One of the most common and easier ways to sell on Amazon is by buying products from Alibaba and selling them on Amazon FBA. Like many nascent businesses, you might be contemplating the idea of importing products from Alibaba to sell on Amazon. If so, this post is for you.
Alibaba, the Chinese e-commerce company is providing many sourcing options for all types of businesses. If you want to source your products, this e-commerce giant from the East is one of the best options available. Alibaba is a viable option for retailers who are just starting on Amazon and those who are willing to expand their portfolio and diversify their avenues on Amazon. While it is lucrative, sourcing from Alibaba does not come without risks and you need to be careful at every step of the process.
So, we are here to provide you with a detailed guide about how to successfully source products from Alibaba and sell on Amazon.
- What is Alibaba?
- Is it safe to source your products from Alibaba?
- Risks associated with buying products from Alibaba?
- How to buy from Alibaba and sell on Amazon?
- Final Thoughts
What is Alibaba?
For those of you who don’t know, Alibaba is a vast marketplace from China having a huge portfolio of products. So, if you are a seller on Amazon, Alibaba is an easy way to look for suppliers. It means Alibaba will be on the supplier to you and Amazon will be on your retail side. Besides, it is one of the best options to find private label products.
Now, let’s see the common misconceptions about sourcing from Alibaba.
Is it safe to source your products from Alibaba?
Finding the right supplier is the key to succeed on Amazon. It is one of the important assets to sell on Amazon FBA. Besides, security is one of the critical issues for businesses to buy products from Alibaba. Fraudulent transactions are everywhere not only on Alibaba. They cannot be eliminated completely but can be minimized. If you want to use Alibaba for Amazon FBA, you need to have the knowledge, observe, and take a little precaution to handle these scams on Alibaba.
With Alibaba, it is important to maintain secure transactions. There are tons of reputed suppliers who are selling on Alibaba for years now. Opt for gold suppliers who gave a positive reputation and credibility. These gold suppliers pay a huge amount to appear higher in the search results on Alibaba. Though you are offered good deals from non-gold suppliers, choosing gold suppliers will help you avoid scams. Furthermore, Alibaba’s trade assurance program protects buyers’ orders. This program mitigates risks by enabling money-back guarantee if the suppliers meet the terms of order contract including quality and quantity discrepancies or delivery delays.
Risks Associated with Buying on Alibaba
One of the common risks associated with Alibaba is the presence of scammers. Probably, this might be the reason for many people asking, ‘Is Alibaba safe to use?’
The answer would be yes, if you follow some basic guidelines and precautions so that you’ll never get scammed.
Most common types of scams faced by sellers on Alibaba are:
This is quite a common issue while dealing with wholesalers. Often, quality issues are the result of misunderstandings or lack of attention to detail, or fraudulent suppliers who try to scam the buyers by sending cheaper items than they originally decided.
If the scam is from the manufacturers’ end, it can be more difficult to identify. Since the manufacturer purchases low quality materials to manufacture their products hoping that the buyer wouldn’t notice. They commit these scams to reap higher returns by charging higher amounts for quality from the customer.
You can avoid these types of scams by creating clear product specifications such as design, material, and dimensions, etc. And, you can include a third-party inspection before you pay your suppliers.
Payment frauds are on the rise from the past few years. This is how a payment fraud works usually – Scammer accesses the suppliers’ account (probably email) and finds out which orders are about to get paid. They communicate with the buyers over the same email and give different bank account details to the buyer for payment. And, the buyer wires the money to the scammer account without the knowledge that he/she is being scammed.
By the time you or your supplier realizes this fraud, the scammer is long gone with your money and it will be extremely difficult to track them. The only thing that can save you is your insurance if you have any.
How to avoid this scam?
Compare your supplier’s bank account name with the company name listed on Alibaba. If it is different, then it is a red flag.
How to Buy From Alibaba and Sell on Amazon?
Now that we have covered the issues related to Alibaba, let’s get started with the step by step process to source your products from Alibaba.
- Product Research
Product research is the most significant and longest part of ecommerce selling. This step will make or break your entire business. If you choose your products similar to the others, you won’t be able to make higher profits. Look for a product that fills the gap in the market. Alibaba is a great place to find some generic products. Bsides, if you want to find a few private label product websites, this post can help you with it.
If you have decided your product to sell, that’s great, if not, learn how to get started with your product research by reading this post here.
- Get Quotes
Once you have decided what to sell, it’s time to get quotes for your product from potential suppliers. All you need to do is go to Alibaba website, click on Sourcing solutions and go to RFQ (Request for Quotation).
You can give the details of your product like quantity, description and so on.
On the other hand, you can message the sellers directly stating that you are interested in their product. Set up a template first, keep your language simple, direct, and professional. Your template should be asking the basic questions like:
- Minimum order quantity (MOQ).
- Price of MOQ.
- Pictures of the product.
- Types of samples.
- Production lead time.
- Shipping options and payment options.
- Questions related to the customization of the product (if you need any).
Things to keep in mind:
You should ask yourself the following questions while choosing the supplier.
- Do the suppliers have trade insurance?
- Do they have experience with Amazon?
- Do they understand the requirements for Amazon FBA and packaging etc?
- How quickly do you want your products to be shipped? Can they do that?
- Are they authorized to ship to the US or whichever country you want to?
While sourcing the product, keep the following points in mind.
- Are there any patent rights that can prevent you from selling the product in your desired country.
- Does the product satisfy the health and safety specifications of Amazon and the country?
- Does the product come under dangerous goods?
You need to handle all the above mentioned situations, your supplier will not help you with these points.
If you are sourcing from Alibaba, you will have a number of potential suppliers to choose from. Try sorting them into different categories based on your priorities. Contact everyone and get a quote with all the details required. There can be a huge difference between the amount quoted and the final price. So, make sure you thoroughly negotiate for the best price from your supplier. Negotiations are a part of the Chinese businesses. If you get a much lower price than expected, there are chances that the suppliers may cut the corners to get your orders done.
- You talk to different factories.
- Stick to your budget (including packaging, customization, shipping and other costs involved).
- You have a solid idea of the actual prices of the products.
- Stay polite and professional.
- Get Your Sample
Once you have finalized your product, it’s time to buy a sample. The price of the sample may differ from the retail price of the product. If your product is a private label or customized for you, the cost can be higher. While paying for the product, choose a secure payment method like PayPal.
To avoid complications, a seller must decide if a product and the supplier works well with his/her sourcing criteria.
Do you think Alibaba is a good place to find suppliers? Let me know your questions and thoughts in the comment section below.
Customer Success Head at SellerApp
Customer success leader with expertise in coordinating between cross-functional teams in product development and strategy, professional services, sales, marketing and content to deliver excellent customer experience and accelerate growth within the company by ensuring clients’ success.