Finding a Supplier on Alibaba

This is the bit that many people get really hung up on, but in fact finding a good supplier for
your chosen product is not difficult at all providing you know how to go about it. This
module will show you in detail how to find a reputable supplier for the product you want to
sell, how to avoid the common mistakes and how to calculate if the price is right in order to
allow you to make a profit on Amazon.
It’s a lot cheaper to source products from China (even with shipping factored in).
Additionally, you have a much bigger selection of products to choose from.

Step 1:

Head over to Alibaba.com

Most suppliers on Alibaba speak good English, so there are usually no language barrier
concerns. There should be no need to actually speak with suppliers on the phone because
all correspondence will be through the Alibaba messaging system, and possibly email (once
you have built up a relationship with the supplier). In addition, Alibaba is a generally a safe
place to do business and just to make certain, follow this module to the letter and you
should have no issues.
Register for an account by clicking on ‘Join Free’. Where it asks for ‘company name’, if you
don’t have a company, simply enter your own name and the registration will go through
without any issues.

Step 2:

Grab your list of products that you selected earlier. In the products search bar on Alibaba,
enter your first product. There are often 1000's of results, which to be expected on Alibaba
because it's a massive portal and has been operating for well over a decade.
We want to filter these results down by ticking ‘Trade Assurance’. Most suppliers have
Trade Assurance, but we want to eliminate any that do not.
Do not tick any other options otherwise you will be narrowing your search too much.
Look at the prices (although at this point, price is only a general guide). I advise to look for a
price of $3 per unit or below. Reason is that sticking with lower cost items will allow you to
buy more units while still keeping your spend relatively low.
MOQ means Minimum Order Quantity. Many suppliers will allow you to order a smaller
quantity than the MOQ stated on their listing, so don't let that put you off too much.
Next we want to shortlist a few listings on Alibaba.
The supplier criteria I recommend you follow:
2 years or more on Alibaba
Trade assurance
Some of their trade volume includes your marketplace (N. America, W. Europe, etc.)
Rating of 4.7 or above (only applies if the supplier has at least 15 reviews. Otherwise ignore
the rating)
Take a look at the Packaging and Delivery section to see how long they take to deliver. Up to
30 days is normal, but over that is a bit too long.
It’s important to know that shipping costs are calculated on what's known as the
'Dimensional Weight' or 'DIM' for short. Basically this means the size of the item is usually
more important than the weight. In fact, how many units fit into a shipping carton will
probably determine your shipping costs, as opposed to the weight.
Suppliers will usually be able to give you a better shipping rate than you could get yourself,
simply because they get volume discounts with the major carriers.
As a new seller placing small orders, I advise air express shipping.
[Sea shipping is a little more complex and if you follow the criteria for product and supplier
selection laid out in this course, you will not need to use sea freight until you are at the stage
where you are growing your Amazon business and looking to expand into different types of
products and larger order quantities.]
If everything on the supplier's listing looks good, the next thing is to send a message. To
ensure that your message gets replied to, you need to sound professional. One of the most
common complaints I've seen about dealing with suppliers, is lack of response to messages.
If you come across as professional, you will get more replies. There will always be SOME
suppliers who never respond, but for the most part you should start getting replies within
24 hours (not including weekends and holidays)

Feel free to use the following template, or a variation of it

Hello
I'm interested in this product. My company retails on Amazon and we are always looking for
quality products to add to our line up.
Could you please send me the latest price.
We would like to start with a small order and if we are happy, we will place a larger order
afterwards.
Look forward to your response.
Best Regards
(your full name here)

Step 3:

Repeat this step with 3 or 4 suppliers (for the same or similar products), even though
ultimately you will only choose one of them. Some may come back with a higher price than
quoted on the listing and maybe one or two will not reply. Therefore we contact several and
then narrow it down to one.
Step 4:
As soon as you get some favourable replies, you can now ask for a shipping quote*. The type
of shipping you probably want is door-to-door using air express, or you might want ‘Direct
Duty Paid’ (see the next lesson for more details about shipping options).
Once you have both the cost of the product and the cost of shipping, you can do your
calculations as per the lesson on how to calculate your profits (you can find the profit
calculation lesson after the lessons on finding suppliers).
If it works out, great! If not, move on to another supplier or another product (from your list
of 10 that you gathered during the product research stage)

Step 5:
Okay, so assuming the calculations have shown that you can make a profit, the next step is
to request a sample
Here's a template you can use:

Hi (supplier name)
Thank you for your reply. Before I go ahead and place an order, I would like to obtain a
sample.
Can you accept PayPal for the sample? If not, please provide an alternative method.
Could you please let me know the shipping cost plus samples cost for 2 pieces to the
following address:
(your address here)
(your phone number for the courier here)
Looking forward to your reply
(your name here)
Many suppliers will not charge for samples, but you will still need to pay the shipping. Let
the suppliers arrange the shipping and send you the cost. Note: the cost of shipping a
sample will NOT reflect the cost of the actual product shipment because there is always a
minimum shipping cost to send a small parcel. The reason you should ask for two units is so
that you can evaluate the quality and consistency of the product.
Most suppliers will accept PayPal for the samples. If not, you will be able to pay through
Alibaba's payment system, where the funds are held until the suppliers have shipped the
items to you.
Step 6:

Wait for the samples to arrive in the mail and evaluate them. Use them, try them out and
make sure they work properly. Look at the quality and finish of the samples. Would you be
happy with this product if you purchased it yourself? Most suppliers on Alibaba are
producing and supplying good quality products. They need to, because the competition is
fierce with many suppliers competing for business. Even so, you still need to acquire
samples and check them before placing any orders.

Step 7:

As soon as you have a sample in your hands and you are happy with it, it's time to place
your initial order. Email the supplier and let them know that you like their sample and
would like an invoice for the deposit for an initial order of xx pieces plus shipping.
Note: Most suppliers work on a 30% deposit and the balance of 70% is expected to be paid
just prior to shipping. If you have chosen a supplier based on the criteria in this module, you
will have no concerns about being 'scammed'.

Phew! Give yourself a pat on the back because you have just done what most
people will never do. That is, you have chosen a product based on intelligent
research, sourced an overseas supplier for that product, and arranged your
first order.

*Shipping quote – In order to get a quote, you need to give the supplier a delivery address. If
you are shipping directly to Amazon, the shipping address will be one of the FBA
warehouses.
However, some Amazon marketplaces, such as the US, have multiple FBA warehouses and
you will not know which one to use until you actually set up your ‘incoming shipment’ in your
seller central account. Hmm,… so how do we get a quote if we don’t know the shipping
address yet?
The solution is to give the supplier an interim address, which you will change with your
supplier later, before the product is actually shipped. Your shipping quote should not
change in any significant way because your items are still going to the same country.
To get an interim address to use, you need to find the address of an FBA warehouse for the
Amazon marketplace you will be selling on.
Here’s how:
Go to google and type in ‘Amazon.com FBA warehouse address’, or ‘Amazon.co.uk FBA
warehouse address’, or ‘Amazon.ca FBA warehouse address’, etc.