Sourcing from Alibaba and Selling on Amazon FBA - A Step by Step Guide
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 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 at starting an FBA business you almost certainly have come across Alibaba. Alibaba is a massive Chinese marketplace with millions of sellers and tens of millions of product for sale in any quantity. Sourcing a product on Alibaba and selling on Amazon is one of the most popular methods to do 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 you 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 are throwing your info to up to a few thousand potential suppliers.
We recommend creating a dedicated email just for Alibaba in order to cut back on Spam.
There are a few blocks to fill out:
Keywords of 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 your aim is to get the attention of as many people as possible.
Detailed description - This box requires a fairly exact description of what you are looking for. While what is needed varies by products, you should include things like materials, dimensions, measurements, and if you need logos or customizations.
**Consider presenting yourself as someone who is lower on the totem pole, such as a buyer or procurement manager, and that you need to run all decisions by your “CEO,” when ordering–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 per unit price you’ll get; if it’s too low, a supplier may overlook you.
Photos - make sure you have good photos to accurately portray what you want, include close-ups of any details you want to be done.
Send direct messages
For this step, you actively look for potential suppliers on the Alibaba website. Simply go to the search bar and type in the name of the product you are buying. Alibaba should give you dozens of results that may or may not match what you are looking for. Be careful about which ones you are messaging and that you are contacting factories as much as possible and not resellers. I’ll go over later about some tricks of how to figure out who’s legit or not. 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 just 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 2 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 all the time 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. Be sure to use clear and simple language, while making sure you are getting your point across.
See our full post on the best questions to ask Suppliers on Alibaba Here!
Get as many responses as possible
I can't state enough how important it is to have as many potential suppliers as possible. The more suppliers you reach out to the more likely you are to find the best one. It’s not uncommon 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 amount of responses from potential suppliers. Once you get here you need to go to go through and make a list that includes the contact information and prices. Once you do this you'll start to notice the averages and the outliers. The further from the average an outlier is the more likely that 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’s legit
Always remember that the best supplier is buying from the factory directly and not from a reseller. When a potential supplier sends you a picture of a product, 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 at all possible, you should 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 their legitimacy. With Trade Assurance, Alibaba can act as an escrow service for your transaction.
Find out if they have a narrow product line - If you’re talking to someone who offers hundreds of unrelated products, then 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 who are looking to buy from Chinese factories. There is not much motivation for Chinese to resell to Chinese. This is considered an advanced trick because the site is entirely in Chinese and requires you to sign up to use it.
Ask for documents - Ask a supplier what documents and certification that they have, such as ISO 9001. Always ask for business registration certificates and check the dates. Make sure the business certification matches the info the supplier has given you otherwise you may be dealing with a reseller.
Is personalization an option? - If your dealing with a factory you should be able to make customization to 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 with both marketing and English. If you receive emails that are poorly formatted, it’s not a big deal. In addition, do not expect them to speak good English or any English at all. It’s very possible, and common, that they are using 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 a basic web presence. Make sure there are no warnings about them on online forums.
Look for reasonable prices - if a supplier sounds too cheap to be true, then frankly 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 common but check to see if they are a general sales@Comanyname.com. It’s a good way to feel out the authenticity of the person you’re talking to.
Ask very detailed questions - If they are a real manufacturer they should know these questions well.
Ask for pictures- A good supplier should be able to supply you with detailed pictures of the product and the factory. They should 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 legit 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 onsite visit or factory tour - While this step is not necessary, it is extremely useful. You can hire a third party to visit the factory and do an inspection in person (Cosmo offers this service BTW) or if you’re willing to spend more, fly in and do the inspection yourself.
This is a short summary, our full post on the best ways to avoid scams can be found here!
Follow up Questions to ask suppliers on Alibaba
Before and during the negotiation phase you should be talking 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 to 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 a full 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 a full order?
What is the best selling product made in your factory?
Rate your suppliers
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 score–bad, meh, OK, good, great. Eliminate the bad, keep the contact info for the meh, and contact the ok, good and great ones.
First, you’ll want to contact the good or even the OK ones (NOT the great ones), in order to develop a template and get a solid idea of prices and a feel for the product. If you message a bunch of ‘OK’ Factories and they aren't responding, then perhaps your message needs some work. Fortunately, you now have the opportunity to tweak your messaging before you reach out to the suppliers you really want. Next, you can message the great ones, express your interest and discuss their final prices, order details, shipping and all the hard 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 suppliers and great ones can be eliminated if they never get back to you or you notice red flags. Make sure you are keeping records on how capable they are at producing your item at your desired price and quality, as well as how good they are at communicating with you. Follow your instincts.
Negotiate!
The quoted price is very rarely the final price, so be sure to negotiate thoroughly with your supplier to make sure that you get the absolute best price that you can. In Chinese society, negotiations are expected and part of business norms. Keep in mind that if you do succeed in getting a low price then you should expect that the factory will 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 real price of all items - When compiling your list of potential suppliers in the earlier step, you should have a pretty solid idea of the actual price, from the manufacturer of the item. Keep this in mind when you order but also remember that the factory is a business and they need to make a profit.
Stick to your budget - Figure out the total cost of the entire project, including the full quantity order. This amount includes and customization, packaging shipping and more. It’s very easy to go over your budget.
Be polite, professional and positive - 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 that they like and enjoy talking to. Offer compliments about products when they do a good job. And make sure that you come across professional–this will give you more legitimacy.
We have more negotiation tips here!
Order Samples
Once you believe that you found a suitable supplier at a good price it’s time to order samples. You are expected to pay a small sample fee, which can range from free plus shipping to the normal full retail price. If you are getting an item custom made, you should expect to pay even more than retail plus shipping. 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 strong buyer protection.
How to pay for an order:
Even if you do not intend to use them it’s important that a supplier uses PayPal and Alibaba Trade Assurance, as 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 cost associated with it. 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. Avoid T/T, direct bank transfers, and Western Union as those are very easy to get scammed.
Cosmo did an analysis of over a dozen different ways to pay a supplier in order to find the best ones. You can view the full post here.
Want a professional to help?
Cosmo has been helping Source products from China, Vietnam sing 2013. If you’re interested in hiring a sourcing company feel free to Contact Cosmo for all your sourcing needs at Info@cosmosourcing.com or visit our Product request page. Even if you do not need any sourcing service feel free to reach out to us and we will answer any sourcing questions that you may have. Check out our services to learn more about how we can help you find the perfect supplier! Thanks for reading!