Alibaba Dropshipping for Amazon Business Success – How to Use Alibaba to Start an Amazon Business?
Just like any other business, there’s so much to think about in starting an e-commerce business. You might still be on your research, you might have drafted your plan, or you might already be ready to start. But aren’t you forgetting something? Anything?
Sometimes, because it’s so basic and common, we tend to forget about, much less not pay enough attention to things- like the products we plan to sell, for example. Little do we know that choosing the right products to sell and knowing where to source them is one of the vital elements you need for your e-commerce business to succeed.
In 2019, CB Insights conducted a study involving CEOs and company founders to discuss reasons for e-commerce startup failures. The respondents noted that poor product choices and other product-related mishaps are reasons for e-commerce business failures. The study revealed that 42% of online startup businesses fail due to not selling the right product for their market. It also showed that 17% of startup failure was attributed to products without a business model, while another 17% was caused by user-unfriendly products. 13% also showed mistimed products, or products released at the wrong time, cause ecommerce business failure.
Product is one of the vital elements of a business that you need to carefully consider to successfully establish your e-commerce store. If you’re still deciding on the best products to sell in your store, Alibaba has a broad selection of products at low costs. It is one of the most competitive and cheap marketplaces to source products.
What is Alibaba?
Alibaba is a China-based wholesale e-commerce marketplace founded in 1999 by the Chinese business mogul Jack Ma. Alibaba Group, which includes all online marketplaces it owns, including Alibaba.com, garnered 811 million active global consumers by the end of the first quarter of 2021. Alibaba.com, or Alibaba, alone has more than 20 million active buyers coming from more than 190 countries and regions in the world. It has more than 150 million members and over 150,000 suppliers on its platform.
Although it is primarily a B2B (business-to-business) company that sells in bulk, buyers can still buy single items on Alibaba marketplace as long as the sellers agree. With several types of sellers on the platform, like wholesalers, manufacturers, trading companies and agents, and exporters, Alibaba marketplace is a go-to place for different types of entrepreneurs to source their products. The platform connects these sellers to typical buyers like other B2B sellers, B2C (business-to-consumer) retailers, manufacturers, wholesale distributors, and sourcing agents.
What is Product Sourcing?
The next step after determining the kind of business you’ll start, and the products you’ll be selling, is to ask yourself this: “Where can I find suppliers for the products I plan to sell?”
Product sourcing in e-commerce is the process by which you look for reliable and trustworthy vendors on online marketplaces to supply products for your business. This answers the question of how you’ll acquire inventory or even products you plan to dropship on your e-commerce store.
Furthermore, product sourcing research, or simply product sourcing, involves skimming through countless merchants and vendors on e-commerce platforms like Alibaba marketplace to find legitimate suppliers. Of course, this process can be simplified using guidelines and criteria like:
- Look for seller rating and certifications
- Read through customer feedbacks
- Evaluate the vendor’s communication and customer support by contacting the seller and ordering sample products.
- Order sample products to assess their quality
- Look for Alibaba seller qualifications like Verified, Gold Supplier, and Trade Assurance.
- Review product information and shipping times
Alibaba marketplace sells a vast selection of products in multiple product categories. You can find almost any product you’re looking for on this platform which makes it a good sourcing platform, especially for niche businesses. If you are still undecided about what niche to enter, you can browse through a number of product categories. It has 36 first-class product categories, which range from beauty to agriculture.
Moreover, Alibaba marketplace sells products at very low costs. You can find really cheap products on its site because the majority of manufacturers and suppliers that sell there are from China. China is considered the “world’s factory” because of the many manufacturing plants, low-cost labour, and non-restrictive labour laws in the country. Also, most raw materials come from there, so materials for the production of goods are cheaper. These are the reasons why Alibaba, a Chinese-based marketplace, can sell really cheap items on its e-commerce site.
How to Use Alibaba to Start an Amazon Business
Alibaba marketplace connects you to Chinese and other foreign manufacturers who sell products at a cheaper rate or wholesale prices. This is one major reason why Alibaba is one of the best online sourcing platforms.
If you have an Amazon Seller Central account and plans to start selling on Amazon, or you’re already an Amazon seller who wants to add new products to your store, Alibaba marketplace can help you locate new products and suppliers.
Before diving deep into the technical how-to steps of selling products from Alibaba marketplace to Amazon, here are ways to use Alibaba for your Amazon business.
1. Do Product Research and Identify Your Niche
A product is still a big concept that involves many kinds. You have to figure out the types of products you will sell and the product category where they belong. That will be your niche.
To effectively determine the products you’ll be selling, research the current market trends. Study the demands for specific products.
On the other hand, you can use tools provided by Amazon and Alibaba for product research. Amazon partners with Alibaba in their product research tool AMZ Scout to let you browse through products and suppliers you can use for your Amazon store from Alibaba. In addition, Alibaba offers Helium 10, a chrome extension that lets you use a Demand Analyzer tool to sift through products currently on demand and figure out commonly used keywords for your products.
