison and supplier evaluation.
Hi Mr./Ms. Supplier,
My name is Eugene and I am searching for a reliable supplier to work with long term. I came across your company on Alibaba and wanted to place an order for [Product A]. Before I do, however, I have just a few questions:
- What OEM options do you offer?
- What is your minimum order quantity?
- What is your cost per unit and product price tiers?
Could you please get back to me at your earliest convenience with the above information?
Thanks and I look forward to hearing from you and hopefully placing an order with your company.
Pro Tip: Depending on what you are sourcing, update the template accordingly.
A simple, concise, and straight to the point email/message to engage with suppliers. The template is structured specifically to make you look more professional and most importantly saves you time by requesting information that you need to proceed in a timely manner. Once you have begun conversations with multiple potential suppliers, you can proceed with the remaining questions listed above to gain more insights to help you with decision making.
Once you are satisfied with the MOQ and pricing, it’s time to order some samples for quality assurance. Great suppliers are more than happy to provide samples for free and all you need to do is pay for shipping. I suggest moving on to the next supplier on your list should any of them won’t provide any samples. Below is a sample template to ask for samples,
Thank you for your prompt response Mr./Ms Supplier.
I have gone over the information you sent and we are happy to proceed with the order from you.
However, we would like to get some samples first to test the quality before moving on to our real order, so can we please arrange to have samples for [Product A] shipped to the following address?
Looking forward to your inspirational response.
Again, keeping the email/message simple and concise is the way to go.
One of the best part reaching out to suppliers on Alibaba is that you get to learn how to negotiate. The minimum order quantities are almost always negotiable, all you need to do is ask. You never know until you ask!
Pro Tip: A good negotiation leaves both parties happy with the outcome so push a little but don’t go overboard.
How to Avoid Scammers On Alibaba
As great as Alibaba is, it’s also plagued with scammers that you need to be aware of when contacting various suppliers. One of the greatest fears sellers have is being scammed by a supplier out of hundreds and thousands of dollars. A great advice I would give is always be vigilant and trust your gut feeling when sourcing for suppliers on Alibaba. Using the reference list below, you will be able to steer away from most scammers on Alibaba.
- Avoid Free Account Members – This is the basic rule to enforce for yourself reducing your exposure to Alibaba scams. Free accounts are not checked or verified by Alibaba therefore if sellers are serious about offering quality services, they will pay required fees for a Gold Supplier account to validate their commitment. Although this does eliminate scammers, but keep in mind that this doesn’t guarantee a professional service or quality products. Technically you haven’t been ‘scammed’ if you received lower quality products, but it can be just as damaging to your business.
- Avoid Big Brands – Branded goods are by far the most common product in these scams on Alibaba. This is because big brands carry high persuasive power that scammers seize this opportunity to carry out their misconduct. They know that a brand attracts higher margins simply because of the name, and it’s very easy to advertise the name. For instance, electronics are particularly attractive to scammers due to their popularity and high profit margin. Alibaba will also notify buyers when big brand names are being searched reminding buyers to be cautious.
- Verify Suppliers – Alibaba has their own verification program in place which serves to safeguard buyers by ensuring sellers are legally registered companies. Here is a chart that summarizes the 3 different levels of verification Alibaba,
- Verified Documentation – Asking for legal documentation from a Chinese company is another way to quickly reveal untrustworthy companies should they refuse to send you any documentation. Key document to ask for is a business license and legitimate companies usually agree to comply. Keep in mind that you need to verify the documentation, as we all know that pretty much anything can be replicated in China, including official documentation. You can verify documentation received using this website, China Checkup, with a small fee.
- Get Samples – It is vital that before you invest any significant amount of money into inventory, you need to get samples from suppliers to check and verify product quality.
- Do Your Homework – Time to play detective and put effort into researching more about suppliers found on Alibaba. The best and easiest way to do is to ask Google for help. Do they have a website? Is the company address legit? Do they have any social media accounts? Do they have any bad reviews online? This may seem obvious, but you will be surprised how many sellers are not doing their homework.
- The indication of Company Size – You can also use information available on Alibaba to determine the legitimacy of a company. Companies with less than RMB500,000 (around US$75,200) registered capital should be avoided if possible. This is the strongest indicator of the supplier’s scale of operations as the more capital they registered, the more likely they are to care about their reputation.Another good practice is to cross-check the established year of a company and make sure it matches their profile. For instance, the company shown in the image below is established in 2011 and have been on Alibaba for 11 years. Meaning we are in the year 2022 now? Also, the registered capital is only RMB30,000 (around US$4,510) Not sure about you but this sounds dodgy to me!
Compared to the following company which was established in 2013 and have been running the business for 4 years on Alibaba (matches the year we are in now which is 2017). They also have a registered capital of RMB2,000,000 (around US$300,700) which makes them look more trustworthy. Which company would you contact and source from? The answer is pretty obvious.
- Trade Shows and Exhibitions – Another great way to figure out if a supplier on Alibaba is reliable to to ask if they attend any trade shows or exhibitions throughout the year. It is safe to say that legitimate companies would attend trade shows to promote their businesses and prospect potential clients. You can search the supplier details on the official China Exhibition website should they attend any of these events.
Sourcing for reliable suppliers on Alibaba might be a new experience for you but with all the gold nuggets given in this article, it can be safe and rewarding at the same time. You can refer back to this article and drop a comment whenever you have questions. Always do your due diligence and if a deal feels too good to be true, trust your gut feelings and walk away. There are plenty of suppliers on Alibaba and all within a few clicks away.
There are also other B2B sourcing platforms such as Alibaba’s sister company AliExpress of which you can purchase products in smaller quantity at a higher price of course. You can also check out other popular sourcing platforms such as Made-In-China and Global Sources but do know that majority of suppliers on these alternative platforms are on Alibaba as well. Afterall, Alibaba is still by far the largest online B2B sourcing platform. Best of success sourcing for your reliable suppliers on Alibaba.
Eugene Cheng is an Amazon business consultant and blockchain enthusiast. He helps aspiring and established entrepreneurs build a profitable Amazon FBA business so they can unlock their true potential. Learn more about him at https://wiseintro.co/freedomprofitsblueprint