Alibaba is the place to go when looking for suppliers of private label products in China. On the surface, using Alibaba seems relatively straightforward. But how do you find reliable suppliers, negotiate with them, and get your products shipped? In this article, we’ll cover all of these things.
What is Alibaba?
Alibaba is the largest ecommerce company in the world – yes, even bigger than Amazon. This is mostly because of an ecommerce site in China that Alibaba owns called Taobao. However, Alibaba also owns Alibaba.com which is a supplier directory of factories, mostly located in China. Alibaba is the number one website that most importers use to start looking for products (including myself!)
Alibaba also owns Aliexpress.com which allows foreigners to buy cheap individual products from China. That's the key difference between Alibaba and Aliexpress – Alibaba is for buying many products for your business, Aliexpress is for buying one or two products for your personal use.
Can You Drop Ship from Alibaba?
Most suppliers on Alibaba want you to purchase a Minimum Order Quantity (MOQ) of at least $500 or more. Therefore, Alibaba is not very good for drop shippers.
If you want to drop ship, it's better to use Alibaba's sister site, AliExpress.
You can also check out our article on how we use AliExpress to validate products before launching them on Amazon.
Is Alibaba Safe?
The question I probably hear the most about Alibaba is, “Is it safe to use?” Alibaba is incredibly safe if you follow some basic precautions (see below). The biggest issue you will run into is poor quality products, which I'll address below.
These are some of the basic precautions to follow when buying on Alibaba:
- Verify their export history using a tool like Jungle Scout's Supplier Database.
- Order from Chinese companies only.
- Buy from Gold Suppliers only.
- Pay via Trade Assurance or PayPal when you can. Making payment via wire transfers for larger orders is normal, but always make sure the beneficiary name matches the company name.
- Order small at first and gradually increase your order size.
Before I send any money to a supplier in China, I always verify that supplier's export history using Jungle Scout's Supplier Database. This is an affiliate link but Jungle Scout is by far the cheapest and most complete option for viewing supplier import records. You can see all of shipments that supplier has exported to America. You can even see what factories your competitors are buying from. If you can see that a supplier is making continuous exports to other companies, the chances are fairly certain they are a legitimate supplier.
You want to make sure the company you're sending to matches their Alibaba trade name and Jungle Scout supplier database name – if a Chinese supplier all of a sudden asks you to send payment to an individual in Nigeria, this should be a red flag!
If you order from Alibaba, as long as you follow some normal precautions, you will almost certainly always receive your products. In nearly ten years of using Alibaba, I have ordered millions of dollars worth of products from dozens of suppliers, and I've never been scammed.
Now, the caveat I mentioned regarding quality. Receiving inferior quality products in China is a very big concern when ordering on Alibaba. Stereotypes are sometimes true, and the crappy “Made In China” products stereotype will be true for you if you do not follow some fairly easy best practices. When you're reading to order products, review our article below on ensuring quality products.
Related reading: How to do a Quality Inspection and Why You Need One
What Types of Products Are Best to Buy on Alibaba?
You're probably looking to source on Alibaba because you want to find products to sell via Amazon or your own website.
There are factories in China selling nearly every product imaginable and you'll find them all on Alibaba. This doesn't mean that you should import every single type of product.
I personally focus on large and heavy items and often with fairly low demand. I call this method the Cockroach Method (full blog article). It's not the only way to source products but it works for me.
As a general rule, the simpler the product the less quality issues you're going to run into. For instance, a table is very simple. A hoverboard is very complicated. If you can't understand exactly how a product works, you increase the probability that you'll run into problems.
There are a few product categories you want to avoid, specifically as a new importer. These are baby products, consumable products, electronics, and electrical items. All of these have a lot of import restrictions and/or dangers associated with them.
Gold Suppliers vs non-Gold Suppliers on Alibaba
On Alibaba, there are two types of suppliers: Gold Suppliers and non-Gold suppliers.
|Free Unverified Members
|Quote to inquiries in message box
|Talk with buyers on Trade Manager
|Access to buyers' contacts
|Receive recommended inquiries
|Set preferred inquiries
A Gold supplier pays a premium for increased ranking, marketing services, etc., and Alibaba does some limited identity verification of these suppliers. However, take note that just because a supplier is a Gold Supplier on Alibaba does not mean that this supplier has good quality products. It does, however, give some indication that this supplier is a legitimate and invested one.
