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Alibaba and Amazon FBA are two powerful eCommerce platforms that can catapult your entrepreneurial dreams to success. Buying on Alibaba and selling on Amazon FBA is a common strategy for getting quality products and selling them directly to your customers.
Alibaba, often referred to as the "world's largest B2B marketplace," connects buyers with suppliers from around the globe, offering an extensive range of products at competitive prices. In 2021, the company accounted for 24% of the global e-commerce market share.
On the other hand, Amazon FBA (Fulfillment by Amazon) provides a hassle-free way to sell your products, taking care of warehousing, packaging, and shipping logistics. Almost 64% of merchants rely on Amazon’s logistics capabilities to fulfill their orders.
By tapping into Alibaba's vast network of suppliers, you gain access to a wide array of high-quality products. By reselling them on Amazon, you take advantage of Amazon’s massive customer base and streamlined fulfillment services.
In this article, we’ll provide a step-by-step guide on how to buy from Alibaba and sell on Amazon FBA.
Understanding Alibaba
Unlike other traditional eCommerce platforms that let you make one-time purchases, Alibaba lets you buy in bulk and resell them in an online or physical store. The platform enables business owners to connect with manufacturers and suppliers worldwide.
Anyone can register on Alibaba, from the CEO of a large company to a small independent business owner. This makes it easy for those with a great product idea to find manufacturers for their concept.
However, there are also risks associated with sourcing products on the platform.
Is Alibaba safe?
Before you start buying products on Alibaba, let’s tackle the elephant in the room. Is it legal to resell items from Alibaba?
Yes—you can safely sell items from Alibaba as long as you comply with Amazon’s Seller Agreement and follow all the applicable laws and regulations. In fact, successful brands purchase their products from Alibaba and use Amazon FBA for the order fulfillment process.
To make the most of this strategy, you must carefully weigh the pros and cons of sourcing products from Alibaba.
Pros of Buying from Alibaba
Cons of Using Alibaba
Deciding on Products to Sell on Amazon
To find suitable suppliers, you need to know the products you want to sell. If you’re just starting out, you should focus on selling products that are high in demand and low in competition. You can use Amazon tools to help you find the right products to sell.
Don’t underestimate product research. This step will help you analyze the right products to sell so you become successful faster. When analyzing products, look at these factors:
Be careful not to get stuck in analysis paralysis. Sometimes, the best way to prove your strategy (and learn a lesson) is just to do it. Decide on a product, source it, sell it, and see how it delivers.
Finding Reliable Suppliers on Alibaba
When sourcing products on Alibaba, identifying reliable suppliers is crucial to ensure the quality and success of your Amazon FBA business. Let's explore the key steps involved in finding trustworthy suppliers on the platform.
Searching for Suppliers on Alibaba
Now that you’ve decided on a product to sell, it’s time to head to Alibaba.com and find a supplier. Of course, you need to create your account first.
Once you’ve created an account, start by conducting a thorough search on Alibaba.com. You can utilize filters and keywords relevant to your product. Narrow down your options based on factors such as location, product certifications, and transaction history.
You can also filter suppliers by the country or region they come from. Because Alibaba is a Chinese company, many make the common misconception that the merchants on the platform are all from China. But this is not true. You can find suppliers from other countries using the Supplier Country/Region filter.
One of the most important filters you should use is “Supplier Types.” To find reliable suppliers, make sure “Trade Assurance” and “Verified Supplier” are checked. The search results will only show products from professional and legitimate suppliers.
Assess the credibility of potential suppliers by examining their company profiles, including years of operation, certifications, and verified trade information. Look for suppliers with a high "Supplier Assessment" score and positive customer reviews.
Communicating with Suppliers
Now that you’ve shortlisted suppliers, it’s time to initiate communication with them through Alibaba's messaging system. Ask detailed questions about their manufacturing capabilities, product specifications, and customization options. Pay attention to response time, professionalism, and willingness to address your concerns. Beware of suppliers with poor communication or inconsistent information.
Before making a bulk purchase, request samples from selected suppliers to evaluate product quality firsthand. Evaluate product packaging, materials, and craftsmanship. Assess the samples for compliance with your standards and ensure they meet the requirements of Amazon FBA.
