This is the part 2 of the sourcing products on Alibaba series. In part 1, I ran through the fundamentals of Alibaba. I explained what it is and how to use it. In this part, I will explain how to actually find products from Alibaba.
What you will learn in Part 2:
- The 6 golden unwritten rules of using Alibaba
- How to use Alibaba.com to search for products
- How to Speak Chinese. Hey wait! I’m not actually teaching you how to speak Chinese but how to use certain lingo in communicating with Chinese suppliers. There’s a certain way you have to talk to them in order to drive down the price and communicate effectively. You will see as we move along.
So, let’s get started…
The 6 Golden Unwritten Rules of Using Alibaba
Rule Number 1 – Try to Form Long Term relationships with Suppliers/Manufacturers
Suppliers are looking for people who want to order from them and so by forming a long-term relationship with them or showing them you are looking to form a long- term relationship, they will be willing to be more flexible upfront and give you a preferential pricing as well as letting you order smaller quantities of products.
Rule Number 2 – Numbers on Alibaba Mean Nothing
If you see a number on Alibaba, just treat it with a grain of salt because everything on Alibaba is negotiable.
Rule Number 3 – Never Place a Large Order Before Seeing Samples
Whether you are ordering 10 pieces, a hundred pieces or a thousand pieces, never place a large order unless you see and verify the quality of the work. The problem with oversea suppliers is communication and a lot of times you may order something thinking you are getting one product but it turns out you are getting something entirely different.
Rule Number 4 – Always Negotiate!
This is tied to rule number 2. Numbers mean nothing. Any number you see on Alibaba can actually be negotiated and you actually must negotiate.
Rule Number 5 – Don’t Waste Time with Suppliers. Go Straight to the Manufacturers
A lot of times, the person you are speaking to on Alibaba is just an agent and sometimes they call themselves suppliers. The problem with these suppliers is that they are just middlemen or wholesalers. They will go find your product in the local market, bundle it all together and ship it to you. If the product arrives and it’s defective or every single product is different, there’s not a lot you can do because once a middleman has been paid, he’s out of the picture and he won’t care. So, always find the manufacturer.
Side note: If I say manufacturer or supplier from this point on, always remember I’m referring to the Manufacturer.
Rule Number 6 – Keep Records of Everything!
There’s going to be a lot of back and forth between you and your supplier, and you can use Skype, WhatsApp, Alibaba Trade Manager or any other means of communication, but the most important details need to go into a document that both of you share. That way, if there is an issue with the product you received, you can easily resolve it.
Also, if you have a good relationship with your supplier, they are more likely to work with you but if you have a poor relationship or the supplier doesn’t feel that you will be a long-term customer, they won’t necessarily care. So, that is why rule number one is so important.
Everything we have talked about so far in part 1 up till now has been theoretical. Let’s actually go practical where I will show you how to find products and suppliers while also implementing some of the rules I listed above.
First step is to head to Alibaba.com to register an account. All you need is a valid email address, you don’t have to provide your phone number or your debit/credit card. Once you have created an account, sign in and return to the homepage.
Now, if you don’t know which product you’re looking for, you can search for anything through categories and there are literally millions of products here to search through.
For the purpose of this lesson, I’m going to say that I’m looking to source for sweatshirts or more specifically hoodies. So, I’m going to search for that product in the search bar. The search will return literally hundreds or thousands of suppliers of the product I searched.
I can narrow the search field by using some of the product filters as displayed on the left side of the page. If I’m looking for hoodies that are 100% cotton, I would just click right there under the “Material” section and the Alibaba search engine will weed out any hoodie that is not 100% cotton.
In part 1, I mentioned that Alibaba is not for Chinese manufacturers alone but also for other Asia countries. You will see goods from manufacturers in Turkey, Singapore, Taiwan Pakistan etc. Every of these countries has something they specialize in. For example, China is known mainly for manufactured or mass-produced products, Pakistan and Turkey are known for their quality of cotton, Japan is known for their electronics. So, depending on what you are sourcing, you should find that country that specializes in that product. You will see the option to select the country you want their suppliers displayed also by the left side. So you can go ahead and click whichever country you decide on.
Back to our example, so, if I’m interested in the hoodie on the first line of the search result, I will just go ahead and click on it and I will be taken to the product page where I will find all the information I need. The product specification, shipping and payment, the seller information everything shall be displayed to me.
The main information I’m really interested in at this time is the price of the product which is called the FOB price. FOB means freight on board or free on board which means the all-inclusive price per unit including any handling charges, setup charges and any other surcharges.
In the case of our example, the supplier is charging $2.50 and $5.78 per hoodie. The price changes depending on how many pieces you order. The more I order, the lower the price of the product.
Another thing you have to pay attention to is the Minimum Order Quantity (MOQ), which means that I can buy less than the number specified by the supplier. In our example, the MOQ is 200 pieces, this means that any order I am making for the product must be 200 pieces and above.
If I decide to order for 200 pieces, which is the MOQ, the price is going to be $5.78 per piece. But if I decide to order say a thousand units, the price will drastically reduce and it can even be at the cheapest price of $2.50. The only way to find out is to talk to the supplier by sending him a message.
However, the prices are all just numbers. If you recall from rule number 2 which says number on Alibaba mean nothing because everything on Alibaba is negotiable.
I’m actually going to show you how I apply all six of the unwritten rules of Alibaba by chatting with supplier or agent that works for the company. To do this effectively, you have to download and install Alibaba’s chat application on your computer.
After this, initiate a chat by clicking on the “Chat Now” button on the product page (as shown in the screenshot below). To start your message, you have to remember rule number 1 which says, “form a long-term relationship with your supplier”. So, you will want to be respectful and polite. You can say:
Hi, I’m looking to order hoodies but I’m interested in low Minimum Quantities or low MOQ
You will see that the English is not very refined. You have to keep in mind that the people you talk to doesn’t really understand English. English is like their fifth or sixth language. Try to use few words as possible and stick to basic English. Sometimes you even break up words, as long as the message is clear.
When the supplier responds, you request for his mail so that you can send him a proper order enquiry. Here is an example of what the mail should look like. You can use as it is or tweak it to your taste:
Dear XXX (Enter the name of the supplier if you have it)
This is xxx (include your name) from Nigeria. I just spoke with you on Alibaba chat. We are a company looking to buy xxx product (Put the name of the product). We wish to form a long-term relationship with you but we need to start with a low MOQ. We are looking to order thousand pieces but I need to see sample first. So, let me know if you can sell 10 pieces for now. Also, I want to be able to customize the product by adding our logo. If you can do this, let us know. We can start doing business immediately
You can include the link of the product in the mail, they will tell you if they can make or supply it. Also, request for their product catalogue. Most times the suppliers have products that are not listed on Alibaba, you only get to know about it if you request for the product catalogue.
Now, you don’t have to do this for just one supplier. You should contact at least 10 suppliers.
That is it for this part of our series. If you have any question you can leave a comment below, I will try to answer as much question as I can.
In the next part, which is the part 3 of this series. We shall look at private labeling.
Thanks for reading