Lastly, read about the product information and other product details you will find in the supplier’s store. Make sure to never miss out on any important information as this will guarantee the quality of the product and the kind of service you’ll receive from the supplier.
2. Contact Supplier
Correspondence and customer service are vital elements of an e-commerce store, especially since transactions are only done online. You cannot physically meet with your supplier, who is most probably from the other side of the world. Contacting your supplier helps you evaluate the supplier’s communication ability and gives you answer to product queries and other concerns not seen on the product page or anywhere on the seller’s store.
3. Evaluate and Verify the Payment Options Available from the Supplier
Some suppliers would ask you to pay through payment options available on the Alibaba platform, while some would require you to pay outside the platform through other payment gateways. In the case of the latter, in most cases, you should run. This is not to say that you cannot find legitimate suppliers who prefer other payment methods outside Alibaba. However, within Alibaba, you are protected with buyer protection policies like Trade Assurance.
Learning about the supplier’s payment options also makes you aware of the payment options available in your geographical area. If these options are not available in your area, then you can negotiate for other payment options or simply let go.
4. Ask for a Quote
Ask for a quotation, or a quote – a proposal given to you by the supplier, which is simply a list of prices of goods and services they are offering to you. You can ask for quotes from suppliers by logging in on Alibaba’s website and clicking on Sourcing Solutions to fill out an RFQ or Request for Quote, which will be sent to suppliers. You can also try other methods like messaging the supplier directly on their Alibaba store and emailing them your RFQ. It should include the minimum order quantities (MOQs), price of samples, production time and pricing, and payment terms.
5. Negotiate Prices and Order Quantities
Negotiating involves letting the suppliers know how much you’d be willing to pay for their products and services. Other than that, you can also negotiate the quantity of your order (MOQs).
As mentioned earlier, some sellers allow buyers to order single items, if only they ask. If you’re planning to dropship on Amazon, this method of sourcing suppliers can work.
You can also discuss the product images. Ask the supplier if they can let you use their product images and videos in your store.
At the end of the day, both ends should be happy with the terms and outcome of negotiations.
6. Narrow Down Your Search and Zero in on the Best Suppliers
After researching and corresponding with multiple suppliers, compare the quotes, correspondence, and advantages and disadvantages of each. Then, pinpoint the supplier or suppliers who stand out and can give the best benefit for your Amazon ecommerce business.
To be able to use Alibaba to find suppliers for your Amazon startup, you need to follow these steps:
- Sign up to Alibaba and register for an account.
- Use the filters like trade assurance, verified suppliers, and gold suppliers on the left side of the Alibaba homepage. It will show you legitimate suppliers you can consider for your Amazon business.
- Visit the supplier stores that you want and survey the products and details. Message the supplier to ask about products, returns, and other important details and to evaluate communication.
- Determine the price of shipping and the shipping method you want to use to receive the product.
- Ship products to Amazon using Amazon FBA if you’re dealing with inventory. If you’re a drop shipper, you can buy sample products first to evaluate shipping times and product quality.
- Sell your products to Amazon! Create a product listing on Amazon, promote and fulfil orders, or let Amazon or your Alibaba supplier fulfil it for you.
Also, you have to be careful since there are instances that your Amazon business account might get suspended. Know more on this blog: Things You Should Never Do to Get Your Amazon Account Suspended.
Frequently Asked Questions
Is it safe to buy products in Alibaba?
Yes, definitely. As people become more acquainted with online shopping, fraudsters and scammers are also shifting their schemes online. Yet, Alibaba has a free protection policy called Trade Assurance which protects buyers in terms of quality-related and shipping disputes.
Where else can I source products to sell on Amazon?
Some good alternatives to Alibaba where you can source products to be sold on Amazon are Global Sources, AliExpress, 1688, and DHgate. You can also use other sourcing methods like factory visits (if you can), visiting fairs and trade shows, or hiring sourcing agents.
What products or product categories sell best on Alibaba?
Alibaba’s bestselling products for 2021 are tempered glass, TWS Bluetooth earbuds, smartphone case, smartphone cables, necklace and pendants, headphones, power banks, nail art, earphones, car accessories and fake eyelashes. As you can see, mobile phones and accessories and fashion and jewellery are the top product categories.
Finding a reliable and legitimate supplier on an e-commerce marketplace like Alibaba takes time. Yet, Alibaba is a buyer-friendly platform that allows you to browse millions of items from hundreds of thousands of merchants and implements buyer protection policies to protect you. Although there will always be uncertainty when it comes to the people you transact with online, Alibaba is generally a safe platform for buyers who source products. With some effort, time, available tools, you can find the best suppliers from Alibaba for your Amazon e-commerce startup.