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SELLERS’ GUIDE TO UNDERSTANDING ALIBABA

Starting up as an Amazon seller needs proper planning and research. Like any business, you will need to be able to know your market, the right sources for your product, supplier information, etc. That’s where Alibaba comes in. You probably have heard, and read a lot about Alibaba. What exactly is Alibaba?

Alibaba is the leading platform for global wholesale trade. Alibaba is used as a global sourcing platform for Amazon sellers as it helps them find product and suppliers quickly and efficiently.

Alibaba is an international business-to-business platform. Using Alibaba, you can find a manufacturer to create your private label product and have it imported right to your market or to an Amazon fulfilment centre. Alibaba is also an e-commerce store (similar to Amazon) that mainly operates through its Taobao and Tmall brand, in China.

Taobao is the largest e-commerce store in the world. It connects consumers to consumers. Taobao is similar to eBay, it allows consumers to sell products to each other. Tmall is the Amazon of China, it primarily connects merchants to consumers. Tmall is also quick, offering delivery in two days or fewer — similar to Amazon Prime.

HOW TO USE ALIBABA

Alibaba is more than just an online market for buying and selling. You can use it for:

  1. Finding a product or manufacturer on Alibaba

Alibaba is one alternative you can choose for all your sourcing needs. Alibaba has a similar layout to Amazon making it easy to navigate. You have two main ways to find a supplier for your product:

  1. Product Search: On the Alibaba home page, you can enter the item or related keywords that you wish to source in the search bar and search by suppliers. Then Alibaba will display relevant results.
  2. Request-for-Quote(RFQ):  This method for searching for products on Alibaba involves putting out an advertisement for the product you need to have manufactured, and inviting interested merchants to contact you through your Alibaba account directly. An example of an RFQ is shown in the screenshot below.

The picture above shows an RFQ being filled in before submission. It’s pretty easy to do as Alibaba has already provided categories you can choose from. It also gives you a field you can fill in to give the suppliers your product specifications.

The second screenshot now shows where you can track the progress of your RFQ. From here, you can see that the RFQ was approved and what was left was to wait for quotations from suppliers to come through.

For Private Label Manufacturing

A private label product is a good or service produced by another company and resold under a different brand or label. Private labelling is one way you can stand out as an Amazon Seller. Where does Alibaba come in? You can use Alibaba to find Private label manufacturers.

3. For Dropshipping

A drop shipper is a type of seller that advertises the products of a manufacturer under their brand. Then, when customers buy that product, the seller orders the product through the manufacturer who then ships it to the consumer on their behalf.

If you are a dropshipper or are planning to start dropshipping, you can use Alibaba to get products straight from the manufacturer and to your customers. 

However, it is worth noting that because of the MOQs or Minimum order quantities it is hard for drop shipping to work with Alibaba suppliers. It may be easier to work with Ali express sellers who sell in smaller quantities. 

4. Wholesaling

Wholesaling is the practice of buying goods in bulk to resell to consumers. Alibaba is a good source for buying products in bulk. You can buy the product you want in bulk at a discounted price and then resell it on Amazon with markup.

HOW IS ALIBABA DIFFERENT FROM AMAZON?

Alibaba and Amazon are both e-commerce platforms and are growing online markets for a lot of products. However, there are some differences between these two companies.

If you’re new to working with international businesses, there are a few things you need to know about Alibaba and Chinese culture. Understanding these differences will improve your ability to communicate and negotiate with vendors, resulting in smoother transactions.

  1. Language barrier for many sellers and Chinese suppliers

While most of the sales representatives on Alibaba can speak, read, and write English, there can still be some difficulty with communications, especially over email. 

Chinese pleasantries are different. They might refer to you as “honey” or “dear” in emails, which is perfectly normal. And honour is a big deal in China. Be sure to be respectful when speaking with your suppliers (always a good idea, regardless of your supplier’s location!).

Below are two screenshots that demonstrate the language difference.

From the screenshot above, you can see that ‘dear’ is not an endearment but a pleasantry in Chinese Culture.

2.Work Ethic and Holidays

In China, many workers live by the 996 schedules, meaning they work from 9 am to 9 pm, six days per week. These 72-hour weeks might seem intense for those used to 40-hour workweeks. However, it is fairly common in China. 

 China gets pounded with orders from October to December. This isn’t only for American shopping holidays such as Black Friday and Cyber Monday, but also for China’s version of “Black Friday”. It’s called Singles Day, and it falls on November 11.

Like Black Friday, Singles Day is touted as China’s biggest shopping day of the year. One implicit benefit of Singles Day is that many of Alibaba’s products are discounted, much in the same way that Amazon discounts their products for Black Friday, Cyber Monday, and Prime Day.

HOW TO BUY PRODUCTS ON ALIBABA AND SELL THEM ON AMAZON

Here are a few simple tips to help you get your product from Alibaba and sell them on Amazon:

1. Carry out Product Research 

Product research is the most significant part of e-commerce selling. This step will either make or break your 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 and a lot of Suppliers.

Another great technique is to find trending products on pinterest.com and then find them on Alibaba to sell on amazon for a healthy profit. 

2. Get quotes

Once you have decided on what product to sell. Then, you can get quotes for your product from potential suppliers. All you need to do is:

  1. go to the Alibaba website, 
  2. click on Sourcing solutions and go to RFQ (Request for Quotation) as seen in the screenshot below. 

