Amazon FBA Guide 2022 – How to Start an Amazon FBA with Source by Alibaba and Low Budget?
Starting a business is tedious work, e-commerce included. You might think launching an online business is easier and faster. But despite countless available digital tools to automate business processes, like Amazon FBA, the risks are just as heavy and just as serious as any other business. You need to look into every aspect and learn every business area before you finally launch successfully.
Whether you want to start a reseller or private label business on Amazon FBA, it pays to understand how your business model works and take your time researching and learning about vital business aspects like suppliers.
The quality and shipping times of your products are just some of the essential factors of your business that will depend on them. Where you’ll source your products is another crucial factor. Online marketplaces like Alibaba are just one way to find legitimate suppliers for your business.
What is Amazon FBA?
Amazon FBA, or Fulfilled by Amazon, is an Amazon program designed to automate e-commerce businesses’ fulfillment processes.
When you enroll your business in the program, you allow Amazon to pick, pack, and ship your goods straight to your customers.
With 185 global fulfillment centers and 110 active warehouses in the US alone, you can also let Amazon store your inventory for a fee.
All the fees for using the different services under the program, such as picking, packing, shipping, and storing inventory, are charged on your monthly billing.
FBA allows Amazon to have total control of the shipment of your products, including returns and refunds, as well as customer support. As it frees you from the task of fulfilling orders, you can just monitor and keep track of the parcel’s delivery, update your customers, and devote your time to other areas of your business.
What is Alibaba?
Alibaba is one of the largest e-commerce companies and biggest online marketplaces in the world. It was founded in 1999 by the world-renowned Chinese business magnate, Jack Ma.
Alibaba is famous to e-commerce businesses as a supplier of cheap e-commerce products and one of the go-to marketplaces for finding reliable suppliers. It connects individual sellers and businesses to Chinese manufacturers, who offer to sell or manufacture products at a lower price as long as it’s in bulk orders.
While many may think that the quality is being sacrificed for the cheap products from Alibaba, there are, in truth, legitimate sellers of good-quality products on the marketplace. The reason for low product cost compared to other marketplaces or sourcing platforms is that China is considered “the world’s factory.”
The cheap labor, large manufacturing plants, competitive business ecosystem, lower taxes compared to other countries, and loose regulatory compliance all contribute to the low cost of Alibaba products.
Yet, although the platform is intended mainly for bulk orders, Alibaba allows individuals to order single items as long as the supplier agrees to it.
Sourcing Products from Alibaba and Selling Them to Amazon FBA
- Identify the products you want to sell
Before anything else, the first thing you need to be sure about is the product you want to sell on your Amazon FBA business.
If you plan to start a business but don’t know what products to sell, search online marketplaces like Amazon or use Alibaba. These are online marketplaces with a vast collection of product and product categories.
You’ll get an idea of the trending items and most competitive niches. Also, consider your interests. Likely, your business won’t work if you don’t like what you sell or if your passion is somewhere else.
- Register an account on Alibaba
You need to register for an Alibaba account to use the platform in product searching and supplier hunting. To create an account, simply go to the Alibaba.com website and click the Join Free link below the Sign-Up link and beside the head symbol on the upper right corner of the homepage.
Clicking the link will open a new page consisting of fields where you need to input necessary information. After selecting Agree and register, you need to verify your email. Then, you can finally start using the platform to research.
- Look for and contact suppliers
When looking for suppliers on Alibaba, be mindful of these several criteria to ensure that you’ll find the best, most legitimate, and most reliable suppliers on the platform.
- Ratings and Feedbacks
Feedbacks and star ratings on Alibaba are ways to determine if a supplier is legitimate and reputable. A star rating on Alibaba shows the overall performance of the seller. It is based on performance indicators enumerated at the Seller Star Rating Rules.
- Logistics and Shipping Times
It’s vital to determine the shipping times and logistical details of the supplier. It’s because any change or delay in logistics and shipping will greatly affect your business operations.
You can also use customer feedbacks for reference of the shipping times because it is based on the realistic experiences of buyers.
- Industry Experience
Look for suppliers that have been in the industry or niche for at least 3 years. It ensures that they already know the ins and outs of the business and will have enough knowledge to resolve any issue that may arise with matters regarding your partnership and supply agreement.
You can evaluate the communication skills of the supplier by talking to them. You can contact them on the Alibaba platform in four ways: click the Contact Supplier, Start Order, Get Latest Price, or Chat Now buttons.
- Returns and Refund Policies
It is the part where Alibaba Trade Assurance comes in. The Trade Assurance policy protects buyers from being scammed on the platform. You can see a Trade Assurance badge in the seller’s store if the seller is enrolled in the program.
- Certifications or Verifications
Certifications and verifications are other ways of knowing that the supplier is legit and reliable. When you see the “Verified Supplier” badge on the seller’s store, it means a third-party certified, inspected, and accredited the store.
- Gold Suppliers
You can also filter your supplier search on Alibaba using the category Gold Suppliers. It’s a membership program that costs $10,000 and guarantees that you are dealing with a high-quality supplier. Why? Because usually, no fraudster or scammer would release such a high amount to scam buyers who may not be willing to spend half that amount for an order.
- Minimum Order Quantity (MOQ)
Every supplier in Alibaba has a minimum order quantity or MOQ, especially that most deal with bulk orders. Ask the supplier for their MOQ and try to negotiate if it doesn’t suit your needs.
- Evaluate product samples
Product quality is always crucial in a business. It could make or break your FBA business.
To avoid getting bad feedbacks and business failure, always check the product quality. Talk to the supplier and ask for or buy product samples to assess the quality of the materials used in the product.
- Eliminate and Negotiate
When finding suppliers, you need to talk with several of them to compare and keep your options open. Eliminate suppliers that lack essential criteria and negotiate with the rest that, ideally, check off all on the list. In communicating with the supplier, you can set the shipping dates, order quantity, and other things concerning the supply of your inventory, such as replenishment.
- Ship products to Amazon
After finalizing your supplier, ship date and shipping method, and product quality and quantity, you can already ask your supplier to ship the products to the Amazon center or warehouse, where you’ll store your inventory and sell your products.
When you pay via the Alibaba platform, you are protected by the Trade Assurance policy. However, your supplier may prefer other payment methods available in their area, so practice due diligence in using other payment gateways.
If you want to expand your product sourcing, you can check this blog out: How to buy on eBay and sell on Amazon.
How much budget should I need to start an Amazon FBA Business?
In starting an Amazon FBA business, you need to consider the costs of the separate processes that would comprise the entirety of your business. To be specific, think of the storage cost for your inventory, shipping cost, labeling and graphics costs, and any other cost you will incur based on your specific FBA business. You can start for as low as $500 and build on it as you go along your business.
Do I need to pay separately for the services offered by Amazon FBA?
Yes. The price for picking your orders is different when it comes to shipping them to your customer, and so is the storage cost. Labeling also has its own cost. You can refer here for complete FBA fulfillment fees.
Is it safe to source products from Alibaba to sell them to my Amazon FBA business?
Yes. Fraudsters and scammers are everywhere online, but you’ll be fine as long as you are specific on the suppliers you are looking for on Alibaba and you are aware of the risks. Alibaba also has a Trade Assurance policy to protect you from abusive sellers and manufacturers.
Once the products you sourced from Alibaba reach the Amazon warehouse of your choice, you can start listing your products on your store and proceed with selling and marketing. To avoid getting scammed or losing profit, keep away from reselling branded items from Alibaba.
There are a lot of counterfeit branded items on the platform. If you are still unsure about looking for suppliers on your own, you can employ sourcing agents to do the checking and evaluation for you.