Table of Contents
- 1 What is Alibaba?
- 2 Is it Secure to Buy from Alibaba for Selling on Amazon?
- 3 What Are the Risks to Sell on Amazon from Alibaba?
- 4 How to Mitigate the Risks of Sourcing from Alibaba?
- 5 How to Find a Product on Alibaba to Sell on Amazon?
- 6 How to Buy from Alibaba and Sell on Amazon?
- 7 Wrap Up
There are a lot of tools to grow sales on Amazon. It’s famous for its advanced marketing tools, sophisticated SEO algorithm, and many other techniques helping sellers deliver their products to the right customer.
On the other hand, to get a good profit margin and ROI, you should find a product with a reasonable cost of goods. In other words, the product you source should have a low price from a distributor or manufacturer.
One of such place is the Chinese B2B platform Alibaba. On that platform, you can find a variety of manufacturers and distributors trading almost every product category in the world. Their prices are pretty low. This is one of the reasons why that place is popular with Amazon sellers.
And though sourcing a product from China involves certain risks, with the right approach buying on Alibaba and selling on Amazon is generally relatively safe. One of the reasons for that is that Alibaba works hard to facilitate secure business for buyers and manufacturers. Trade Assurance and Gold suppliers features are examples of such security measures.
Read further to find out how to sell on Amazon from Alibaba and how to deal with the risks of sourcing Alibaba products to sell on Amazon.
What is Alibaba?
Alibaba is the China-based B2B e-commerce platform that hosts manufacturers of all scales from around the globe. Unlike Amazon, the platform connects sellers with manufacturers and suppliers.
This is a place where many merchants source products from Alibaba to Amazon FBA. Typically, merchants buy products on Alibaba in bulk to resell online or in a brick-and-mortar store. Though Alibaba uses a business-to-business model, the scale of the buyers varies greatly. It can be both individual Amazon sellers and big brands. In fact, Alibaba’s price levels are way lower than Amazon’s, which allows sellers to make a profit.
On Alibaba, sellers can find products that match almost any business model. For instance, it’s a good place to look for a private label product to rebrand. Also, wholesalers can get products in bulk at extremely cheap. The only exception is branded products. Remember that most manufacturers producing branded products don’t have the rights for that outside China. On the other hand, very many brands are restricted on Amazon anyway.
Is it Secure to Buy from Alibaba for Selling on Amazon?
The short answer is: Yes. However, you’ll need to take extra precautions, given that this platform functions under the laws of another country. Also, for some manufacturers, English is a second language that may cause misunderstanding.
In addition, you must be aware that despite extensive security measures from Alibaba’s side, there are still cases of selling counterfeits. There are cases when suppliers provide high-quality samples but low-quality large orders. You should also be careful about the resellers that pretend to be manufacturers. And last but not least is the risk of payment fraud.
Alibaba is aware of these security problems and constantly works on verifying manufacturers. They also have a lot of anti-fraud programs.
How does Alibaba mitigate the security risks?
This feature allows for the money-back guarantee if the order doesn’t meet quality and shipping time requirements.
If a supplier is marked “Gold,” it means a verified manufacturer sells quality products.
Every supplier receives a badge from Alibaba that shows the verification level they pass.
“Contact supplier” option
Alibaba provides you with an option to communicate with manufacturers. You can ask questions about their products and businessб and request samples. You can also check if they have business licenses and other permits. Moreover, they can send factory pictures to prove their production capacity.
Alibaba has a comprehensive anti-fraud policy. They also quickly investigate all reported fraud cases, so you can contact them if you encounter any problems.
What Are the Risks to Sell on Amazon from Alibaba?
The typical risks are related to fraud, especially with payment transactions. You must also ensure that products are high quality and don’t violate copyright and trademark law.
List of significant risks of selling Alibaba on Amazon
- low-quality items;
- product is different from the picture;
- payment transaction frauds;
- unreliable supplier;
- copyright and trademark infringing products;
- high-quality samples but low-quality big orders.
How to Mitigate the Risks of Sourcing from Alibaba?
To successfully buy from Alibaba for selling on Amazon, you should find a reliable supplier, verify them, and check the product quality. Also, use secure channels to send cash for the orders.
Choosing a high-quality product
In different countries, quality standards may vary. Therefore you must ensure that the product meets all U.S. quality regulations. Ask the supplier to send samples, test their functionality, and see if they correspond to the manufacturer’s specifications. You also need to check the health and safety regulations.
Ensure that an item looks like in the picture
Before ordering a sample, ask for multiple pictures from different angles. After that, order a couple of pieces to see the product live.
Use low-risk payment methods
Alibaba offers several options for reducing the risk of payment fraud.