I personally try to work only with Gold Suppliers simply as a filter mechanism, but again, remember that a Gold Supplier does not mean they are an excellent supplier.
If you find a supplier on Alibaba that is not Gold but has the exact product you want and otherwise looks good, you shouldn't dismiss them entirely. Instead, just scrutinize them a little bit more i.e. review their import records, make sure their company name matches the payment name, etc..
Factories vs Trading Companies on Alibaba
Suppliers on Alibaba also come in the form of trading companies and factories.
A trading company does not manufacture the products they produce and generally have slightly higher prices but also slightly more consistent quality and a larger product selection. Factories have slightly lower prices and more limited selection and more unpredictable quality.
Neither is good nor bad inherently, but know the differences between these types of suppliers.
How to Find Great Suppliers on Alibaba
Before even worrying about MOQ and freight costs, you need to find the right supplier first. In order to look for suppliers on Alibaba, you first need to create an account. If you don’t have a registered company, don’t worry. You can put in whatever you want as the company name.
With your account set up, the next thing to figure out is what product you want to search for. Once you know what it is, go ahead and search for it on Alibaba. Your ultimate goal when looking for suppliers should be to find 3 to 5 potential suppliers, contact them, and get price quotes for your product.
The first thing I do when starting a search is to have my results sorted by supplier, not by product (which Alibaba will do by default). Otherwise, the top search results will be dominated by just one or two suppliers. See the image below.
You want to look for suppliers who have products similar to what you're looking for. Keep in mind that many suppliers simply steal photos of Western brand's products. I like to look for signs that the photographs are authentic, such as
- Signs the photo was taken in China (i.e., Chinese people or Chinese writing in the photograph)
- Company watermark on the photo
- Average quality photos (most suppliers don't take retail-quality photographs)
You can also check out Supplier Blacklist to make sure the company you’re dealing with is not among the recognized bad suppliers.
How to Contact Suppliers on Alibaba
Finding the right supplier involves both skill and luck. Make sure to do a quick Google search about the company. Look for red flags by adding the words scam, warning, or beware in the search bar.
Aside from this, suppliers on Alibaba can be very picky with what buyers they choose to work with.
You will see on the search results page the Supplier Response Rate. You will almost always see that this Response Rate is far lower than 100%. Alibaba suppliers will often simply ignore many buyer requests.
There are several ways to increase the likelihood that a supplier responds to you. Consider asking the following questions:
- Do you know exactly what products you're looking for? Or are you fishing for an entire catalog and price list? Ask for details regarding one specific product only.
- Are you clear, concise, and to the point? Or does your supplier have to put a lot of thought into answering your email, which is especially hard for a non-native English speaker? Ask clear questions in bullet points.
- What country are you from? Certain countries are more desirable to suppliers such as countries the supplier doesn't currently do business in. Your supplier can see what country you are emailing from via Alibaba.
- Are you a big buyer with brick-and-mortar stores?
The most important thing that you can do to improve your communication with suppliers is to ask for your supplier's WeChat ID. The Chinese do most work through WeChat and not through email. You'll improve your success rate if you can get their WeChat ID and talk to them over WeChat.
Keep in mind that most people who you are going to communicate with at a company are younger university graduates with reasonable English but little technical knowledge of your products and often very little authority. You're not dealing with the factory owner or manager most of the time.
How to Get & Use WeChat as a Foreigner
Yes, there are some privacy and censorship concerns with using a China based app like WeChat but this affects China based users mostly.
To download WeChat, download it from wherever you download apps (it's basically exclusively a mobile app only). You'll need to get someone else with WeChat to give you an invite – ask a friend or get your supplier to give you the invite.
My goal is just to get a response. I avoid mentioning MOQs, which may scare off a supplier. It's easy for a supplier to simply ignore an initial email. But once a supplier has actually responded to you, it's difficult to ignore future emails. If they add you to WeChat, it's almost impossible for them to ignore you.
The Great Firewall
Chinese censorship is prevalent and can affect your emails from getting through.
The Great Firewall blocks access to common services like Google (including Gmail), Whatsapp, Facebook, and Dropbox. Avoid using any links to these services.
Also, the internet in China is very slow, and large attachments can take a very long time to download.
Given the unpredictability of email, it's best to use WeChat whenever possible.
How to Negotiate with Alibaba Suppliers
The key to negotiating with suppliers is to determine the market price of your desired product.