3. Give the details of your product like quantity, description and so on in the fields provided. See the image below.

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:

  • What is the Minimum order quantity (MOQ)?
  • What is the price of the Minimum Order Quantity?
  •  Are they able to send pictures and videos of the product?
  • Are they able to send samples of the product? 
  •  What is the Production lead time?
  • What are the Shipping and payment options?
  •  Any other questions related to the customization of the product (if you need any).

See the screenshot below for an example. 

Picture: Locating Suppliers on Alibaba for Jumping Castles.

Picture 2: Directly contacting suppliers

While choosing a supplier ask yourself the following questions:

  •  Do the suppliers have experience with Amazon
  •  Do the suppliers have trade insurance?
  •  How quickly do you want your products to be shipped? Can they do that?
  • Do they understand the requirement for Amazon FBA and packaging etc?
  •  Are they authorized to ship to the US or whichever other country you want?

 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?
  •  Is the product considered a dangerous good?

3. Negotiate

You will have several suppliers to choose from. Sort them out into different categories based on your priorities. Get a quote with all the details required and get in contact with everyone. There can be a huge difference between the amount quoted and the final price. You should thoroughly negotiate for the best price from your supplier. Negotiations are part of 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.

Ensure that you:

  • 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. 

4. Get your sample

Once your product has been finalized, you need to get a sample. The price of the sample may differ from the price of the retail price of the product. The cost can be higher if your product is a private label or customized for you. Choose a secure payment method like PayPal, while paying for the product.

5. Inspect and Ship your Product

 Once you are satisfied with the product and the result of an inspection, you can now prepare the product to be shipped to your Amazon Centre. Then, you can go ahead to list your product on Amazon. 

IS IT SAFE TO SOURCE YOUR PRODUCT FROM ALIBABA?

The key to succeeding on Amazon is to find the right supplier. It is one of the most important aspects of selling on Amazon FBA. On the other hand, you are aware of the scams that are everywhere including Alibaba. They cannot be eliminated 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. Here are a few provisions that have been put in place to ensure that you safely source products from Alibaba. 

1.Alibaba Gold Suppliers. Gold Suppliers will have the Gold Supplier icon on their page and it lets you know that they have been inspected and given a seal of approval by Alibaba itself, plus they’ve passed authentication and verification checks which are typically done by third party agencies. Gold Supplier icons will also let you know for how many years this supplier has been active on Alibaba, which is a good indication of their trustworthiness. 

Note that using Gold Suppliers isn’t a failsafe way to ensure you’ll have a trustworthy supplier, but it’s a good filter to start with. There is still a possibility of scams with Gold Suppliers, and non-Gold Suppliers can still be trustworthy, so do your due diligence.

2.Alibaba’s trade assurance program

Alibaba’s Trade Assurance Program protects buyers’ orders. This program mitigates risks by enabling a money-back guarantee if the suppliers meet the terms of the order contract including quality and quantity discrepancies or delivery delays.

WHAT ARE THE RISKS ASSOCIATED WITH BUYING FROM ALIBABA?

One of the most common risks associated with Alibaba is scammers. This might be the reason many people ask “is Alibaba safe to use?”The answer would be yes if you follow some basic guidelines and precautions so that you will never get scammed. 

The most common types of risks faced by sellers on Alibaba are:

  1.  Payment fraud

This can happen when scammers access the suppliers’ account (probably through email) and find 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. 

To avoid scammers, compare the suppliers’ bank account name with the company name listed on Alibaba. If it is different then it’s a red flag. Confirm the payment details on multiple communication channels like WeChat and email 

2. Low-quality products

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 you by sending cheaper items than you originally chose. 

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. 

Such scams can be avoided 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. Inspectaman can assist you with product inspection.

ADVANTAGES OF BUYING FROM ALIBABA

The following are the main advantages of buying from Alibaba:

  • Alibaba has the lowest wholesale pricing allowing you to make a higher profit.
  • There are millions of products within an extensive selection of niches.
  • The ability to design your custom products, affordably.
  • Easily assess reputable suppliers based on their Supplier Type, number of transactions, reviews, and response time and rate.
  • You gain more control over your product packaging and shipping allowing you to provide a better customer experience.
  • You can monitor the quality of products before they are sent to the customer which can help lower refund rates

DISADVANTAGES OF BUYING FROM ALIBABA

  • The minimum order on some products can be in the hundreds. With a higher upfront cost, the risk is on the entrepreneur buying from Alibaba
  • Entrepreneurs can face legal action selling brand name products from Alibaba as they’re not officially licensed.
  • The product photos aren’t always what the finished product looks like. Thus, frustrating entrepreneurs who receive packages they’ll be unable to sell
  • Some niches have obstacles that entrepreneurs face when buying from China. For example, in fashion, clothing sizes are often in Asian sizing instead of American which can result in clothing sizes that are too small for your key demographic.
  • Upon arrival, some products you’ve ordered can be faulty or broken. Also, some entrepreneurs have challenges with product quality after placing their second or third shipment
  • You can’t start selling the same day you place the order. This can add delays in your selling time frame. Also, if you sell out of inventory, it may take some time before you’re able to restock products leaving customers frustrated.

CONCLUSION

To avoid complications, a seller must decide if a product and the supplier works well with his/her sourcing criteria. If you are a seller on Amazon, Alibaba is an easy way to look for suppliers. Alibaba is one of the biggest product sources you might want to use. Sourcing a reliable supplier for your product from Alibaba might be a new experience but also a rewarding one. With some basic knowledge and common safeguards, it can be pretty safe, secure and cost-saving.

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