Since you’ve landed here, we likely don’t need to explain to you that selling on Amazon FBA is extremely lucrative.
Amazon has spent decades improving conversion rates, putting the customer first, and building the perfect sales funnel.
Third party sellers on Amazon’s platform can take advantage of this, and with revenue growing by enormous amounts every single year, this is something every business and sole trader should be looking into.
While Amazon’s competition has also grown each year, and the golden days of being able to make a killing selling almost anything are over – there are still tons of untapped ideas worth looking into.
While in-depth keyword research and boosting organic rankings are the key to success in Amazon, product research is arguably just as important.
Enter Alibaba.
Another giant of ecommerce, Alibaba is the world’s most popular marketplace for finding bulk manufacturers, especially for low cost products.
They are also able to manufacture products for you and ship them directly to Amazon FBA, allowing you to run a global business entirely from your laptop.
There are a lot of pitfalls to this though, including:
- Counterfeit products
- Highly competitive niches where competitors are selling products at minimal profits
- Payment fraud
- Low quality manufacturing
This is why we decided to put together this guide to help you conduct in-depth product research, negotiate with manufacturers, and ship to Amazon FBA while avoiding any potentially costly issues.
Let’s start with the very basics:
What is Alibaba?
Alibaba is a vast, global marketplace that allows manufacturers in China and elsewhere to sell their products.
As the world’s #1 source of manufacturers, it is packed with countless products across all niches and industries.
While some Amazon sellers resell branded products from the West, and others make their own products – private label sellers most commonly buy products in bulk from Alibaba.
Almost any form of product can be found there, and if you struggle to find a product you’re looking for, you can usually contact a factory directly and get them to make it.
But if you have no experience selling large volumes of stock, it may seem like a difficult business to get into – after all, where will you keep all your stock?
This is where Amazon FBA comes in – Amazon will stock your products, and handle dispatching, logistics, and customer service, allowing you to focus on growing your business.
Even better, you can send shipments directly from Alibaba to Amazon, meaning you can run a global business selling thousands of products without ever actually needing to touch them.
Using Alibaba isn’t risk free though, so make sure you’re careful of the following:
Payment Fraud
There are unfortunately hackers who target Alibaba suppliers.
Their methods typically include hacking into a supplier’s account, and contacting all of the potential buyers who are currently discussing purchasing something from the supplier.
They then provide different payment details, causing you to send money to the wrong person.
The #1 way to protect yourself against this is to always double check any bank account details match the address of the supplier before sending any money.
Payment insurance could also be a great option to reduce any risk here.
Low Quality Manufacturing
Some Alibaba manufacturers try to rip off their customers by supplying lower quality materials or manufacturing than what is expected.
This could mean you order one shipment and get great products, and the next time you get shoddy stuff that isn’t put together as well.
It could also mean switching one material out for another to save themselves money, without changing your unit price.
There are third party inspection companies available to spot this and we highly recommend making use of their services.
Another option to avoid this is to specify exactly what materials, design, and dimensions you need, leaving no freedom for the manufacturer to change things to suit them.
Now that we’ve covered the basic risks you need to look out for, it’s time to move into our full guide on how to buy from Alibaba and sell on Amazon.
How to Sell on Amazon from Alibaba
Of course, the first step of this, and arguably the most important, is product research.
In other words:
How to Search for the Best Products on Alibaba for Amazon FBA
If you buy a product that is already sold by numerous established sellers on Amazon, you may find it’s too competitive to get any good organic rankings, meaning you don’t sell many units.
If you find a product that is low competition, but fail to check the demand in enough detail, you may find the reason nobody is selling it is because nobody wants to buy it!
Get your product research wrong, and you may find yourself investing in a product category that you never had a chance in.
But get it right, and you may find long term profits for relatively little work!
It’s because of this that product research is often the longest stage of selling on Amazon, and should always be done thoroughly.