Unless you know your product extremely well and the cost to manufacture it (VERY few people do) your absolute only way to know the fair price of your product is to receive competing offers which is why you need to contact several suppliers.
You should at this point start to receive prices from your suppliers. If they ask you how much you will be importing, let them know your ideal annual order amount (be an optimist but don't promise the moon) rather than the individual order amount.
Beware of suppliers that have very low prices relative to others. Normally, there is a catch to this. Typical catches include:
- Shipment terms are EXW as opposed to FOB, which makes it much more expensive.
- The material is of a much lower quality, e.g., 150 denier fabric instead of 600 denier fabric.
- They only accept extremely large orders.
Once you are comparing apples to apples, i.e., you know each supplier is quoting a product constructed of similar materials and with similar shipment terms, then ask the other suppliers if they can match the lowest offer. There's a temptation to lie and say “Your competitor Ningbo Saddles offered me these saddles for $24” when in fact they offered them to you for $34. Your supplier will smell you out, and you'll lose credibility. There is not as much room for price negotiation in China as there was previously. A 10% price discount is often huge.
At this point, you will likely have two or three suppliers with comparable prices and comparable products. You want to find a supplier that can accommodate your smaller order size.
Shipment Terms: What's the Difference Between EXW, FOB, and CIF?
As you're getting quotes, pay careful attention to the shipment terms. These are especially important if you're shipping your items via sea freight.
There are three common shipment terms that essentially determine who pays for shipping:
- EXW (Most Expensive for You): You have to pay for the cost of freight directly from your supplier's factory to your desired destination. Essentially you're paying the cost of Chinese Land Transportation and sea freight.
- FOB (Most Common): Your supplier will pay for shipping from their factory to the closest Chinese port. You will pay for the sea freight but your supplier will pay for the inland transportation in China.
- CIF (Least Expensive for You): Your supplier pays for the cost of Chinese inland transportation and sea freight to your desired port.
Read more on our article All About Shipment Terms.
How to Negotiate Low Minimum Order Quantities (MOQ)
When I'm first launching a product, I try to get as low of Minimum Order Quantity (MOQ) as possible. Every supplier will have an MOQ which is really a Minimum Order Amount. Normally it's around $2500 to $5000. On a first order, the MOQ is quite flexible if you negotiate though.
For me, on my first order I like to order $500 to $1000 of an item and try it on Amazon and then proceed to a larger order. Again, for your first order most suppliers will be willing to ship such a small amount. I describe these to my suppliers as a “few samples”.
Using Import Records to Find and Vet Suppliers and Snoop Competitors
One of the best things an importer can do is to use import records to help them find products to import and vet suppliers.
As mentioned, in America, import and export records are public information, however, the government does not catalog or give easy access to this information. However, there are tools that do allow you to easily search this information, the most popular and cheapest being Jungle Scout (others include Import Genius and Panjiva).
These tools allow you to:
- Find out what Chinese supplier a competitor is using (great for finding products)
- See how much a supplier exports
- Find out what suppliers export specific products
See our article A Secret Weapon for Doing Supplier Research
How to Order and Pay on Alibaba
Once you've picked a supplier and they've agreed to send your desired quantity, you're ready to pay for and ship your order.
Most suppliers will send you something called a proforma invoice, which is just a fancy word for an invoice.
If your order is smaller (under $5000 or so) use Alibaba's Trade Assurance or PayPal. This will more or less guarantee that your items are shipped but will not give you quality guarantees (despite what Alibaba claims). Once your orders get larger, most suppliers will expect a 30% deposit via wire transfer and the remaining 70% payment when the goods are ready. Suppliers don't typically like PayPal unless it's for smaller orders.
Order Several Samples Instead of One Sample
Many books and websites say that you should always order a single sample from a supplier and inspect it for quality. There are some problems with doing it this way:
- Your first sample is guaranteed to be of good quality. i.e., you will get the “Golden Sample.”
- The freight costs to get a single sample is outrageously high and shipping a few samples may not cost much more
- One sample gives you no chance to try and sell the item on Amazon, eBay etc.
Therefore, I always recommend people to order at least 10 of an item if possible at first. At the very least, this gives you a chance to sell the items on eBay or Amazon. If you import one sample and sell it the very first day on Amazon, you may have simply lucked out. Selling ten is a far better sample size.
How to Ship Your Products from China
If this is your first time ordering from China, it's often best just to ask your supplier to arrange for shipping and to add the charges to the invoice.
