This is a complete guide to sourcing products on Alibaba, the world most popular e-commerce site and shipping down to Nigeria without any issue. This post is a mini-series, created to give you a very deep understanding of how Alibaba works and how you as an importer can source products directly from the manufacturers in countries like China, Vietnam, Turkey etc. The general belief is, Alibaba is only meant for Chinese suppliers, but this is wrong because Alibaba also cater for suppliers from other manufacturing-oriented countries. I will show you later on in this series.
I’ve broken this articles on sourcing products on Alibaba into several parts as outlined below:
Part 3 – We shall have a look at private labeling. What is private labeling? How can you use it to grow your brand and build your product line?
Part 4 – In this part, I will show you how to place an order and how to negotiate with suppliers.
Part 5 – We shall look at how to pay for your products safely and securely.
Part 6 – In the final part of this mini-series, we shall look at how to handle issues with your supplier and make sure of quality.
So, in this post which is part 1 of the series, we shall be looking at the fundamentals of sourcing products on Alibaba. This is important so as to have basic understanding of what the site is all about and how you can use it to your benefit.
Let’s get started…
What exactly is Alibaba?
Simply put, Alibaba is the world’s largest business-to-business (B2B) e-commerce website that connects buyers and sellers.
Let’s look at this simple illustration, you have a company that’s located somewhere in the world that produces a product, they will list these products on Alibaba.com. You have a buyer who’s located somewhere else in the world that will buy these products in bulk and will sell them their local market or through online platforms like Konga, Jumia or their own e-commerce site.
This buyer could be me or you or even a big retail outlets like Shoprite, Mr. Price or Slot. It could be just anybody. The only thing Alibaba wants to do is facilitate a transaction between the buyer and the original supplier of the product. What you do with the product afterwards is none of Alibaba’s business.
There are few other things you should know about sourcing products on Alibaba.
- Alibaba is not used for single unit purchases. You buy goods in bulk
- Alibaba is primarily used to source products from China and other parts of Asia
- Alibaba is not your regular e-commerce site. Say for example, you are buying a product on Jumia, it comes with a Jumia backing. A policy that ensures that if the product you purchase is defective, you can easily ask for refund by contacting Jumia (even though the seller might just be a merchant on Jumia). But in the case of Alibaba, you will have to talk to your supplier directly for any issue concerning refund.
- Buy at your Risk. Alibaba to an extent will help resolve a dispute between you and your suppliers. However, there is a limit to how much they can do. You have to have it at the back of your mind that you are buying at your own risk. It’s important you know that when you order goods in bulk, some of them are going to be defective. That’s just the nature of manufacturing.
Why do People Use Alibaba?
I like to categorize people who use Alibaba into three categories.
The first is, someone who is just looking to buy and sell a product. The process is quite straightforward. You import products and sell them in the local market or through online platforms.
This is fairly easy to do, you buy and just resell. You are not making any changes nor are you making any modifications. Obviously, the earning potential for this type of transaction will be low because there are no barriers to entry and a lot of people are doing this.
The capital investment is also low, you don’t have to buy large quantities of products and therefore the risk is low as well.
The second category of people that use Alibaba are those who are looking to create a private label. Private labeling is taking an existing product and applying your own label or your own brand to that product.
Let’s say you are interested in selling cell phone cases. Now, you have a few options; the first one is to find a supplier in China or another country and you simply import that product and sell it as it is (First category of people I explained above). The second option is you create your own private label by telling the manufacturer or supplier to put your logo on the back and add your brand.
Private labeling is a great way to start your own business and it’s what I use Alibaba for the most. You can do this with just about any product, be it blender, grater, mobile phone cases, shoes, wrist watches just about anything.
It’s a little bit more work than the first category. You will have to invest a little bit more money because you are going to be ordering products in larger quantities. Therefore, there’s going to be a little bit more risk as well but the earning potential is a lot higher than just buying and selling. (I shall explain extensively on private labeling in part 3 of this series).
The last category is for people who are looking to create a unique product. A unique product could be something you invent from scratch or it could be an existing product that you want to modify and tweak to make it somewhat unique. The level of difficulty is going to be a lot higher with this type of product because you have to work very closely with your supplier and you have to have some creativity or technical ability to let the supplier know what it is that you are looking for. You might have to produce some drawings or some engineering documentation. But it can be done with just about any product. The earning potential is going to be a lot higher but so too is the capital investment and the risk.
If you are going to engineer or re-engineer a product, there’s a lot of costs for the supplier. They might have to get new tools and some other things. They are definitely not going to sell in low quantities, they would want high volume purchases only. It will be difficult to tell them you want 50-100 pieces of the product, they are surely going to be looking at a minimum purchase of a thousand or two at a time because that’s how they are going to make money, otherwise it’s not worth it for them.
I don’t advise taking this route, but if you have the right product, something that is going to be in demand, then it might be worth taking the risk and investing a significant amount of money.
However, this is definitely not for mini importers. I would recommend starting with private labeling for mini importers. This we shall look into in part 3 of this series.
So, that is that about the basic fundamentals of sourcing products on Alibaba. If you have any question, kindly use the comment box below and I shall try to provide answers to your questions. In the next part, we shall get into the process of finding a product and contacting suppliers.