Starting to sell on marketplaces is a challenging process that comes with a big dilemma: where to source your products from? You may try local wholesalers or manufacturers, or even consider reselling stock. But the truth is that sourcing your products on Alibaba could be the best start. That’s why you should learn how to buy from Alibaba.
In this article, we will teach you how to navigate their website, how to pick manufacturers, and will even give you some tips that you’ll love.
Part 2: What Metrics to Consider When You Buy From Alibaba
Part 3: Tips for Buying From Alibaba
Part 4: Pros and Cons of Buying From Alibaba
Part 5: Conclusion
Alibaba is perhaps the biggest Business-to-Business marketplace. It is located in China, but it’s available online to businesses worldwide.
If it were to think of Alibaba from a metaphoric standpoint, this place is a treasure chest where you can find all the imaginable and unimaginable products. From small household items to automotive and beyond, you can find it all here.
Since the platform is Chinese, most suppliers and manufacturers here are from China. For someone who just starts selling, this means the possibility to source cheap products or create affordable private label items.
Dedicated to sellers and manufacturers, Alibaba is a bridge between the former and the latter, and a useful business growth tool as long as you know how to make the most out of it.
The first thing to learn if you want to buy from Alibaba is the metrics you must consider each time you want to buy a product.
Is perhaps the most important thing to check. This lets you know how much a single item costs you so that you can compare the purchase cost with the price you could charge for that item. Ultimately, you can use these numbers to calculate your potential turnover.
One thing to remember is that the unit price you see on Alibaba is not what you’ll end up paying for the single unit. You must also account for handling and shipping costs.
Some manufacturers support the costs of getting the products from their warehouse to the port, and this is indicated by the symbol FOB near the unit price.
Minimum Order Quantity (MOQ)
MOQ is another important thing to check with each manufacturer, especially if you’re a beginner. All suppliers on Alibaba practice a wholesale policy, but there is a difference between buying 100 or 1,000 units. If you want to start small, search for a supplier that allows for smaller MOQ.
To determine how much your order will cost you, just multiply MOQ by unit price.
Once you’ve figured out unit price and MOQ, check the payment options. There are quite a few, but some are better than others.
- Letter of credit: Is perhaps the fairest payment method for both seller and buyer, giving some payment security to both. However, issuing a letter of credit is a complex and time-consuming procedure. If the amount is less than $2,000, perhaps you’d be better off with an alternative.
- Upfront bank transfer: You will pay the supplier before the commencement of production. This is risky for the buyer, especially if the supplier has a scarce history on the platform.
- Western Union: Is one of the riskier methods. Not only you’ll pay in advance, but tracking payments made with this method is very hard.
- Money Gram: This service is similar to Western Union and poses similar risks.
- PayPal: Not all suppliers accept PayPal payments, but if they do, this is one of the safest options. This platform established buyer protection a while ago, and you can ask for a refund if you don’t receive the merchandise as ordered.
Another thing you should check is the shipping policy the supplier has. Some of the most important details include:
- Who’s responsible for shipping costs (you or the supplier)
- How long will it take for them to ship your order
- Shipping method
If you’re new to Alibaba, each supplier will seem like the best supplier at first glance. Being, in essence, nothing but a big marketplace, manufacturers and wholesalers do their best to polish their profiles to score a sale.
To avoid falling victim to scams, do some background check on the company. Start with their years of business on Alibaba. If they’ve been around for long, chances are they are a reputable seller.
Besides basic information, reviews, and trade capacity, also check their supplier status. We recommend to trim out everyone who doesn’t have a Gold Member status.
Supplier’s Official Website
If a manufacturer is reputable, chances are they have an established website. Check it and see if the information on their Alibaba profile matches those on their website.
Now that you know what metrics to check, it’s time to find out how to source goods from Alibaba.
