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Product Sourcing

A Complete Guide for Amazon Product Sourcing from Alibaba

  1. Understanding Different Supplier Types on Alibaba
  2. Using Alibaba’s Filters to Find Quality Suppliers
  3. Evaluating and Vetting Potential Suppliers
  4. Creating a Detailed Product Specification Sheet
  5. Negotiating with Suppliers
  6. Wrapping Up

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Sourcing profitable and quality products is one of the most important steps for running a successful Amazon FBA business. While Amazon makes selling easy once you have inventory, finding the right suppliers can be challenging. This is especially true when Amazon Product Sourcing from Chinese manufacturers on platforms like Alibaba.

With thousands of suppliers to choose from, how do you identify the reliable ones that will deliver quality products on time? How do you avoid pitfalls like counterfeits or shipments that don’t meet your specifications?

This guide will walk you through a proven step-by-step process for sourcing products successfully on Alibaba. Whether you’re just starting out or looking to improve your existing process, you’ll learn:

  • How to tell the difference between manufacturers, traders, and wholesalers so you find legitimate suppliers
  • Tips for using Alibaba’s search filters to only see suitable suppliers
  • What to look for in a supplier’s profile and communication to assess their credibility
  • The importance of creating a detailed product specification sheet and how to craft one
  • Strategies for negotiating with suppliers to get the best price and terms for your business

Sourcing from Alibaba has its challenges but also tremendous opportunities. With the right system and knowledge, you can source quality products that will sell profitably on Amazon while building relationships with reliable suppliers. Let’s get started!

Understanding Different Supplier Types on Alibaba

When Amazon Product Sourcing on Alibaba, your first step is to understand the three main types of suppliers:

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  • Manufacturers
  • Traders
  • Wholesalers

This allows you to focus on the supplier types that will work best for your Amazon FBA business.

Manufacturers

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  • Manufacturers are factories and companies that actually produce the products you want to source.
  • They have the production capabilities and facilities on-site.
  • Working directly with manufacturers allows you to oversee production and quality control.
  • Products come directly from the source, which can lead to better pricing.

Traders

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  • Traders are intermediaries that do not manufacture products themselves.
  • They work with networks of manufacturers to source products.
  • Traders buy in bulk from factories and sell to exporters and businesses.
  • Prices may be marked up from direct manufacturer prices.

Wholesalers

  • Wholesalers buy large quantities of finished products for resale to retailers.
  • They do not make or source products – only distribute them.
  • Wholesalers place large minimum orders that are not suitable for Amazon FBA.
  • Their pricing will include significant markups that cut into your margins.

When Amazon Product Sourcing on Alibaba:

  • Prioritize connecting with actual manufacturers whenever possible. This gives the most control over production and pricing.
  • Traders can be considered if they offer competitive pricing and can ensure quality standards.
  • Avoid wholesalers, as their business model is not a fit. The large order minimums and high markups will not work.

Vetting the company name, profile photos, location, and communication early on can help you determine if a potential supplier is likely a manufacturer, trader, or wholesaler.

Using Alibaba’s Filters to Find Quality Suppliers

Alibaba hosts thousands of suppliers, so leveraging its built-in filters helps narrow down the options to find suitable, verified suppliers quickly.

Focus on the following filters to zone in on legitimate manufacturers and traders:

Keyword Search

  • Brainstorm multiple relevant keywords that describe your product category.
  • Try singular and plural forms, synonyms, broader categories, buyer keywords, etc.
  • Cast a wide net because you never know what keywords a seller will use to list their products.

Example: “stress ball”, “stress balls”, “stress reliever”, “stress relievers”, “squeeze ball”, “squeeze toys”

Require Trade Assurance

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  • Trade Assurance is Alibaba’s built-in payment protection service.
  • Suppliers must apply and be approved to offer Trade Assurance.
  • It adds a layer of verification and shows they are established on Alibaba.

Exported to Target Market

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  • Filter by suppliers that have exported to your target market already.
  • This indicates they are familiar with regulations and standards for that region.
  • No compliance surprises that could delay your product launch.

Company Name

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  • Avoid suppliers with “trading”, “imports/exports” in the name – signals reseller/trader.
  • Look for product descriptors like “factory”, “manufacturer” in the name.

Company Years in Business

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  • Give preference to suppliers that have been on Alibaba for 4+ years.
  • Shows stability and experience interacting with global clients.

Images

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  • Suppliers that show factory sites, production lines, finished products, etc. demonstrate legitimacy.
  • Fake suppliers will only use stock images that may be inconsistent.

Using Alibaba’s built-in filters in your Amazon Product Sourcing process goes a long way towards surfacing suppliers that are credible and able to deliver the quality you need.

Evaluating and Vetting Potential Suppliers

Once you’ve identified some potential suppliers using Alibaba’s filters, the next step is vetting those options to determine the best partner for your business.

Here are the key factors to evaluate:

Compare Pricing Between Suppliers

  • Get quotes from multiple suppliers for the same product.
  • Identify any drastic variances in pricing for the same items.
  • Extremely high pricing likely signals a wholesaler to avoid.
  • Extremely low pricing may indicate lower quality manufacturing.