If you require product customization or branding, communicate your requirements clearly to suppliers. Discuss customization options, such as packaging, labeling, or adding logos. Ensure that the supplier can meet your specifications and adhere to your brand guidelines.
By following these steps, you can find reliable suppliers on Alibaba who will provide high-quality products and establish long-term partnerships. Remember, due diligence in supplier selection is essential for the success of your Amazon FBA business.
Negotiating and Making Purchases
To effectively buy products on Alibaba for your Amazon FBA business, it's crucial to navigate the negotiation and purchasing process confidently.
Familiarize yourself with the pricing structure on Alibaba. Suppliers impose an MOQ or minimum order quantity, which is the minimum number of products you need to purchase. The unit price also often changes depending on your order quantity. The more you order, the less the prices become.
Consider shipping costs, both domestic and international, when evaluating overall expenses. This will help you determine how much profits you can make from a product and whether the selling price will make sense for your customers.
Important Factors to Consider When Negotiating
In negotiating properly, here are factors to take into account:
Negotiation Strategies for Better Prices and Terms
Negotiation plays a crucial role in obtaining better prices and favorable terms when buying products on Alibaba. Here are some strategies to help you navigate the negotiation process effectively:
Before entering into negotiations, research and gather information about the market prices of similar products. This knowledge will give you a benchmark to assess the fairness of the supplier's pricing and provide leverage during negotiations.
Use the competitive nature of Alibaba's marketplace to your advantage. Reach out to multiple suppliers offering similar products and create competition among them. Mention that you are considering various options and that you are inclined to choose the supplier offering the best price and terms.
Communicate your intention to establish a long-term business relationship with the supplier. Emphasize the potential for recurring orders and a mutually beneficial partnership. This can incentivize the supplier to offer more competitive prices and favorable terms.
If you plan to order a significant quantity of products, inquire about bulk discounts. Suppliers are often willing to offer lower unit prices for larger orders. Negotiate based on the economies of scale and the potential for increased sales volume on your end.
Negotiate payment terms that are favorable to you, such as a lower upfront deposit or the option for payment upon inspection or delivery. Discuss shipping arrangements and explore the possibility of the supplier covering or subsidizing shipping costs, especially for larger orders.
Maintain a respectful and professional demeanor throughout the negotiation process. Build a rapport with the supplier and show that you value their expertise and the quality of their products. Clear communication, active listening, and mutual respect can go a long way in establishing a productive negotiation environment.
Remember, negotiations are a give-and-take process. Be prepared to compromise on certain aspects while aiming to secure the best overall deal. With these negotiation strategies in your arsenal, you can increase your chances of obtaining better prices and favorable terms from suppliers on Alibaba.
Always communicate through your Alibaba account. This will help you later on in case there are any payment disputes.
Ordering and Shipping from Alibaba to Amazon FBA
Once you’ve decided on a supplier and locked in your rates, it’s time to make the order. When placing an order, you should create a Purchase Order (PO), a legally binding document that protects you and the supplier.
The PO states the shipping terms, price, and number of items ordered. This will help you in case of disputes over shipping, defective, or non-payment.
Making payments securely on Alibaba
Alibaba offers secure payment options to protect buyers and sellers. Use the platform's built-in payment systems, such as Alibaba Trade Assurance or Secure Payment, to ensure a safe transaction. Be cautious of suppliers who insist on alternative payment methods outside of Alibaba's secure channels.
Alibaba offers the following payment channels:
With this method, you pay the supplier directly from your bank account. There are no third parties involved, the transaction fees are usually low, and the exchange rate is typically favorable.
However, this method usually takes 3-7 business days for the funds to clear, so you need to plan accordingly and consider holidays and weekends. Also, risks are involved, especially if you’re unfamiliar with the supplier.
To reduce the risks, ensure you’re transacting with a reputable supplier and have the correct information like bank account name and number. We recommend paying only a portion of the full amount before items are shipped and paying for the rest once you get the entire order.
If you’re dealing with large quantities worth more than $20,000, you can use this payment option. It’s an effective way to guarantee to a supplier that you’d pay for the stipulated quantities.
This involves working with a financial institution that would open up a line of credit for you and only release the money if the contract is followed. Using this method will also improve your cash flow since you don’t have to pay anything for the products until they arrive.
However, this method can be expensive due to the associated fees and unfavorable exchange rates. It can also be a slow process. We only recommend this method if you’re working with a large order and a new supplier.
