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How to use Alibaba to Grow Your Amazon Business

Threecolts
Geri Mileva
Published
December 8, 2023
Modified
May 7, 2024
How to use Alibaba to Grow Your Amazon Business

When Jack Ma founded Alibaba back in the 1990s, the company had very humble beginnings. It was initially set up by Ma and 18 other tech pioneers in a small apartment in Hangzhou. Today, Alibaba has become one of the world’s leading online B2B marketplaces, generating $32.29 billion in revenue by the end of June 2023 (Q2 2023), which marks a 5.22% YoY increase. Despite the current state of China’s economy, the Alibaba Group’s overall performance has shown promising results, with a 51% YoY net profit increase

What is Alibaba and how can Amazon sellers work with overseas suppliers to grow their business? Get a better understanding of Alibaba, how it works, and how you can use it to help your Amazon business grow by reading this article. 

What Is Alibaba?

what is alibaba

The Alibaba Group is Alibaba.com’s parent company. The group is composed of several companies, including eCommerce retail giants Taobao, Tmall, and AliExpress. Alibaba.com is the group’s first website and was created to connect suppliers to global B2B buyers. On Alibaba.com, you’ll find a wide range of B2B businesses, including manufacturers, wholesalers, and retailers, that sell products in nearly 6,000 categories. Given its global scale, Alibaba receives over 300,000 daily inquiries, indicating a large volume of transactions being made daily. 

With its focus on wholesale trade, many physical stores source their inventory from Alibaba.com and its vetted suppliers. Some of the biggest reasons why these global businesses prefer to work with Alibaba.com include the low manufacturing costs and the wide catalog of suppliers and products to choose from. 

While Alibaba.com is primarily a B2B marketplace, the Alibaba Group also caters to other types of consumers and businesses through brands like Taobao, Tmall, and AliExpress. For example, through Tmall, regular consumers can purchase a wide variety of retail products. Meanwhile, dropshippers can use AliExpress to source products for dropshipping. Businesses that want to enter private label manufacturing or wholesaling have the option to use Alibaba.com or AliExpress. 

Alibaba vs. AliExpress

While both Alibaba.com and AliExpress are under the Alibaba Group’s umbrella and cater to global eCommerce businesses, each offers unique buying and selling experiences, as well as features designed for different types of users. 

Alibaba.com

Alibaba.com is best for business buyers who are looking to source products or parts to create their goods, purchase finished products for reselling, or source items they need for their business operations. On Alibaba.com, each seller has a digital storefront or a so-called mini-site where buyers can check out their offerings and sellers can interact with potential buyers. The platform also provides users with resources to facilitate buyer-seller communication, logistics solutions, and payment protection. Some of Alibaba.com’s key features include CRM tools, market and industry analytics tools, order management, and auto-translation (over 18 languages). 

Some of the seller types you can find on Alibaba.com include manufacturers, trading companies, wholesalers, and exporters. Meanwhile, typical buyers on the Alibaba.com B2B platform are usually other businesses. B2C retailers, wholesale distributors, manufacturers, and other B2B sellers are also using Alibaba.com to source products. 

AliExpress

aliexpress

AliExpress is an online B2C eCommerce marketplace that lets businesses sell their products directly to consumers. The platform has reached approximately 200 countries and territories and has over 150 million buyers worldwide.

As one of the Alibaba Group’s retail divisions, it caters mainly to individual consumers and allows them to purchase products without a minimum order quantity, much like eBay and Amazon. The platform also lends itself well to dropshipping due to its expansive selection of products and competitive prices. Some of AliExpress’s key features include buyer protection, currency conversion capabilities, customized seller storefronts, and secure payment and transaction support for 38 local payment channels. 

Typical sellers on AliExpress include SMBs that focus on retail for categories like clothing, home improvement, and electronics. These businesses are likely to buy and sell products, rather than manufacture these goods themselves. Typical AliExpress buyers include consumers and resellers who want to venture into dropshipping. 

Alibaba vs. Amazon

While Alibaba and Amazon are recognized as two of the world’s leading eCommerce platforms that cater to a large number of customers worldwide, they differ in some key aspects. For instance, as a B2B platform, Alibaba mainly functions as a middleman that connects buyers and sellers, while Amazon is a B2C platform that primarily functions as an online retailer and acts as a giant eCommerce storefront that directly sells goods to consumers. 

