Most Amazon sellers, private label sellers especially, operate in the global e-commerce space that is held up by the twin pillars that are Alibaba and Amazon. Private label sellers frequently rely on Amazon to sell and Alibaba for products to source. This new e-com land of opportunity that they inhabit is largely shaped and made possible by the simultaneous existence of these two titans.
Most people are familiar with shopping on Amazon, from the front-end perspective. Sourcing the product, and most importantly, finding the right supplier is the back-end of things and many sellers rely on Alibaba. In a broader sense, Alibaba and its subsidiaries (e.g. TaoBao and Tmall) are based in China. It became the world’s largest e-commerce company by initially putting together an accessible catalog of much of China’s manufacturing capabilities. If you’re looking for a factory to make pretty much anything in China, people go to Alibaba.
Let’s look at what Alibaba’s primary functions and interests are, and how they align with the interests of an Amazon seller. In many ways, Alibaba is similar to Amazon. Manufacturers make profiles and users can buy goods from those manufacturers. Seller listings are subject to various ranking rules, similar to Amazon’s listing system. Alibaba also has a rating system and special badges that indicate a profile’s level of success or credibility. Alibaba wants to be the first place you go to for a manufacturer or wholesale supplier, and it’s doing a mighty fine job so far.
Much like Amazon’s primary focus is on satisfying shoppers, Alibaba wants to push the best suppliers to the front and filter out those who cannot deliver as promised. This has greatly reduced scams and fraud committed by suppliers. While Alibaba is not the source for business, it’s significant enough that suppliers will think twice before doing anything that risks removal from the platform.
However rare, scammers still get into the system, but the perpetrators are often rogue employees or hackers with illegal access to a company e-mail address. These types of scams were more prevalent 5 to 6 years ago. Today, shoppers on Alibaba are more concerned with finding a good supplier and getting their fulfillment process started.
Let’s use an example to review all the different elements of an Alibaba supplier listing. Today, we’ll look at one of the most famous examples of a generic private label product available, the silicone baking mat:
Alibaba Badge Breakdown
This is a premium supplier membership on Alibaba. Alibaba or a third party contractor must verify that the supplier is a legally registered business before appending the Gold Supplier badge. Alongside this badge, you can also see the number of years the supplier has held the badge. However, as stated by Alibaba, the Gold Supplier badge doesn’t verify the authenticity goods offered by the supplier.
An onsite check is another form of verification performed by Alibaba or one of its contractors. Having this badge means that the Gold Supplier also runs a verified operation at their location of business. The onsite check also confirms that the company details displayed online are correct. You can see that the supplier from our example has in fact been verified in this manner. It’s not immediately available on the product page, but is visibly on the company page.
Trade assurance indicates that the supplier accepts payments through Alibaba’s integrated payment system. It’s represented by a crown icon on a supplier’s profile:
Trade assurance requires the supplier to draft an invoice with the specifics of your order for you to confirm and pay. In case that any aspect of the invoice terms were not honored, you can ask for a refund. Whether it’s issues with the delivery time or the quality of the goods, Alibaba’s trade assurance guarantees that you are protected.
This system is highly recommended, especially for your first few transactions with a new supplier. Keep in mind that Alibaba charges a 2.95% transaction fee for every payment made this way. For example, if your total purchase costs $1000, you’ll pay $1029.50 total after the transaction fee. You can arrange to bypass this agreement with your supplier, but know that transaction levels encourage the supplier to take trade assured payments.
The orange diamond icons represent a supplier’s lifetime transaction count on Alibaba. Each additional diamond indicates a higher transaction count, and therefore transaction tier.
Minimum Order Quantity
That covers badges. Next, let’s take a look at the other pieces of information you can find on a supplier’s profile, starting with Minimum Order Quantity (MOQ). This number indicates the lowest number of items per order that a the supplier will accept. We’ll use this listing for kids rolling pins as an example.
We can see here that there are different price points for different order quantities. Whether or not this information is displayed, it’s always best to ask and confirm with the supplier. In this case, we can see that there are three price points and the minimum quantity you can order is 100 units. Also, in order to get a custom logo and packaging, you’ll need to order 1000 units or more. This is an example of a well constructed profile, which often isn’t the case. However, you should still reach out and confirm this information anyway.
