How to Find the Best Suppliers on Alibaba for Amazon FBA

Introduction 

The success of your Amazon FBA business depends on the type of supplier you choose to work with. After reading this article, you will be equipped with all the knowledge you need to find the best supplier on Alibaba for your Amazon FBA business.

Meaning Of Alibaba

Alibaba is an online business-to-business e-commerce platform that connects buyers with suppliers. You can connect with suppliers and manufacturers worldwide for general or custom products. Although Alibaba and Amazon are both e-commerce platforms, their operations differ significantly. Unlike Amazon, which caters to one-off purchases, the primary aim of Alibaba is to cater to B2B bulk purchases, thus leading to high MOQ. Meanwhile, you’ll find suppliers that also cater to small orders or spot purchases on Alibaba. However, it’s recommended that you consider AliExpress and the likes if you want small retail orders.

Why is Alibaba so Cheap?

Alibaba is cheap because the majority of suppliers and manufacturers you meet on Alibaba are based in China.  China is the only country known to have a very low raw material cost; China is well known as a country with the best cost advantage when it comes to complete industrial chains and scale. However, Southeast Asia and South Asia countries have competitive costs in some aspects; therefore, quality products are produced at a very low price compared to the United States or Canada. Plus, buying goods in bulk reduces the price you pay per unit.

What Type of Goods can you buy on Alibaba?

We recommend purchasing original branded products protected by intellectual property rights on Alibaba, such as those from brands like Zara and Versace. The risk of counterfeit products is high, and it’s difficult to verify they meet legal and quality standards.

Avoid buying branded products on Alibaba, as 95% of them are counterfeit. If you attempt to sell counterfeit products, your Amazon store will be permanently shut down. Amazon’s stance against counterfeit and knockoff products is enshrined in its Terms of Service.

Is Alibaba a Legit Platform?

Generally, it’s safe to buy on Alibaba. However, just like many other e-commerce platforms, be mindful of suppliers that offer you counterfeit products at the original price, payment scams, and suppliers that send high-quality samples, but low-quality bulk orders.

Meanwhile, the list below explains in detail the key things you should do to avoid the risk of losing your capital on Alibaba:

• Inspect Suppliers: Always look for a verified supplier with trade assurance on Alibaba. Alibaba introduced these measures to ensure you are not scammed out of your money or buy low-quality products. Additionally, make sure the supplier you want to buy from has been selling for at least seven (7) years, has a reasonable years of operation in the business. Also, conduct a comprehensive assessment by verifying audit reports, sample quality, shipment reputation, positive reviews and ratings, a quick response rate, and third-party factory inspections/tests to minimize risk and fraud on Alibaba.
• Purchase Samples First: Purchase samples first to check if the supplier you are buying from supplies high-quality products before you place large orders. Additionally, you can inspect the products during the course of manufacturing to make sure your products are perfectly made.

Payment and Buyer Protection on Alibaba

The subsequent paragraphs show how you can pay through Alibaba’s online checkout.

Credit/debit cards

You can pay with credit and debit cards like Visa, Mastercard, Diners Club International, Discover, JCB, American Express, UnionPay, and Citibank. This method of payment has a processing time of one to two hours, sometimes faster.

Apple Pay

It supports multi-currency pay of up to $12,000 USD with a service fee of 2.99%. 

Your region and account are what determine your limits and fees when you want to make an online payment with Apple Pay. Consider the real-time notifications on the platform checkout page when you want to place an order. Using fixed rates for external advertising is not recommended.  Apple Pay processing time takes between one to two hours.

Afterpay/Clearpay

Afterpay is otherwise known as Clearpay in the UK. You can use it to fund Trade Assurance. Here, your limits and how you apply them are based on your region and account. Consider referring to the Afterpay/Clearpay order page and terms of service for more information.

Trade Assurance (Alibaba Protection Service)

Trade Assurance on Alibaba is the way Alibaba protects your funds from scam suppliers. Here, Alibaba uses this payment method to disburse loans and protects your rights based on the milestone and your agreement with your supplier. Therefore, be detailed about your product specifications, inspection points, and dispute resolution clauses before you place an order. Trade Assurance is considered a low-risk type of payment on Alibaba because you don’t pay the supplier until you confirm the goods you receive are up to your standard.

