How do you source products successfully on Alibaba?
Lars HurkmansCo-founder18 June 2023Reading time 7 minutes
You source successfully on Alibaba by choosing the right supplier, requesting quotes from several parties and looking beyond price alone. Always ask for samples first, put the specifications and terms in writing, use secure payment methods and build a long-term relationship with reliable suppliers.
What is Alibaba?
Alibaba is a Chinese online marketplace and the largest B2B trading platform in the world, where manufacturers, suppliers and distributors offer their products to buyers around the globe. The platform offers a wide range of products, from electronics and clothing to furniture and food products.
Who are the sellers on Alibaba?
There are three main types of sellers on Alibaba: suppliers, manufacturers and trading companies.
Suppliers
Suppliers are companies that sell products in bulk. They can be manufacturers as well as distributors. The advantage of buying from suppliers is that they often offer a wide range of products, which is handy if you want to source different kinds of products. The downside is that their prices are often higher than those of manufacturers, because they add a margin to the products they sell.
Manufacturers
Manufacturers are companies that produce the products they sell themselves. The advantage of buying from manufacturers is that they usually offer the lowest prices, because there are no middlemen. The downside is that they often have higher minimum order quantities (MOQs) and can be less flexible when it comes to customising products.
Trading companies
Trading companies, also known as trading houses, buy products from manufacturers or suppliers and then resell them. The advantage of buying from trading companies is that they often offer more flexibility in terms of MOQs and product customisation. The downside is that their prices are often higher than those of manufacturers and suppliers, because they add a margin to the products they sell.
How do you choose the right supplier on Alibaba?
Choose a supplier based on their certifications, their company information, the quality of their communication and the breadth of their range. Choosing the right supplier is a crucial step in the sourcing process. These steps will help you:
- 1. Look for certified suppliers Alibaba has several certifications that indicate a supplier is reliable. These include Gold Supplier, Verified Supplier and Assessed Supplier. Look for these certifications when choosing a supplier.
- 2. Check the company information Look at the supplier's company information, such as how long they have been active, what their top products are, which country they are based in, which countries they ship to and how other buyers rate them.
- 3. Test the communication Before you place a large order, try communicating with the supplier to see how quickly and effectively they respond. This can also give you an idea of their level of English.
- 4. Think long term If you plan to build a long-term relationship with a supplier, take factors into account such as the breadth of their range and their willingness to meet your needs.
- 5. Look beyond the product you want to source When you choose a supplier, also look at which other products they sell. If these are products you already sell or want to sell in the future, that can be a reason to choose this supplier. When you order more products from one supplier, you can negotiate better prices.
How do you approach a supplier on Alibaba?
Approach a supplier clearly, concisely and politely, ask specific questions and ask for photos of the product. Especially when you are new to the platform, that first contact can be tricky, and the way you communicate partly determines whether Chinese suppliers take you seriously. These tips will help you:
- Be clear and concise When you approach a supplier, be clear and concise in your communication. Avoid jargon and make sure your message is easy to understand.
- Be polite Respect is important in Chinese business culture. Make sure you are always polite and respectful in your communication.
- Ask specific questions Make sure you ask specific questions about the product, the price, the MOQ, the delivery time and so on. This will help you get a better idea of what to expect.
- Ask for photos Ask the supplier for photos of the product. This can help you get a better idea of the product's quality.
How do you negotiate the price on Alibaba?
Negotiate by collecting quotes first, staying respectful and flexible, and using those quotes to show that you know the market price. Negotiating the price is an important part of the sourcing process on Alibaba. These tips will help you:
- 1. Collect quotes Before you start negotiating, collect quotes from several suppliers. This gives you an idea of the market price for the product you want to buy.
- 2. Be respectful Respect is important in Chinese business culture. Make sure you are always respectful and polite during the negotiations.
- 3. Be flexible Be willing to negotiate and compromise. This may mean you are willing to pay a bit more for higher quality or better service.
- 4. Use your quotes Use the quotes you have collected to show the supplier that you know what the market price is. This can help you get a better price.
What else can you arrange with suppliers?
Besides the price, you also arrange the shipping and payment terms, quality control, the MOQ, product customisation and possibly freight forwarding and sourcing with suppliers. When it comes to shipping terms, also keep in mind the incoterms, import duties and VAT that come with importing from China. Among other things, you can agree on the following:
- Shipping and payment terms Discuss how and when the products will be shipped, and how and when you will pay.
- Quality control Agree on how the quality of the products will be checked and what happens if the products do not meet the agreed standards.
- MOQ Discuss the minimum order quantity (MOQ). This is the minimum number of products you have to order.
- Product customisation Many suppliers are willing to adapt products to your specific needs. This can include engraving your brand on the product or making custom packaging, for example. Keep in mind, however, that this usually requires a higher MOQ.
- Freight forwarding and sourcing If you plan to buy large quantities of products regularly, you can consider using freight forwarding and sourcing services. Freight forwarding services take care of the logistics of shipping the products from the supplier to you, while sourcing services can help you find the best products and suppliers.
10 tips for successful sourcing on Alibaba
These ten tips help you source successfully on Alibaba, from your research beforehand to the inspection on arrival. If you want to see the whole process step by step, also read how to avoid a bad buy from China:
- 1. Do your research Before you make a purchase, research the product and the supplier. This can help you avoid problems.
- 2. Don't be afraid to walk away If you notice that you cannot come to an agreement with a supplier, do not hesitate to break off the negotiations. In most cases there are always more suppliers to be found, especially with the competition there is on Alibaba. Threatening to walk away can also be a good way to put pressure on the supplier you are negotiating with.
- 3. Take the delivery time into account Delivery times can vary, so take this into account when planning your purchases. Start negotiating in good time and keep in mind that the delivery time may be longer than stated. This is especially true during busy periods, such as the run-up to the holidays.
- 4. Be willing to invest in long-term relationships Try to build long-term relationships with reliable suppliers. This can help you get better deals in the future and work together more smoothly.
- 5. Be careful with payments Make sure you use secure payment methods and watch out for scams. For example, use the secure payment options Alibaba offers.
- 6. Ask for samples Always request samples before you place a large order. It is also smart to order several samples, because quality can vary quite a bit from sample to sample. And do not order very large quantities straight away.
- 7. Communicate clearly Make sure you communicate clearly with the supplier. Explain your expectations and specifications properly to avoid misunderstandings.
- 8. Check the quality on arrival As soon as you receive the products, check the quality and make sure they meet your expectations. If necessary, contact the supplier to resolve any issues.
- 9. Consider visiting the supplier If you have serious plans to buy from a supplier regularly, consider visiting their factory or office. This gives you the chance to see their operations first hand and build a strong working relationship. You do not have to do this yourself, a sourcing agent can do it for you.
- 10. Learn from experience Every sourcing experience on Alibaba is a learning moment. Take the time to evaluate what went well and what could be improved. This helps you make better decisions and source more successfully in the future.
In short: research the product and the supplier beforehand, put all agreements and specifications in writing, and test with samples before you place a large order.
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