We will bring a complete guide to Amazon/Alibaba product research soon, but let’s look at the basics of what you should look for now:
Demand
If nobody wants the type of product you’re selling, then no matter how good your price, listing and marketing skills, you’re always going to struggle.
An Amazon keyword research tool such as Helium10 allows you to check all relevant keywords to your product, as well as their monthly search volume in the marketplace you’re looking to sell in.
This gives you an idea of how many people look for this sort of product each month – if the number is high, you may have a chance as long as your product matches what these searchers are looking for.
If the number is low, it’s time to give up – the product you’re looking at simply doesn’t have the demand to be successful.
Competition
Competition is just as crucial as demand – if the competition outstrips the demand, then you may find it’s tough to get a sale, even if thousands of people each month are looking for your type product.
On the other hand, low competition combined with high demand means you have much more chance of being seen by the exact buyers that are looking for your product – making sales pretty likely and even easy to win.
So how do you judge competition?
There are a few ways.
Helium10‘s keyword research tool also has a “Competing Products” column and a “Competition Score”.
The Competing Products shows how many products are ranked well for the keyword, and the Competition Score is simply made from combining this number with the search volume.
These numbers aren’t 100% accurate and shouldn’t be treated as gospel, but they are relatively proportional to each other, and this is great for getting a quick overlook and comparing keywords to each other.
Another great way to just competition is to simply search the keyword in question and look at the highest ranked products.
If they all have huge amounts of reviews (say a few thousand), then you can assume they’ve been sat there for a while, raking up the sales. If you launch a new product into that keyword with a very small amount of reviews, you will struggle to make sales and maintain an organic rank.
While reviews aren’t a direct ranking factor, they are an indirect one due to the importance of social proof, as we discussed in our guide to organic rankings in Amazon.
Lightweight Items
This one is self explanatory.
When you’re more established, you may find you want to go for heavy and bulky products simply because they are low competition due to being too difficult for the average seller.
But when first starting out, it’s best to avoid this since it often means huge shipping fees or Amazon storage fees.
Using a quick and easy to ship product at first will allow you to build up some experience and capital before going for the more awkward, heavy and difficult to ship products.
Room for Improvement
When you’re researching whether a product is worth selling on Amazon, it’s also a good idea to check the reviews of similar products already been sold on the platform.
Positive points in these reviews will give you ideas for what people like about the existing options, so you need to ensure your product benefits from those features too.
Negative reviews are also a great source of information regarding what people don’t like about the existing options – and if you can find a way to solve that issue with your own offering, you’re likely to be onto a winner.
Other, less important but still beneficial things to look out for include:
- Low seasonality
- No issues around legality
- Priced in impulse buy territory (roughly $15 > $50)
- But still not low enough to have all of your profit eaten up by Amazon fees (not below $12 or so)
Once you’ve decided on the type of product you want to sell, it’s time to find the supplier in Alibaba that best suits your needs for that product.
How to Choose an Alibaba Supplier
While Alibaba is a great place to find a supplier for your product, one massive downside is that there are a huge amount of manufacturers listed, which naturally leads to a massive range in quality.
Luckily, the site does offer some tools and filters that help you weed out the bad options, so let’s take a look at that first.
You will come across different types of suppliers within Alibaba, the most common of which are:
- Wholesalers
- Dropshippers
- Manufacturers
- Importers
Wholesalers focus on storing large quantities of items in order to offer a discounted price. You don’t necessarily need to buy from them in huge quantities, but they do prefer this and it helps to keep costs low.
Dropshippers allow you to buy items one at a time and ship them directly to your customers for you. Generally we wouldn’t recommend this route as it means your customers will have a long waiting time and often items will turn up in packaging that is obviously Chinese – although this route can work excellently if you can find a dropshipper in your own country that is relatively unknown.
Importing agents don’t directly sell products but are a middleman between yourself and the supplier, often offering more comprehensive shipping solutions at a better price than the other suppliers can offer.