Assess Level of Specialization

  • Review the product catalog and profile information carefully.
  • Suppliers focused on a narrow niche typically produce higher quality.
  • General trading companies may not have the same expertise.

Example: A factory specializing only in silicone kitchen products demonstrates deeper expertise versus a general housewares trader.

Example of a overall houseware trader:

Amazon Product Sourcing
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Quality Over Lowest Price

  • Don’t let price be the determining factor – quality is crucial.
  • Rigorously vet suppliers promising prices that seem “too good to be true”.
  • Get samples to verify quality before ordering bulk inventory.

Previous Export Experience

  • Give preference to suppliers with proven history exporting to your target market.
  • Ask for references from past customers, especially in your market.
  • Indicates ability to meet quality standards and compliance requirements.

Responsiveness and Communication

  • Engage in discussions and assess responsiveness and English fluency.
  • Shows level of experience working with overseas clients.
  • Proactively address your questions and concerns.

Taking the time to carefully evaluate potential suppliers will help identify the best partner that can deliver on quality, pricing, compliance, and communication – setting your Amazon FBA business up for ongoing success.

Creating a Detailed Product Specification Sheet

Once you’ve selected a supplier, the next critical step is creating a detailed product specification sheet to communicate exactly what you need them to manufacture.

A clear, comprehensive spec sheet prevents errors, miscommunications, and quality issues with your order.

Elements to include:

  • Product Images – Provide images, drawings, or samples of the exact product, design, dimensions, and packaging wanted. Remove any guesswork.
  • Dimensions – Specify the exact sizing measurements of the product components. Include tolerances if applicable.
  • Materials – Call out the exact materials to be used for each component, such as:
  • Silicone rubber
  • ABS plastic
  • Cotton fabric
  • Polyester stuffing
  • Color – Use Pantone or other color codes to specify colors precisely.
  • Packaging – Describe packaging requirements in detail including:
  • Box dimensions
  • Labeling/markings
  • Any inserts needed
  • Bagging or wrapping
  • Compliance – List any applicable compliance standards, certifications, or lab testing required. Common examples:
  • FDA
  • FCC
  • CE
  • MSDS/SDS sheets
  • Quantity – Confirm order volumes and production timeline expectations.
  • Pricing – Restate agreed upon per unit pricing and confirm tooling/mold fees if applicable.

The more detailed and specific you can be in your product spec sheet, the greater chance you have of the factory producing exactly what you need for a successful product launch.

Provide your supplier an opportunity to review the spec sheet and resolve any open questions. Use this document to align on a production plan that meets your business needs.

Negotiating with Suppliers

Once you have identified a strong potential supplier and provided your product specifications, it’s time to negotiate production pricing and terms.

Here are some best practices to get the best deal:

Build Rapport

  • Take the time to build some rapport before negotiations.
  • Let the supplier get to know you, your business, and your goals.
  • Establish a friendly, long-term relationship mentality.

Understand Their Pricing

  • Ask questions to understand their pricing structure.
  • What are their standard margins? What drives costs?
  • Get them to break down material, labor, overhead contributions.

Offer Value

  • Highlight ways working with you benefits them besides pricing.
  • Offer larger order quantities to drive volume.
  • Present steady, ongoing production forecasts.
  • Refer other business contacts if possible.

Be Flexible

  • Suppliers may not be able to meet every single term you propose.
  • Allow some flexibility with production timelines if reasonable.
  • Offer flexibility on shipping terms, inspection terms if needed.

Aim for Win-Win

  • Avoid treating negotiation as adversarial or zero sum.
  • Approach it as collaborative problem solving.
  • If pricing can’t meet target, explore options to close gap like ordering more units.
  • Your success depends on their success long-term.

With some empathy, flexibility, and creativity, you can negotiate win-win pricing and terms with Alibaba suppliers to maximize the profitability of your Amazon FBA business.

Wrapping Up

Amazon Product Sourcing profitable products from reliable suppliers is foundational to running a successful Amazon FBA business. By carefully evaluating suppliers on Alibaba, leveraging its search filters, vetting options, creating detailed specifications, and negotiating win-win deals, you can ensure access to quality inventory.

The key takeaways are:

  • Identify the best supplier type for you – manufacturers or qualified traders. Avoid wholesalers.
  • Use Alibaba’s filters to surface reputable, stable suppliers efficiently.
  • Compare prices, specialization, history, communication to select the best partner.
  • Create a complete product specification sheet and align on details.
  • Negotiate pricing and terms collaboratively to launch your products.

While it does take some work to find diamonds in the rough on Alibaba, the effort pays off many times over with reliable inventory sources. You reduce the risks of production errors, quality issues, and compliance problems down the road.

Amazon Product Sourcing products from China through platforms like Alibaba can seem daunting but becomes much more manageable if you follow a methodical step-by-step process. Apply the tips and strategies outlined in this guide to confidently navigate the complexities of international sourcing.

With solid suppliers secured, you’ll be prepared to launch your products and grow a thriving Amazon FBA business. Best of luck!

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