1. Verify Suppliers
Using the Assessed Supplier, Trade Assurance, and Gold Supplier search options when looking for suppliers on Alibaba is a first step towards finding a reliable source. But don’t settle for it. Always use Google to verify the supplier and make sure they are truly legit.
2. Shop Around
The beauty of Alibaba is that it gathers a host of suppliers at just a click away. You can choose to send them your requests and wait for a reply, or express your interest in a product via AliSource Tool and wait for the offers to flow. Compare quotes and product quality to close the best deal.
3. Ask for Samples
Don’t shy out when it comes to asking for samples. You must assess the quality of the products you want to buy, and the only way to do this is by asking for samples. Most suppliers on Alibaba will gladly comply with your request.
4. Ask Questions
Besides asking for samples, communicate with the manufacturers and ask all you want to know. Whether you have doubts about shipping or want a discount for a bulk order, just ask for it. Frequent communication also helps you build a relationship with the supplier, and this can open you the door to new possibilities, such as getting better deals or working on product customization.
5. Validate Your Product Idea
Did you fall for an awesome gadget and are sure you’ll revolutionize the world with your product choice? Think again. Go on Amazon and AliExpress and see how many people are actually searching for that item. Just because you like it, it doesn’t mean it sells.
6. Get Friend’s Help
If you happen to know someone in China, ask them to meet with the supplier and visit the factory. This is perhaps the best way to assess the reliability of the manufacturer and the quality of your order.
Like anything else, Alibaba comes with advantages and drawbacks. Here is a quick look at both.
- An extensive range of products in all categories. Due to the number of manufacturers selling through this marketplace, there is a vast offer of products in each category. This gives you high chances to find the exact product you are looking for; due to high competition, most manufacturers will also agree to work with you and customize the product.
- Huge number of suppliers to choose from. Alibaba is the largest B2B marketplace in the world where most manufacturers and wholesalers from Asia and other parts of the world sell their products. Thanks to this, you will be able to compare quotes, product offers, production time, and choose the most suitable supplier for you.
- Low manufacturing costs. Another great thing that derives from the competition is the reduction of the final manufacturing costs. Because there are so many suppliers on Alibaba, most of them will be open to negotiate a deal with you.
- Most suppliers are open to working with startups and small businesses. If you’re just launching your e-commerce business and want to start with a smaller order, you’ll find that most manufacturers will turn you down if you contact them directly. Competition among suppliers is so fierce on Alibaba though, that most manufacturers here will agree to work with a startup or small business. Due to the same reasons, the quality of the products is often higher than it would have been if you would have contacted the manufacturer directly.
- Easy to compare prices and suppliers. By browsing the site or using the AliSource tool, you can receive and compare prices and supplier profiles for the item you want to buy so that you can find the best deal.
- Language and communication barriers. Most manufacturers on Alibaba are Chinese and some of them speak poor or no English. If you don’t speak Chinese, you might find it hard to explain a product concept and establish an agreement without the help of an interpreter.
- Low payment protection. Alibaba doesn’t offer payment protection on purchases. If you don’t choose your supplier and payment method wisely, you’ll lose money if you don’t receive the order or if the items are of poor quality.
- Hard to protect intellectual property. If you have a product concept that is not patented, the manufacturer will be able to reproduce your idea and sell similar items to other customers.
- Importation and customs clearance costs. Getting your products in Asia comes with low manufacture costs, but you will have to pay importation and customs clearance. Depending on what you bought, these could be really hefty fees.
Alibaba is undoubtedly the best place to source products regardless of the size of your business. This B2B marketplace puts you in contact with manufacturers and suppliers around the world. Whether you’re after an expensive niche item or cheaper manufacturing costs, you can find it all here.
This doesn’t mean Alibaba is perfect. It has its drawbacks too, and you must be aware of scams before diving into this world.
However, once you learn how to buy from Alibaba, it all gets simple, and you’ll be able to establish fruitful cooperation with trusted suppliers so that you can grow your business in all peace of mind.