Manufacturers are the most important suppliers when it comes to selling on Amazon. They produce products themselves, making them usually the cheapest source of any item. The cheapest way to get products from Alibaba is often to use a combination of a manufacturer and shipping agent. The one downside of manufacturers is that they usually have much larger minimum orders than other suppliers, since they need to set up the appropriate tooling.
Tip for Helping Find High Quality Suppliers in Alibaba
Beyond the above considerations, Alibaba offers a range of titles, services and classifications to help you tell the trustworthy companies from the charlatans.
These include:
Trade Assurance
Trade Assurance is something Alibaba offers when you order from a supplier that it considers high quality.
It involves Alibaba covering you if the products you purchase are delayed or not of the required standard.
It’s best treated as a form of free insurance, and all you need to do to find Trade Assurance suppliers is click the “Trade Assurance” box when searching.
Of course, if it’s not offered for a specific supplier, this is a potential red flag that Alibaba deems them unlikely to meet these standards.
Gold Suppliers.
Suppliers can pay Alibaba $10,000 for Gold status.
This provides them with an extra range of marketing options and tools to help boost their ROI.
In all honesty, being a Gold supplier is not a sign of being a great supplier. There are many Gold suppliers who are slow to respond or ship products, and some may not respond at all.
What this designation is good for, however, is to avoid being scammed. There are some some sketchy suppliers on Alibaba that are set up to scam people and that potentially aren’t even capable of supplying the products they’re advertising.
However, the probability of this type of scammer spending 10k on Gold certification is extremely low, to the point that sticking to Gold suppliers is a great idea if you are concerned.
Assessed Suppliers
Assessed suppliers are the rarest type of supplier, but they are also the most reliable.
Assessed suppliers have had their factory inspected in person and assessment reports are often publicly available along with videos and pictures of the factory or warehouse.
To even apply to be inspected for Assessed Supplier status, a supplier must already be Gold rated in China, Hong Kong and Taiwan separately – something that takes serious efficiency and investment in the first place.
Now that you know how to rule out some of the less reliable suppliers on Alibaba, it’s time to start building a shortlist of ones that may suit your needs.
Shortlisting Alibaba Suppliers
The first thing you want to do when deciding whether or not to shortlist a supplier is to confirm their company background and details.
While this shouldn’t be necessary, and may not be in the case of Gold suppliers – it’s the easiest way to avoid scams and is often best done just to be safe.
The best route is to go to a supplier’s own website and confirm details such as:
- Company address
- Company owners
- Business license details
- Any relevant certifications, awards etc
Another trick can be simply to Google “company name + scam” to see if anybody else is talking about having a bad experience with the supplier.
Once you’ve done all of the above and weeded out any potentially bad suppliers, it’s time to message the ones that haven’t been eliminated yet in order to learn more.
Questions to Ask Alibaba Suppliers
Once you’ve got a narrowed down list, it’s best to send each potential supplier asking some basic questions about how they work.
Some of the suppliers will not respond – strike them off the list, as you need one with good communication skills who will be willing to respond to you quickly if you have any issues in the future.
Outside of that, you should ask any questions you need to know, such as what they charge to ship to your address (or Amazon FBA in the marketplace you’re targeting), or any of the below:
- Cost per unit, payment terms, bulk discounts, private labelling costs etc. If they offer you a specific price or bulk discount but you aren’t purchasing right away, ask for it in writing so they can’t go back on it.
- Refund policy
- Are they willing to work with you to solve issues if your customers aren’t happy with the quality?
- Will they send free samples, and are they willing to send you one single unit before they go ahead with a large order?
- Do they have testimonials from other customers?
Are you tired of digging through Alibaba and only finding dead ends?
Do you wish you could get help from some of the industry’s greatest minds?
We offer a complete product research that is guaranteed to find you the best possible product and supplier for your requirements.
Want to learn more?