PayPal lets you send money worldwide by linking your bank account, credit, or debit card. It provides a low-risk payment method because you can open a dispute should there be any errors with the transaction.
However, it’s not a convenient method for suppliers because they are charged hefty fees for accepting payments via PayPal. Most suppliers may not agree to this method, especially if you’re buying huge quantities.
Using a debit or credit card is the simplest way to pay on Alibaba. You simply enter your card details, and funds are transferred automatically to the supplier’s account. Cards are also multi-currency, making them convenient.
However, card companies charge high transaction fees and less desirable currency conversions. Only use this method if you’re comfortable with the fees they charge.
To give you peace of mind, work with a supplier enrolled in Alibaba Trade Assurance. This is an escrow service where your money is held securely until the order is delivered and you’re completely satisfied. Alibaba will only release the money when you’re happy with the order. You can also open disputes and get customer support up to 30 days after the delivery.
Shipping and Logistics
Efficient shipping and logistics are crucial when buying products on Alibaba and selling them on Amazon FBA. You can either ship items directly to an Amazon FBA center or ship them to a separate warehouse first so you can inspect them and save on Amazon storage fees.
Alibaba-verified suppliers are familiar with the shipping process and can help facilitate your first shipment. They will also include shipping costs on their invoice.
When you have bigger shipments over 200 kg (440 lbs), you should get a freight forwarding company. They will arrange sea shipments, customs clearance, packaging, and more.
To ensure the successful delivery of your items, consider these factors:
Consider the nature of your products, budget, and time constraints when selecting a shipping method. Air freight is faster but more expensive, making it suitable for smaller or time-sensitive shipments. Sea freight is cost-effective for larger quantities but has a longer transit time. Express delivery services offer a balance between speed and cost for intermediate-sized shipments.
Familiarize yourself with the customs and import regulations of your country to ensure compliance. Determine any necessary permits, licenses, or certifications required for your products. Provide accurate and complete documentation to expedite customs clearance and avoid delays or penalties.
Optimize shipping costs by comparing quotes from different freight forwarders or shipping providers. Negotiate favorable rates based on the volume and frequency of your shipments. Plan ahead to allow sufficient time for shipping and customs procedures, considering factors like peak seasons, holidays, and potential disruptions.
You should also utilize tracking systems provided by shipping carriers or freight forwarders to monitor the progress of your shipments. Stay updated on the shipment's location, estimated delivery date, and potential delays. Communicate with your supplier and Amazon FBA to ensure seamless coordination and timely delivery.
Listing Products on Amazon FBA
As you gear up to sell your Alibaba-sourced products on Amazon FBA, it's essential to make the necessary preparations to maximize your success. Even before your items arrive at their destination, you should already list them on Amazon.
Here are some helpful tips for creating successful listings:
You should also employ strategies to enhance your product visibility and increase your chances of ranking higher in Amazon's search results.
Once you start selling products, encourage positive customer reviews and optimize your product's performance metrics to boost its ranking.
Participate in Amazon advertising programs, such as Sponsored Products or Brand Registry, to further enhance your product visibility.
You can also utilize Amazon tools to check if there were changes in your listing so that you can address them immediately.
Check out our guide on How to Sell on Amazon FBA for Beginners, which has a comprehensive section on listing your products on Amazon FBA.
Final Thoughts
Buying products on Alibaba and selling them on Amazon offers tremendous opportunities for entrepreneurs to thrive in the eCommerce industry.
If you have a unique idea, Alibaba offers multiple suppliers who can manufacture the items based on your specifications. You can also safely resell items from Alibaba as long as they meet Amazon’s Product Guidelines.
Research and due diligence are essential when choosing suppliers on Alibaba. Verify their credibility and reputation before making a purchase. Negotiate effectively to get better prices and terms. You can do this by leveraging competition, highlighting your potential as a long-term buyer, and being respectful throughout the process.
As the world becomes increasingly interconnected, sourcing items from different countries will be a common strategy to boost competitiveness. It will also open doors to new and exciting products that will create trends and excite consumers.
Embracing these opportunities and leveraging these strategies will help you remain agile in a dynamic environment and stay ahead of the game.
See how Threecolts can help you today, the world's most comprehensive marketplace management platform.
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