Alibaba Do & Do-not #1
DO NOT search for suppliers using the Products dropdown in Alibaba search
When you first go to the Alibaba.com home page, you will see a dropdown on the left side of the search bar. By default, it is set to Products. I know you're searching for a product to sell, but do not be deceived. You are actually looking for a supplier to buy products from.
If you search by Products, then Alibaba will show you all listings that sell the product. Alibaba will not factor in whether or not the supplier selling the product also makes the product.
If the supplier does not make the product...
The supplier may not be able to fulfill reorders for you. Yes, you can still make short-term money. But then you'll have to keep searching for one-off products and suppliers over and over, costing you time. If you buy from a supplier that makes the products, then you can sell the products under your own brand, reorder, continue to capitalize in a market niche, and put more time back into your day. This selling model, called "private label", can generate passive income.
Suppliers that don't make their own products probably won't be able to make customizations for you. Let's say that in product research you discovered shoppers want to buy copper colored French presses. But all your competitors only sell them in silver. So, you go to a supplier and say, "Hey, these are great, but could you make them copper colored?" And they can't because they don't make the product.
A supplier that does not make the product may be a trading company. Trading companies are middle-men who buy products from a manufacturer and then resell it to you for a higher price. Let's say you want to sell an insulated French press. A trading company might buy them from a manufacturer for $6 each and sell them to you at $10 each. If instead you went directly to the manufacturer, that could have saved you $4 per unit. Even if you only ordered a batch of 100 units, that's still $400 you could have saved. (Note: Some suppliers can be both a trading company and a manufacturer.)
As an alternative...
DO search for suppliers using the Suppliers dropdown in Alibaba search.
Click on the dropdown, and select Suppliers.
Suppliers search results are more likely to contain suppliers that can build you a customized product rather than just sell you what they have.
Type in your shortest main keyword that describes your product. For example, if you want to sell a French press insulated coffee and tea maker that is made of stainless steel with a 500ml capacity, search "insulated French press". If you search "French press", that might work too, but since you want to sell a specific type of French press, it may save you time if you add one extra adjective.
Alibaba Do & Do-not #2
DO NOT search for products via the Ready to Ship product type.
If you went down the rabbit hole of searching via Products instead of Suppliers like I told you to (*shame*), then you'll see the Ready to Ship option that you do not want to click.
Ready to Ship means that the supplier will send you products as-is. That's fine if you're doing wholesale or just want to have a few dozen French presses to give to your friends and family for Christmas, but not fine for private label.
DO filter for trustworthy suppliers before you reach out to them.
First, you need to search your main keyword on Alibaba.
Only then will you see two boxes to click: Trade Assurance & Verified Supplier.
Tick these two boxes. Alibaba will reload the page each time.
Trade Assurance is a deal where you typically pay the supplier 30% upfront and 70% when the job is done. However, you can't just "promise" that you'll send over the 70% later. You have to send those funds to a third-party holding account called an "escrow" account. In this case, Alibaba will serve as that intermediary escrow holder.
Your supplier receives 30% of the funds upfront so they can get the raw materials and labor to start manufacturing your product. Your supplier only gets the other 70% of the funds after you tell Alibaba that the supplier has fulfilled all the terms of your contract. It's fair to you because that supplier can't take your money and run, and it's fair to the supplier because they don't have to break your legs like a loan shark to get their money when the deal is done.
Verified Suppliers are confirmed by a third party working for Alibaba. In order to be Verified, suppliers must submit proof of their operation, abilities, network, and a ton of other paperwork. They are just about as legitimate as suppliers get.
Alibaba Do & Do-not #3
DO NOT contact potential suppliers through the Start Order button.
Choosing “Start Order” only makes sense if you are ready to order from the supplier. If you want to make passive income through your own private label brand, this is not the option for you.
DO contact potential suppliers through the Contact Supplier button.
Use the “Contact Supplier” option to speak directly with a representative.
It’s similar to sending an email, but it's through the Alibaba site. You’ll receive an email notification for every response the supplier sends you. You can also attach pictures of examples, etc.
Most Verified suppliers that offer Trade Assurance and have competitive prices will be from mainland China, Taiwan, or Hong Kong. So, the upcoming Dos and Do Nots have Chinese suppliers in mind.
Alibaba Do & Do-not #4
DO NOT ask 21 questions of your supplier in the first message.
When you ask Chinese suppliers even three questions in your first contact, you will often only get an answer to one. The time difference makes these conversations last days. Asking only one or two questions at a time makes it even longer. But remember that building your own business is not a quick cash-grab. It's a journey that's well worth it.
A few messages into your conversation, you can ask them to fill out a form where you ask for quote information, etc. A decent supplier will fill out at least half the sheet. Great suppliers will explain why they didn't fill out a section if they left one blank.
DO ask if the supplier can make your product.
Asking about price is not the worst first message you can send, but it's not what matters at the beginning.
Price is irrelevant if the supplier cannot make changes to your product. If they cannot make your customizations, then your product will probably look like every other product on Amazon. You'll blend in, fail to compete with sellers who already have reviews, and close up shop. Make sure that the supplier will be able to make your differentiated product.
Alibaba Do & Do-not #5
DO NOT negotiate on samples.
Most legitimate suppliers are happy to fulfill sample orders. You’ll have to pay a much steeper price for the samples per unit than when you buy in bulk. That's the price of verifying the suppliers' craftsmanship.
If you try to negotiate on the sample, you'll look like a novice. A sample's cost is a one-time expense. Instead, worry about the recurring costs that have a much greater effect on your bottom line.
DO negotiate on large product orders.
When you're not ordering samples, your supplier will have a minimum order quantity (MOQ) that you must meet. The MOQ is the fewest number of units your supplier will make for you at a time. For example, if you want to buy insulated French presses from your supplier, they could require that you must order at least 500 units or else they won't make them.
Suppliers don't make a ton of money per unit sold. Their profit model requires bulk sales. If you don't order enough in one batch, then it's not worth it to them.
Your MOQ could range from under 200 to over 20,000 units. More expensive items tend to have lower MOQs.
In general, purchasing a larger number of units will lower the cost per unit.
I was once offered a $0.50 discount if I ordered an additional 200 items, and because I was just starting out, I thought $0.50 was ridiculous and penny-grabbing. But $0.50 can add up. If you order 5,000 units of that item, with $0.50 off each, that’s $2,500. Don’t assume the supplier is just pinching pennies. You might be getting a better deal than you realize by upping the quantity of your order.
A lot of suppliers don’t mind a bit of bargaining as long as you’re respectful, polite, and not too pushy. For example, you can say, “I’m looking for a long-term supplier relationship. Would you be willing to offer a $0.20 per item discount if I order 500 units?” The worst they can do is say, "No."
Alibaba Do & Do-not #6
DO NOT write a lot of fluff in your communication with suppliers.
If you’re working with a supplier from China, their English is probably not strong. Be as clear, simple, and straight-forward as possible. Time spent clarifying miscommunications is time wasted.
They do not care if you work for IBM or Main Street Local Store Number Two. As long as you position yourself as competent and assertive, Chinese suppliers will work with you.
DO write like you are talking with another human begin.
Just like you, suppliers are real people working real jobs. Treat them like human beings. Ask them how their days are going. It never hurts to be friendly.
One supplier I had worked with for over a year once offered me a $5 discount per item. I was unbelievably grateful. Building a friendly, open, trusting relationship with this supplier benefited me because she knew I would continue to be a faithful customer and bring her more business.
Make the most of the time and money you invest. Before you know it, you’ll be building passive income, so you have more time to focus on doing the things you love with the people you love.