How to Source On Alibaba And Sell On Amazon FBA // A Step-by-Step Guide
In the digital age, the art of e-commerce has become a cornerstone of retail success, particularly for ambitious entrepreneurs looking to tap into the vast potential of platforms like Amazon FBA (Fulfillment by Amazon). At the heart of this venture lies the critical task of sourcing products - a process that can make or break your business. The global wholesale giant Alibaba emerges as a key player in this narrative, offering an extensive array of products catering to diverse business needs.
This comprehensive guide will be your roadmap through the intricate process of sourcing products from Alibaba to sell on Amazon FBA. We will walk you through every step, from the initial phase of product selection on Alibaba to the complexities of shipping and customs, and finally, getting your products live on Amazon.
We will focus on leveraging the strengths of Alibaba’s vast product range, cost-effective options, and flexibility while skillfully navigating its challenges. You will learn how to identify reliable suppliers, negotiate effectively, and ensure product quality, which is vital to a successful sourcing strategy.
Additionally, we’ll delve into the specifics of Amazon FBA, a program that can dramatically streamline your logistics and distribution, allowing you to focus on growing your business. From understanding Amazon’s stringent requirements to mastering the art of listing and marketing your products, this guide aims to provide a holistic view of the journey from sourcing to selling.
Embark with us on this enlightening journey, where the goal is to inform and empower you with practical insights and strategies, transforming your entrepreneurial vision into a thriving Amazon FBA business.
How To Source Products On Alibaba
Do you want to know the best way to source products on Alibaba to sell on Amazon? Have you been looking to start an FBA business but are unsure where to start?
One of the most common and easiest ways to start is by buying products on Alibaba and selling them on Amazon's FBA platform.
If you've been looking to start an FBA business, you almost certainly have encountered Alibaba. Alibaba is a massive Chinese marketplace with millions of sellers and millions of products for sale in any quantity. Sourcing a product on Alibaba and selling it on Amazon is one of the most popular methods of doing FBA, and it's a great place to start as a beginner. Check out our low-risk, step-by-step guide to help you get started and save time and money.
Post A Buying Request
Once you create an Alibaba account, go to the tab "Sourcing Solutions" and "Submit RFQ," which is an industry term meaning "Request for Quotations. When you do this, you throw your info to up to a few thousand potential suppliers.
We recommend creating a dedicated email just for Alibaba to cut back on Spam.
There are a few blocks to fill out:
Keywords for products—Use a few keywords that you think will attract the attention of potential suppliers. For this part, you can be a little vague as you aim to get the attention of as many people as possible.
Detailed description—This box requires a reasonably exact description of what you seek. While what is needed varies by by-products, you should include materials, dimensions, and whether you need logos or customization.
**Consider presenting yourself as someone lower on the totem pole, such as a buyer or procurement manager. When ordering, you must run all decisions by your “CEO”–this trick will give you room while negotiating.
Quantity—You may not think the amount you order is a big deal, but it is. After the product, this is one of the main things suppliers look at. The more you order, the lower the price; a supplier may overlook you if it’s too low.
Photos—Make sure you have good photos that accurately portray what you want, including close-ups of any details you want to include.
Send Direct Messages
You actively look for potential suppliers on the Alibaba website for this step. Go to the search bar and type in the product name you are buying. Alibaba should give you dozens of results that may or may not match what you seek. Be careful about which ones you are messaging and contacting factories as much as possible, not resellers. I’ll review some tricks later to figure out who’s legit. If you’re unsure, go ahead and message to gauge their response. With this step and the RFQ step before it, your goal should be to get as many responses as possible.
Here’s a basic template you can use:
Subject(s): “I’m interested in [Product Name]” or “RFQ for [Product Name]”
Hello [Potential supplier] (Note: use their given name if you have it),
I’m (your name) the procurement manager for [company name], and I’m interested in receiving a quote for [product name]
If you manufacture [product name], please email me more information to [your email]
In your response, include
Pictures of the product and a photo of [product detail] (note: the detail can be anything; make sure it forces them to use pictures taken for you and not found elsewhere)
The Minimum Order Quantity
The price at the MOQ and [some other amount] (Note: I find that getting two prices for different quantities lets you know their flexibility on a price and helps in negotiations later on)
[the price to make any changes or customization that you want] (be specific on this part, but you can skip it if you want a product as-is)
What is the shipping cost of sending a sample?
The Closest port (note the port should be close to where they claim they are located if you’re dealing with a factory; if it’s too far, be cautious)
Thanks. I look forward to hearing back from you!