PayPal

This payment method is considered safe. It has security features like built-in fraud detection and chargeback protection. This means you can request a refund if the goods you receive from the supplier are not up to your requirements. PayPal’s payment method is similar to Alibaba’s Trade Assurance; however, unlike Trade Assurance, which is insured by Alibaba, you need to begin the chargeback process on your own if the need arises.

Note: The charges of PayPal might increase your payment fees, meaning it’s an expensive payment option.

Letter of Credit (L/C)

A letter of credit is a payment method that necessitates your bank to issue a guarantee for assuring your supplier that they’ll be paid by them once the supplier presents the necessary shipping documents to the issuing bank. Here, your bank takes the payment responsibility on itself through your order/request. The major demerits of this payment method are issuing paperwork, and various interpretations of L/Cs can delay or block your payments. Plus, issuing an L/C requires additional fees.

Bank Transfers

This is the most risky payment method on Alibaba. Here, you can send payment through bank wire (SWIFT) or Western Union transfer. In this method of payment, once you encounter a problem with your supplier after sending payment, recovering your money is difficult. Plus, the success rate of transactions is low, and it takes more time before your supplier receives the money. Consider paying with bank transfers only if your supplier is fully verified and you have signed a contract with the supplier; if not, use other payment methods.

Tips to Find Hot Products on Alibaba to Sell on Amazon

There are three important factors you should consider before you choose the type of product you want to sell on Amazon: profitability, demand, and competition. Let’s break it down:

Profitability

Determine your profitability by knowing your target gross profit and net profit, and ensure you calculate FBA fees, advertising, return rate, logistics, and taxes. Do this by using the contribution gross profit model or FBA calculator to be sure of your net profit after you deduct all your expenses. This will help you cater to other expenses of the business like Amazon cost, Amazon Ads, etc, while ensuring you have a reasonable profit at the end.

Demand

Ensure customers are buying the product you want to sell on Amazon before you start sourcing. If you did not consider the demand for the product, you may incur a loss because no customer will buy your product.

Competition

Ensure the product you want to sell on Amazon is a hot product with low competition. In this scenario, you need to strike a balance between demand and competition.  

Note: To perform the above basic things, you need powerful research tools like Helium 10, AMZScout, Amazon FBA Calculator, Keepa, Chrome extensions, etc.

Common Risks to Avoid When Finding Suppliers On Alibaba

This section explains in detail the risks you should not take when you’re finding suppliers on Alibaba.

Avoid Fraudulent Suppliers

Ensure you verify the addresses of factories against verification reports to avoid doing business with fake profiles. Also, ensure that the bank details of the company are the same as the Trade Assurance records of the supplier. Plus, you can also request video calls, then ask the supplier to take a tour of the factory for assurance purposes. 

Minimize Payment Risk

You can manage payment risk on Alibaba based on your approach. As it was stated earlier, the payment method with the lowest risk is Alibaba Trade Assurance. Other payment methods are viable, but they have risks. Bank transfers are the payment method with the highest risk.

How To Negotiate Prices and MOQs When You Find Suppliers on Alibaba

There are various ways you can negotiate prices and MOQs when you find suppliers on Alibaba. These ways include:

• Seek Quotes From Various Suppliers: Request quotes from five to ten suppliers on the same product for evaluation.
• Use Sample Leverage: When you place a minimum order of 5 to 50 pieces, tell the suppliers you’ll order more if the samples meet your requirements.
• Buy Different Products: The supplier can lower the price of your order if you combine different types of SKUs into a single order. 
• Assure the Supplier Long-term Buying Relationships: Assure the supplier you’ll be ordering products from only them if the quality of their product meets your requirements.
• Ask about Shipping: Ask for the overall cost of express shipping to your destination.

Advantages Of Finding Suppliers On Alibaba

There are various benefits of sourcing your products from suppliers on Alibaba.