In order to make a proper decision, you’ll also need to know the cost per item with shipping to your market of choice. The price quotes you see are almost always “Free on Board Shipping Point” (FOB), which means that the price quote is only for the goods and does not include shipping. When you’re reaching out to confirm prices, make sure to ask for quotes with shipping included.
Making sure that the goods you ordered are up to your specifications and are at the level of quality you need is absolutely essential. The first step in this process is asking for a sample or a prototype from your potential supplier. Get samples from several suppliers and compare them. Just taking a look at the item online isn’t enough to determine if it really is capable of what it’s promised to do.
Bad reviews can severely damage the rankings of your listings on Amazon and returns can actually get your listing suspended. This is why you need to stress test the prototype you get from your supplier. Try to put some wear and tear on it, wash it multiple times in a washing machine to see if it retains color, drop it, bend it, leave it out in the sun or rain—whatever conditions it should be working in, put it to the test.
If you are satisfied with the prototype, you should still take an extra measure of precaution and hire a third party to inspect your inventory before sending it to your FBA warehouse. There are prep centers that can do a visual inspection and put the proper Amazon labels on your products. If you need more rigorous quality control (e.g., electronics that may need specialized testing) you may want to look into a specialized company that can conduct it for you. It may be even wiser to look for one in China, close to your supplier. It’s surprisingly easy to find one, given quality control used to be an issue many sellers faced years ago.
Once you can confirm that your supplier has sent a couple of consistently good quality batches, you may feel confident enough to skip hiring a third party to handle any part of the process. Your supplier can also put on the labels for you if you ask them. Even better, you can simply include the FNSKU labels as part of your packaging.
Keep in mind that a supplier is, in a way, a partner and therefore a crucial contributor to your Amazon business. Choosing a supplier isn’t as simple as checking off a list of badges and price points. A supplier is someone you’ll be communicating to, coordinating shipments with, along with many other details. Building trust and confidence and aligning interests takes time. but the foundation of that starts with good communication. So, the first thing you need to determine when approaching potential suppliers is how well you can communicate with them. This is an issue many people face.
Unfortunately, few supplier representatives speak English well. While communicating with them, you may find yourself hitting a wall and failing to find the answer you want or you may get responses that are clearly copied and pasted from a translation software. You shouldn’t expect fluent speakers but you need to be confident that the communication between you and your supplier is efficient and to the point.
Meet them halfway by asking clear questions with simple language. Keep your messages short and succinct. However, you don’t want to keep them too short—pleasantries are very much expected in Chinese culture, so make sure you include good wishes and praise when it’s appropriate or deserved. A simple “Thank you for responding so quickly” or “Thank you for the information” will go a long way. The best piece of advice when it comes to praises and pleasantries is that they work best if you genuinely mean what you say.
In general, once you start working with a supplier, it’s customary to inquire about their health or their family’s well-being. Keep in mind that you are building a relationship with the person on the other end. Be considerate of their interests, needs, and circumstances. That’s how you build a great relationship.
Many Amazon sellers will confirm that a good supplier is worth their weight in gold. If you develop a great partnership, you can always find ways of helping each other and grow in the process. Here are five things that having a great supplier relationship can mean:
1. Trusting them with placing Amazon FNSKU labels on your items instead of doing it yourself or paying a 3rd party to do it.
2. Not having to spend your money on prep centers since you trust your supplier’s goods are up to standard, saving you money and time in the process.
3. Arranging for payment in installments when you don’t have the funds to pay for the entire batch at the time of order.
4. Relying on them to make emergency express shipments when you suddenly run low on inventory and risk going out of stock.
5. Finding other payment methods that allow you to pay less in transaction fees.
Alibaba is an immensely helpful platform that can help you find the right supplier in China. It’s in Alibaba’s best interests that you get exactly what you’ve asked for and continue coming back to use their Trade Assurance payment system. It is also in all of their suppliers’ interests to fully honor their commitments and obligations to customers.
This makes the search for a supplier somewhat easier, but not effortless. You still need to do your part in reaching out, maintaining communication, and building a trusting relationship. Alibaba enables an easy, seamless experience, but it doesn’t guarantee it.
PingPong on the other hand, can guarantee they’ll work with you from start to finish when it comes to payment solutions.