[your name]
Procurement manager
[Company name]
Please note that the salesperson answering these emails sees the same email templates, so take time to personalize it and make it yours. This will help it stand out from the crowd.
Another thing to note is that English is almost certainly not the first language of the person you are talking to. So, be sure to use clear and straightforward language while making sure you are getting your point across.
See our post on the best questions to ask Suppliers on Alibaba Here!
Get as many responses as possible.
I can’t stress enough how important it is to have as many potential suppliers as possible. The more suppliers you contact, the more likely you are to find the best one. It’s common to have a list of 50-100 (and sometimes even more). In other words, if you think you don’t have enough, you’re likely correct, and if you think you have too many, you’re likely wrong.
Keep responses organized
By this point, you should have a sizeable number of responses from potential suppliers. Once you get here, you must list the contact information and prices. Once you do this, you’ll notice the averages and the outliers. The further from the average an outlier is, the more likely it is not a legitimate company or a potential scam.
Using Excel, separate the following information into distinct cells:
Suppliers name
Website
Supplier Email
MOQ (Minimum Order Quantity)
Cost Per Unit
Product Cost
Shipping
Notes
Total Cost (MOQ x Cost per unit)
If you’re lazy, we made a template that you can use: https://docs.google.com/spreadsheets/d/1JrxP_3vNcKBaccLwVVKu5ZCxgzpSmqems4kUzCPlEu8/edit?usp=sharing
Figure Out Who Is Legit On Alibaba
Always remember that the best supplier directly buys from the factory, not a reseller. When a potential supplier sends you a product picture, zoom in and see if you can find a logo or factory name. If you see a name, find that factory and contact them directly. If possible, avoid trading companies, resellers, and buying offices and attempt to do business directly with the factory.
Look for a Gold Supplier offering Trade Assurance on Alibaba - If they have both of these labels, it means Alibaba has vetted the company and determined its legitimacy. With Trade Assurance, Alibaba can act as an escrow service for your transaction.
Find out if they have a narrow product line. Suppose you’re talking to someone who offers hundreds of unrelated products. In that case, you’re probably talking to a trading company or a reseller because a factory makes a limited number of related products.
Check out 1688.com - Another resource is the website 1688.com, which is like Alibaba but for Chinese buyers looking to buy from Chinese factories. There is not much motivation for the Chinese to resell to the Chinese. This is considered an advanced trick because it is entirely Chinese and requires you to sign up to use it.
Ask for documents - Ask a supplier what documents and certifications they have, such as ISO 9001. Always ask for business registration certificates and check the dates. Ensure the business certification matches the supplier’s information; otherwise, you may be dealing with a reseller.
Is personalization an option? If you’re dealing with a factory, you should be able to customize your product since they have direct access to the machinery.
Attempt to schedule a visit (even if you don’t plan on going) - If they are a legitimate factory, they should be perfectly fine with you visiting if they make excuses; this should raise some flags.
Keep in mind factories are typically pretty weak in both marketing and English. So, if you receive poorly formatted emails, it’s not a big deal. Besides, do not expect them to speak good English or any English. It’s possible and common for them to use an online translating service to translate messages from Chinese. Just make sure they are making an effort to be honest and helpful.
How Do I Avoid Getting Scammed Or Ripped Off?
Google them - A good company will have an essential web presence. Please make sure there are no warnings about them on online forums.
Look for reasonable prices. If a supplier sounds too cheap to be accurate, they probably are. If you get a quote that is way cheaper than everything else or EXACTLY ( and I mean exactly) what you want from them, you should be very suspicious of their authenticity.
Check their email address - Pay attention to email addresses. QQ addresses are standard, but check if they are general sales@Comanyname.com. It’s an excellent way to feel the authenticity of the person you’re talking to.
Ask detailed questions - They should know these questions well if they are a manufacturer.
Ask for pictures—A good supplier should provide detailed pictures of the product and the factory. They should also be able to provide pictures quickly and fulfill any request you might have, such as pictures of specific equipment or product details.
Get a sample before you buy - any legitimate supplier will have no problem shipping a sample. We’ll talk more about this later.
Find out about their selling history - Ask them who they’ve sold to and, if possible, get a reference from another customer.
Request an on-site visit or factory tour—While this step is unnecessary, it is beneficial. You can hire a third party to visit the factory and inspect it in person (Cosmo offers this service, by the way), or if you’re willing to spend more, fly in and inspect it yourself.
Here is a summary of our full post on the best ways to avoid scams!
Follow-up Questions to Ask Suppliers on Alibaba.