The good news is that if you’re an Amazon seller, you can use both Alibaba and Amazon to grow your eCommerce business. Using tools like Jungle Scout’s product research and keyword research tools, you can look for potentially profitable products on Amazon. Once you’ve found a winning product, you can go to Alibaba.com to find a supplier. You can also use Threecolts’ Tactical Arbitrage to source profitable products on Amazon, analyze the competition, perform reverse lookups, and do a wholesale search to find the most profitable deals. 

How Does Alibaba Work?

As a wholesale marketplace, Alibaba enables businesses to purchase large volumes of products at competitive prices. Because it’s primarily a B2B eCommerce platform, users can interact and negotiate directly with other businesses like manufacturers and suppliers to source raw materials, manufactured goods, or products for private labeling. 

As a one-stop shop for different kinds of products, shopping on Alibaba.com also comes with several benefits, such as access to the platform’s global sourcing capabilities, competitive wholesale prices, and access to a secure and trusted marketplace. 

If you’re a seller, some of the benefits of selling on the platform include having a custom storefront, reaching a global audience of over 26 million, access to digital tools like analytics and target advertising tools for increasing your sales, access to professional services, and secure transactions through Alibaba.com’s Trade Assurance feature. 

In a nutshell, here’s how you can buy products on Alibaba.com:

  • Create a buyer’s account on Alibaba.com.
  • Source products using the platform’s search bar. You can also upload images of the products you need or post a request for quotation (RFQ) for the products you’re interested in.
how does Alibaba work
  • Compare different sellers and connect with potential partners. Alibaba helps you vet sellers through badges, such as “Gold Supplier”, “Verified Supplier”, and “Trade Assurance Supplier”, which help you verify if they’re trusted sellers.
  • Once you’ve found the supplier that best fits your needs, you can place your order. 
  • After placing your order, you can then choose an option to ship your products. 

Sourcing Products from Alibaba for Your Online Business

Manually looking for products to sell on Amazon and searching for reliable suppliers on Alibaba.com can be a time-consuming process, but doing so can help you find high-quality products at competitive prices and fuel your business’s success. When looking for products to source, it’s best to do product research and study these three key factors: product profitability, customer demand, and the level of competition for that particular product. 

In the sections below, we’ll look at how you can source products from Alibaba and work with overseas suppliers in more detail. 

The Benefits and Drawbacks of Using Alibaba

Like other eCommerce marketplaces, Alibaba has its fair share of pros and cons. For instance, with Alibaba, you can leverage its expansive network of suppliers and manufacturers, connect directly with suppliers, choose from multiple secure payment methods, enjoy protection from scams through Alibaba’s Trade Assurance, and access direct shipping from Alibaba.com to Amazon FBA. 

However, despite its many advantages, Alibaba.com users may encounter counterfeit products on the platform. Buyers may also be at risk of working with suppliers who provide low-quality products, entering a saturated market, and paying US Sales taxes. 

A Quick Step-by-Step Guide to Using Alibaba

Here’s a quick look at how you can start buying from Alibaba for your Amazon business.

  • Create a free account on Alibaba.com. You’ll need to add essential information, such as your country or region, trade role, full name, and contact details. If you solely want to be a buyer, select “Buyer” when prompted to choose your trade role. If you want to be able to buy and sell on Alibaba, choose “Both.”
  • Find products you want to sell on Amazon. Alibaba.com gives you two ways to search for products. You can either use the site’s search bar to start browsing the marketplace or post an RFQ. Alternatively, you can choose to upload an image of the product you’re looking for. Use filters to narrow down the results. You can sort the results based on criteria like supplier type, product type, minimum order quantity, features, and certifications. 
guide to using Alibaba
  • Alibaba is home to millions of sellers worldwide. When searching for the right partners, looking at their qualifications or certifications helps. Alibaba.com has three main identifiers to help you compare sellers. These are:
  • Gold Suppliers: These are paid members who have been verified by Alibaba as businesses that have industrial or commercial capabilities. 
  • Verified Suppliers: Verified Suppliers are businesses that have been assessed or certified by third-party institutions. 
  • Trade Assurance Suppliers: These are suppliers who directly accept payments through Alibaba’s secure payment portal, which helps ensure protection for your orders. 
  • After choosing a supplier and a product, Alibaba gives you the option to immediately place the order or negotiate first with the seller. If you want to purchase a product right away, check to see if it’s marked as “Ready to Ship.” Aside from having a “Ready to Ship” status, the product detail page must have a “Start Order” button, like the one pictured below. To negotiate with a seller, use the “Contact Supplier” or “Chat Now” button to get in touch with them directly. Make sure to be professional when addressing them and be clear on your proposal. 
Alibaba product example
  • If you’ve reached an agreement, you can now place your order and make the payment. While you can complete the transaction outside of Alibaba, it’s best to remain on the platform. Leaving Alibaba means that your transaction will no longer be eligible for Trade Assurance, which is a measure that’s designed to protect both you and the seller. 
  • Receiving your items is the last step of the buying process on Alibaba. You can use Alibaba’s Alibaba.com Freight for cross-border shipping. Alibaba.com Freight provides services for ocean and air freight, as well as air express and air parcels from suppliers to international buyers. You can also consider paying extra and letting the seller take care of shipping or you can set up the shipment yourself using a freight forwarding company. If you pay for your orders through the Alibaba platform, its Trade Assurance platform will cover the shipping and logistics process. 
  • After receiving your order, don’t forget to leave a review for the seller. This is also the time for you to decide if you’ll continue working with them in the future or not. 