Payment methods on Alibaba:
- Alibaba’s Trade Assurance Program
- letter of credit;
- Alibaba Secure Payment service;
- bank transfer.
Alibaba’s Trade Assurance Program
This program mitigates risks of fraud by enabling a money-back guarantee. You get money back if the order doesn’t meet the requirements.
Letter of credit
This payment method is safe; however, it’s suitable for bulk orders.
Alibaba Secure Payment service
This is s safe service as well. It’s an escrow. A customer’s payment is held in the bank account until they get and approve the order.
PayPal is a low-risk level payment method for international transactions. However, it involves high tax rates and specific problems with money withdrawal.
This method is speedy but risky, especially if you make a full prepayment. Also, you must check that all payment details are correct.
Find a reliable supplier
On Alibaba, all suppliers get badges depending on their verification level and the time they work with the platform. “Gold” manufacturer has a perfect reputation. For those who supply products to Alibaba customers, their rating matters greatly, and they invest a lot to build it up.
Talk to the importer and ask questions about their production and products. Check contact details and business documents. Sign an agreement specifying quality control requirements, lead times, and other terms and conditions for bulk orders.
Verify copyright and trademark compliance
When talking about branded products, it’s better to avoid them. Not only they may appear to be counterfeited. A product from China may have brand and patent issues. Manufacturers may have the right to sell a brand in China only or have any other limitations. Some suppliers have the right to sell a national brand locally. Trading such items in different countries might be illegal.
Ensure that a supplier can produce big orders of high-quality
If you purchase a bulk order, the quality may be lower than that of the samples you received. To avoid that, make sure that the supplier can manufacture significant volumes. Don’t order too much from the start as well. It’s better to agree about reordering soon.
How to Find a Product on Alibaba to Sell on Amazon?
Before looking for suppliers on Alibaba, you need to decide what kind of product you will sell on Amazon. This requires product research. You can do it either manually or automatically, using Amazon seller tools.
A good product for Amazon should have:
- sufficient demand;
- good best seller rank (BSR);
- low competition in its niche;
- good profit margin and ROI;
A good product for Amazon shouldn’t:
- have extremely high competition;
- be bulk or oversize ASIN;
- be restricted on Amazon;
- have caused account health issues;
- be a highly seasonal or trendy item.
How to Buy from Alibaba and Sell on Amazon?
After you’ve selected a product, you’ll need to open an account on Alibaba and start looking for a supplier.
Sourcing a product from Alibaba to Amazon step by step
Step 1. Create an account on Alibaba
In the same way as Amazon, to be able to identify and talk to your potential suppliers, you need to set up an account on Alibaba. Registering an account on Alibaba is free of charge.
Step 2. Look for a product and manufacturer
Use the search bar to find the product you’d like to sell. Alibaba will show you the search results with similar product categories and manufacturers. You can also check additional product data, including certifications, manufacturing process images, the supplier’s term on Alibaba, and more.
Adversely, you can search for the exact suppliers instead of products.
Step 3. Shortcut the supplier list
Filter out several suppliers and analyze their advantages and disadvantages. Shortlist the possible candidates.
Step 4. Talk to the Alibaba supplier
Before placing the order, ensure that you’ve clarified all doubts you may have about a product. On Alibaba, you can ask questions to the manufacturer online. For that, you can use a ‘Contact Seller’ button or the ‘Chat Now’ link.
Step 5. Ask for a sample and request a quotation
You should always get a sample before ordering in bulk. As said, the product may look different from the picture or be of low quality.
Step 6. Negotiate the prices
Negotiating the order prices and the MOQ (Minimum Order Quantity) is vital since the cost of goods influences profitability. Try to negotiate prices down while still keeping the quality high.
Step 7. Check supplier’s details
When selecting a supplier, ensure they have the necessary shipping authorizations, trade insurance, and other permits. Check the return policies and warranties. Verify that they can comply with the requirements of Amazon FBA. Ask for estimated express shipping costs.
Step 8. Source the product
Make an order, wait until it’s delivered, list a product on Amazon and start selling.
Sourcing products from Alibaba to sell them on Amazon is tempting because the Chinese manufacturers offer reasonable prices. This way, sellers can get good profit margins and ROI. On the other hand, acquiring orders on Alibaba is associated with certain risks. The items you source may turn out to be low quality, as well as the product is different from the picture. Payment transaction fraud or bumping into an unreliable supplier is also risky. In addition, it can happen so that a manufacturer supplies high-quality samples but low-quality big orders.
As a matter of fact, it’s possible to mitigate these risks. You should order samples and test them to ensure high quality. In addition, you should pay specific attention to the thorough verification of all necessary permits. Ensure that supplier is familiar with Amazon FBA requirements. Finally, when you make a payment, use only low-risk payment methods.
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