If you're shipping under 200 lbs, ship it via air with a courier such as UPS, FedEx, or DHL. Expect to pay $6 to $15 per pound with a minimum charge of $75 or so. Shipping air is easy and you basically just tell your supplier the address you want your items shipped to.
If you're shipping over 200 lbs, you will want to go via sea freight which can be quite a bit trickier to organize and you'll need a freight forwarder to help you organize. It's only tricky the first couple of times though, so don't be too intimidated. Check out our full length blog post on how to ship via sea freight.
If your goods are being shipped to the US and are valued at under $800, then there will be no duty charged because of America's very generous de minimis rules.
If you're shipping your products to Amazon FBA warehouses then check out our article How to Ship Your Goods from China to Amazon FBA.
Why is Shipping from Alibaba and China So Expensive?
Shipping items from China overall can be very expensive due to the distance. Overall, shipping via air from China is very expensive but quite quick. Shipping via sea is quite cheap but very slow (typically 30 to 60 days).
If an item is under 5 lbs it can actually be shipped for quite cheap from China but very slowly using something called ePacket.
If your item is heavier then normally you can expect to pay around $6-15 per pound with a minimum of $75 or so.
How to Review Your Shipment for Problems
If you've had your order shipped via air, then it should arrive in anywhere from 3-10 business days. If via sea, this will be more like 30 to 60 days. When your shipment arrives, here are some things to inspect, which may be talking points for future orders:
- Quality. Is the product the quality you expect? Use and abuse the product for a bit of time. Does it hold up how it should? If not, remember that you've likely received their best quality samples and quality is only expected to be the same or decrease on future orders.
- Packaging: Is the packaging sufficient to ship to your customer? Or was everything lumped into one box and you need to purchase all new shipping boxes? If so, request your items to be boxed on future orders.
- Instructions. Did it come with instructions (if applicable)? If not, does your supplier have instructions? If they don't, you should start creating or borrowing some and include them with your product.
- Does your item have “Made in China” marked somewhere on the box? If not, you should request this on the next order as it's a legal requirement
Once you've received your order, you should email your supplier to let them know that you received everything but you have not had a chance to review the products yet and let them know that you will contact them shortly to discuss things and to hopefully make another order. There's no rush to do the above. Just like in dating, playing hard to get is sometimes a good strategy.
How to Buy Wholesale from Alibaba
While there are companies in Alibaba that allow buyers to purchase as few as one item, this e-commerce giant is designed mainly for wholesalers. As opposed to retailers, wholesalers purchase in bulk and generally do not sell to end-users.
Here’s a quick summary of the steps to successfully buy wholesale from Alibaba.
Determine the exact product you want to buy wholesale. Find a niche first, then pinpoint the exact products you want to buy. Be particular about the specifications, quality, and features of the product.
Search for the right suppliers and negotiate with them. The last thing you need is having to deal with a scammer. Once you find a reliable supplier, it’s time to talk about important factors such as the MOQ, product quality, and manufacturing lead time.
Ask for samples. Don’t take their word for it. Pictures are easily manipulated and you will be hard-pressed to find a supplier that will bad mouth their own products to potential customers. When asking for a sample, make sure to consider not only the product but also how it is packed.
Pay your suppliers. Fortunately for wholesalers, Alibaba doesn’t release the payment without a go signal from your end that you’ve received the products in good condition. You can always pay suppliers privately, but you will have to do this at your own risk. If you’ve already established a good relationship with them, then this wouldn’t be much of a problem.
Alternatives to Alibaba
There are several alternatives to Alibaba that exist, although none are anywhere near as exhaustive as Alibaba. We have a post that lists down 10 Alibaba alternatives for you. Some of these options include:
- 1688: This is the Chinese-only wholesale version of Alibaba for Chinese buyers. Use Google Translate if you don't know how to speak Chinese.
- Global Sources: Not as exhaustive as Alibaba and has more Hong Kong trading companies. However, the quality of supplier skews higher.
- AliExpress: If you want a small number of products, AliExpress is a good option although you'll pay slightly higher prices.
This covers most of the basics of using Alibaba to find suppliers and products. If you want a more in-depth guide to starting an importing and private label business, I strongly suggest you check out our mega guide on How to Import from China.
Do you think Alibaba is still a good place to find suppliers? Let me know below or share any other questions you have about buying from Alibaba.