Tips to Help You Negotiate with Alibaba Suppliers

After making a list of potential suppliers, you can contact them directly to negotiate certain aspects of your order, such as:

  • Payment terms
  • Minimum order quantity
  • Pricing for samples
  • Production time
  • Delivery dates 

Ask questions to help you decide if the supplier is a good fit or not. For example, you can ask them about product certifications, price per order volume, and shipping terms.

You can also send them an inquiry. When writing an inquiry, make sure that it’s clear and detailed. Include helpful information, such as product description and specifications, quantity, branding, and photos. Adding a lot of relevant information will make it easier for you to find suppliers who can best meet your requirements.

To help you land a good deal, you can include sales projections and records of past purchases to help the seller see that you’re a high-volume customer or a serious and reputable buyer. Aside from price negotiations, you can also arrange other matters that impact your cash flow, such as your order’s deposit amount, shipping times, and product packaging. Lastly, you can encourage competitive bidding among various suppliers by letting them know about the quotes that you’ve received from other vendors. 

In some cases, even after sending an inquiry, some suppliers may not reply to your messages. If this happens, you can try contacting them directly or start contacting other suppliers. 

How to Buy Products Safely on Alibaba

While Alibaba takes proactive measures to protect its users and has many reputable merchants, like many other eCommerce marketplaces, there’s still a possibility that you may get scammed by bad actors on the platform. To protect your business from bad actors, here are some tips to help you vet suppliers and avoid getting scammed:

  • Do your homework and take the time to verify suppliers. You can do this by looking for verification badges, like the “Verified Supplier” badge shown below. You can also check their credentials, such as the number of years they’ve been on Alibaba, transaction scores, value and volume of their transactions, response rates, and delivery rates. Check to see if they have the correct certifications, patents or trademarks, and buyer testimonials or success stories. 
How to Buy Products Safely on Alibaba
  • Check the prices carefully. In general, Alibaba sellers offer quality products. However, some bad actors may post prices that are too good to be true. For instance, when a product that usually fetches a higher price is being sold by another seller at a much lower price, this may indicate that the product is counterfeit or of low quality. 
  • When paying for your orders, make sure to use verified methods, such as Trade Assurance, PayPal, online bank payments, and Western Union. It’s best to refrain from paying for or making transactions outside of the Alibaba.com platform. 
  • Look at the seller’s ratings and reviews. Going over other buyers’ experiences with a particular seller will give you an idea if the seller is reliable or not. It also helps to check the company’s history and transaction levels. 
  • Before placing your order, you can connect with the supplier to check if the product on display matches your requirements. You can also ask for samples beforehand, especially if you’re planning to buy in bulk. 

Working with Overseas Suppliers to Grow Your Amazon Business

Alibaba.com is one of the best places to source products for your Amazon business and connect directly with international suppliers. Aside from gaining access to a large network of global suppliers and manufacturers, you can also directly negotiate with them to get lower prices or lower the minimum order quantity requirement. Like most eCommerce platforms, Alibaba.com has security measures in place to protect both sellers and buyers. However, to ensure your security while using the platform, it’s best to take proactive measures, such as verifying the seller and requesting samples before making a purchase. 

Discover how Threecolts can help your Amazon business succeed today. Explore the different solutions offered by Threecolts to help you source profitable products, automate pricing, identify and resolve Amazon overbillings, and more.

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