• Ideal for Scaling Fast: You can quickly scale on Alibaba because sourcing suppliers on Alibaba gives you access to over 200,000 suppliers and more than 200 million SKUs. 
• Low-risk Solution: When you choose to buy from suppliers on Alibaba, you can place your orders with peace of mind, especially when you are using Alibaba’s Trade Assurance payment methods. Alibaba also has verified badges for reliable suppliers. 
• All-in-One: Alibaba simplifies finding a reliable supplier, as you can do everything from finding factories, inquiries, ordering, and payment; factory inspections, testing, and customs clearance through Alibaba’s integrated tools. Plus, your goods can be delivered to your location through international logistics (third parties) partnering with the platform. 
• Cost Efficiency: Always compare Free on Board (FOB) pricing with CIF (Cost, Insurance, Freight) pricing to see which one saves more cost for you.  

Tips on How to Sell on Amazon from Alibaba

The step-by-step process below shows how you can offer your products on Amazon from Alibaba.

Find an Experienced Supplier

Begin by using the Alibaba search bar to find your preferred product. Next, browse through your searches and see the products that captivate you. On the left-hand side, there are various filters you can use, like “supplier type, product type, price, supplier country, and certifications. 

NOTE: You can always choose a supplier from your preferred location by making use of the search filter.

Evaluate Supplier

Above the product image, you’ll see the supplier name and their company website link. Next, click on the link to read more about the supplier company,  sales, employees, quality control,  available products, and their manufacturing process. 

How to contact suppliers on Alibaba

Contact various suppliers to choose the best for your business needs. The list below shows the key factors to consider when you’re contacting suppliers on Alibaba:

• Product Quality: Choose a manufacturer that offers you the best product quality. First order samples from the suppliers you want to partner with so you to see and feel the quality of the product in person. 
• Communication: Pay attention to the supplier response time. Does he/she respond immediately, quickly, or does it take days, and choose according to what works for you. 
• Industry Experience: Check how long the supplier has been operating the business. Evaluate based on their experience if they can supply custom products that meet your requirements. Check if they’re certified. Check their other product offerings. All this information is available to you on the company’s Alibaba profile.
• Price: As a seller, the actual reason you want to buy directly from a manufacturer is to buy products as low as possible so that you can have a good profit margin. Therefore, consider the most suitable price for you when choosing a supplier on Alibaba. 

Place Your Order

At this stage, you must have received samples from various suppliers, shortlisted your favourite supplier, and have concluded on the price; the next thing is to place your order. Make sure you pay through Alibaba’s Trade Assurance to ensure your funds are secured.

How to Ship Your Products From Your Supplier on Alibaba to Amazon FBA

The next thing is to ensure your products get to the Amazon fulfillment center after you place your order. If you are just starting Amazon FBA, you can contact your supplier to help you arrange shipping, since your orders are not large.

After your supplier has arranged shipping, the next thing is to ensure your shipment is up to Amazon’s packaging and delivery standards. You can be sure by checking:

• FBA label and barcode
• Keeping every box under 23 kg and within Amazon’s size limits.
• Deciding if you want to use standard American pallets.
• Book a delivery time with the warehouse.
• Choose how to ship your goods (by express, air, sea, or truck)
• Confirm your trade terms. It’s recommended that you use  DPP (Delivered Duty Paid) if you’re a beginner, as it is very easy and convenient.

How to Sell Alibaba Products on Amazon 

As a new seller, you need to create a listing before your products arrive at the Amazon Fulfillment Center. Let’s assume you already set up your Amazon account. The next thing is to create your listing. 

From Seller Central >> Catalog >> Add Products

Select “I’m adding a product not sold on Amazon,” then choose your product category.

Input your product details and its UPC, brand name, images, product features, description, etc.

Note: If your product does not have a UPC, apply for a GTIN exemption to list your product.

When you fill in all the necessary details, your listing will go live as soon as your inventory arrives.

Conclusion

You don’t need to rush or skip any process discussed in this article if you want to find the best supplier for your Amazon FBA business on Alibaba. Although this process of research, communicating, vetting, etc., might seem long, it’s usually worth it at the end. 

When you find suppliers with verified badges, suppliers with trade assurance, you order a sample to ensure they comply with Amazon FBA, use Alibaba search filters, etc., you’ll screen the best supplier to partner with you in the long run.