Many businesses are waking up to the concept of buying from overseas marketplaces in order to save money on wholesale or custom-made items.
But buying via these platforms is rather different from buying from a consumer marketplace such as eBay or Amazon. Below are some tips to help businesses source products from Alibaba.
Key principles
Unlike consumer marketplaces that you may use in your personal life which tend to sell ready-made commodities in set quantities, many of the business wholesale marketplaces offer more room for negotiation on many aspects of the transaction.
You may have the opportunity to customize your order, such as by getting your branding stamped onto packaging. You can also negotiate on the volume of an order, with the price per unit usually decreasing as the quantity increases.
Many vendors in the wholesale marketplaces will specify the minimum order quantity. Although this may be set low in their profile, in reality manufacturers will take you more seriously if you are enquiring about a bigger order.
If you’re looking for a specific product, you can trawl through the listings just as if you were browsing Amazon to search for an item then start a conversation with the seller behind the listing. But these listings are just examples of what manufacturing services are available on the site.
Alibaba also offers a feature that enables you to request quotations from suppliers who then approach you with their proposals, or approach them directly using the messaging facilities.
Posting a request for quotations may mean you’re inundated with replies of varying quality and relevance. The main thing to remember is that the more quotes you get and the more information you gather, the fuller your range of options and the more you can compare different potential suppliers.
How to get quotes
You can invite manufacturers to approach you by posting a buying request using the “Get Quotations Now” feature on the homepage. It’s best to fill this out with as many relevant keywords as possible as this will help the widest range of suppliers to find your request. It’s best to be honest when specifying the quantity. Manufacturers favour larger orders so for these you’re likely to get a lower quote and be a higher priority. But it’s best not to be deceitful about the likely size of your order as this could damage your reputation.
Tips
Chinese vendors will often respond well to a list of numbered questions, which is something the Chinese school system favours. You may find it helpful in your negotiations if you don’t identify yourself as the decision maker (even if you are).
This may remove any awkwardness if you need to insist on parts of the deal by saying you are not allowed to negotiate on certain elements. It also gives you time to suspend negotiations in order to speak to the decision makers (fictional or not) if you think things are moving too quickly.
Businesses tend to be more interested in orders that lead to long term volume repeat sales, rather than one-off orders (even big ones).
You may like to use this as a negotiating tactic, to argue that you will place a relatively small initial order but ask for the cost of a later, bigger order if the first goes smoothly.
It’s really worth saying that although you can negotiate on price, you’ll reach a better working agreement with your partner if they find the arrangement favourable. If your supplier can’t make a profit doing business with you, then it’s in their interests to cut corners or walk away from the deal. A better working arrangement will arise if both parties benefit from the deal and the seller has an incentive to get repeat business from the buyer. This will only happen if the deal is profitable for them.
You can also approach sellers directly using the message feature.
It’s a good idea to check the seller’s response rate and sales numbers given in their profile on the site.
Sellers that have previously done more business on the site often tend to be more reliable.
You’ll probably get a high number of cut-and-pasted responses which aren’t very relevant to you. If you’ve asked specific questions in your message and these haven’t been referenced or answered, you may want to eliminate these sellers from your list. You can also repeat your original request for information. A slow initial response isn’t necessarily a reason to walk away – sellers are often busy or travelling.
Customize the subject line of your message, specifying the product and possibly quantity you want. This helps your message stand out in their inbox.
The best time to message is at the start of China’s working day. Unfortunately, this is usually around midnight UK time.
But sending messages at the end of your working day may be the best approach. Aim to message at least a dozen suppliers for best results.
Shortlisting
You may find it helpful to compile a spreadsheet of data on your suppliers so that you can keep track of the information you’ve gathered and compare them easily. You can also use Excel formulas to calculate the true cost of doing business with each supplier once you factor in for shipping as well as their unit cost and any extras such as personalization.
One good tip for getting the best value from a supplier on these platforms is to find the manufacturer, rather than a reseller.
Resellers need to charge a cut so they stay in business, this means that you won’t get the best deal compared to shopping with a manufacturer directly. This is why many suppliers will show their factory facilities in their profile and listings.
You can also request photos of their factory facilities, or even a Skype tour. See whether their email address is a generic personal one or indicates they represent a company. Resellers will often use generic rather than corporate email addresses. A factory may also be able to supply relevant documentation such as material testing results or ISO9009 certification.
If you see multiple listings for the same product on the marketplace, this indicates resellers. You may be able to identify the original manufacturer from the brand name shown in the product photos or even stamped on the photo itself as a watermark.
If you’re aiming to buy in relatively small quantities (e.g. under 500 units) then you’ll find manufacturers may not want to deal with you direct. In this case a reseller might be your best option.
Trust
Good sellers are often the ones that pay attention to your communications, answering questions and using the communication channels that you specify. Quality sellers also tend to use PayPal and Alibaba’s own payment method. There are also perfectly good sellers offering transactions by wire transfer but be aware that there’s little protection available if you use a service like Western Union or T/T wire transfer. Some suppliers may try and avoid using PayPal as they incur fees. If you prefer Paypal, you can offer to split the fees with your supplier.
If your contact has a poor grasp of English, this can be a huge inconvenience and a barrier to communication and negotiation.
But, it doesn’t mean they aren’t an excellent supplier. Attention to detail and answering your questions rigorously is the sign of a good supplier, regardless of their language ability. And if the order is large and communication is poor, you can always hire an interpreter to help you reach an agreement and close the deal.
The importance of samples
It’s absolutely essential that you order samples of every product you buy, even if you have already purchased other items from the supplier before.
The cost of samples will be much higher than you expect to pay for the order you intend to place, and they are likely to ask you to pay for shipping even if the sample is free. You can ask for the sample cost to be refunded when you place your order. It’s advisable to pay for the sample using Paypal as this gives you some protection.