Before and during the negotiation phase, you should talk to half a dozen suppliers or more, depending on the product. While questions can vary depending on the product, here are a few to ask and use as a reference.
Do you understand what FBA is and what the packaging requirements are?
Have you ever exported to the USA (Or wherever you’re shipping to)? If so, how often?
Do you have the proper certification to ship to the USA?
Do you have SINOSURE or other trade insurance?
If I place an entire order, how quickly can you ship it?
What payment terms do you require for a new customer?
Can you refund my sample fee if I place an entire order?
What is the best-selling product made in your factory?
Rate Your Suppliers On Alibaba
At this step, you should start eliminating the bad apples and figuring out which factories are worth your business. Now that you have a list and a good idea of their quality make a rating system. You can use whatever method you like, but I tend to give them a bad, meh, OK, good, or great score. So eliminate the bad, keep the meh’s contact info, and contact the OK, sound, and great ones.
First, you’ll want to contact the good or even the OK ones (NOT the great ones) to develop a template and get a solid idea of prices and a feel for the product. If you message many ‘OK’ Factories and aren’t responding, perhaps your message needs some work. Fortunately, you now have the opportunity to tweak your messaging before you reach out to the suppliers you want. Next, you can message the great ones, express your interest, and discuss their final prices, order details, shipping, and all the intricate details needed to make a final purchase.
Keep in mind that ratings can change as you talk with factories. Good and OK suppliers become great ones, which you can eliminate if they never get back to you or notice red flags. Ensure you are keeping records on how capable they are of producing your item at your desired price and quality and how well they communicate with you. Follow your instincts.
How To Negotiate With Suppliers On Alibaba!
The quoted price is rarely the final price, so negotiate thoroughly with your supplier to ensure you get the best price possible. In Chinese society, negotiations are expected and part of business norms. If you get a low price, you should expect the factory to cut corners to complete your order.
Talk to multiple factories - even if you have one factory you think is good, you should still maintain contact with other factories and, if need be, use one factory’s quotes in negotiation with another factory.
Know the actual price of all items - When compiling your list of potential suppliers in the earlier step, you should have a pretty solid idea of the item’s manufacturer’s actual price. Remember when you order that the factory is a business that needs to profit.
Stick to your budget - Figure out the total cost of the entire project, including the complete quantity order. This amount includes customization, packaging shipping, and more. It’s straightforward to go over your budget.
Be polite, professional, and cheerful - Just because they work at a Chinese factory does not mean they are not human. Like anyone, they love hearing praise and prefer to work with people they like and enjoy talking to. Offer compliments about products when they do a good job. And make sure that you come across professionals–this will give you more legitimacy.
Check out our guide on how to negotiate with suppliers
How to Order Samples from Suppliers on Alibaba
Once you believe you have found a suitable supplier at a reasonable price, it’s time to order product samples. You are expected to pay a small sample fee, ranging from free plus shipping to the regular total retail price. You should expect to pay more than retail plus shipping if you get a custom-made item. Shipping is also usually by air, which is more expensive but takes 3-5 days versus more than one month. Using PayPal for the sample is typically the best way to pay due to solid buyer protection.
How Do You Pay For An Order On Alibaba?
Even if you do not intend to use them, a supplier must use PayPal and Alibaba Trade Assurance. Both these services verify the suppliers, and not having either may mean they were delisted for fraudulent activity.
We determined that Veem (Link) has the lowest fees and associated costs. We also recommend OFX, TransferWise, Wyre, and Xoom. Even though most people think PayPal is the best, we do not recommend it due to the high fees. Also, avoid T/T, direct bank transfers, and Western Union, as those are very easy to get scammed.
Cosmo analyzed several ways to pay a supplier to find the best one. The full post is here.
Cosmo Sourcing // Go Straight To The Source!
Do you want our team to find great manufacturers, get quotes, and introduce you directly to great suppliers?
Our Simple Sourcing service is designed to do everything to turn your idea into a shipped product. Our services are designed to do everything to take your idea, turn it into a product, and ship it to the final destination. Cosmo can do everything from creating a product spec sheet to validating, sourcing, ordering, evaluating samples, arranging inspections, finding freight forwarders, quality assurance, negotiations, and shipping. We aim to handle every single step of your business in Vietnam for you.
If you start a new business, finding products and suppliers for your products is one of many things you need to handle. Our services are designed to handle every part of your business in China and Vietnam so you can focus on the rest of growing your own business.
We have helped clients from Fortune 500 companies, brick-and-mortar stores, FBA sellers, and brand-new businesses. So don’t hesitate to contact us and let us know how we can help you.