Tips For Finding a Product Manufacturer on Alibaba

Tips For Finding a Product Manufacturer on Alibaba

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If you haven’t heard of Alibaba, get out from under your rock.

Alibaba is the world’s largest online marketplace. According to the Wall Street Journal, Alibaba “is the most popular destination for online shopping, in the world's fastest growing e-commerce market. Transactions on its online sites totalled $248 billion last year, more than those of eBay and Amazon.com combined.”

Besides being a destination for shopping and a bank, The Alibaba marketplace is where people who want to sell manufactured goods can find them. In our upcoming Guide to Launching an E-Commerce Business (subscribe to get dibs on it), we cover different types of business models, including making, manufacturing, wholesale and dropshipping. Alibaba serves as a place to get manufactured goods and supplies and can be used to varying extents in any of the product models.

Bonus read: A Beginner’s Guide To Locating A Manufacturer for Your Product

For example, even if you make your own products by hand as an artisan, you still need to get your materials from somewhere. Alibaba may have materials that are useful or pre-fabricated that you then add your own touch to and sell as a maker. If you are looking to manufacture a new product, Alibaba has hundreds of thousands of products you can customise and brand, as well as sellers who are able to design and produce your custom products. If you’re a wholesaler, you are likely to find products on Alibaba that are already ready to go, and your role is then to import them, find your clients and resell them. And, if you’re a dropshipper, Alibaba is your new BFF, because you can fully integrate it into your dropshipping store with just a few clicks with AliExpress - then start having producers ship their products straight to your customers. 

 Make

Manufacture

Who’s it for:

DIY product makers, including artisan crafts, art, cosmetics, food and jewellery.

Who’s it for?

Those with a product idea that they’re confident will sell, and a fair bit of money to invest in making it happen.

Pros:

  • Relatively low startup costs, because you don’t need a large bulk order made for you

  • High levels of brand control and quality control at every step

  • Agility to change and adjust more quickly than other types of stores

  • High margins compared to other business models.

Pros:

  • Lower costs per unit

  • The ability to scale up quickly and sell globally

  • Branding flexibility and control when you create a new product

  • High profit margins (though it varies)

Cons:

  • A lot of your time and energy is spent making things. If you love the actual making process, this can be a pro. If you love it less, it means you’re spending less time growing your business. You’re also limited in product choice to whatever your specific skill set is

  • A maker business is harder to scale up, because the focus is on artisanal goods rather than mass production

Cons:

  • Many extra steps in management, warehousing and quality control

  • High levels of financial investment due to large order minimums, and therefore high risks

  • Language and cultural barriers if manufacturing overseas

Wholesale

Dropship

Who’s it for?

Wholesaling involves buying from other brands at discounted costs and reselling them. It’s good for those who have found a niche, are good at branding and want to sell a variety of products. This kind of business model also usually includes subscription boxes that collect products and bundle them.

Who’s it for?

Dropshipping means curating a collection and creating a brand, but outsourcing everything else. Orders on your website go directly to a manufacturer, who then fulfills the order without you dealing with any aspect of quality control, production, shipping or inventory management. It can be a great model for entrepreneurs who have few upfront resources, and want to manage everything remotely. One example of a common drop-shipping business is creating a t-shirt design. When an order is placed, a printer you partner with receives the order, manufactures the t-shirt and ships it to the customer without you touching anything.

Pros:

  • Pretty good margins, depending on the product and market

  • Brands are already created beforehand, and have likely tested their Minimum Product Viability. They also likely have a following and familiarity, which makes your life easier

Pros:

  • Low risk

  • Low time and financial investment

  • Low management and attention to your business - you can pretty much let it run itself

Cons:

  • Industry saturation - since you’re working with already existing brands, others are fighting for the same space in the market

  • Management for warehousing and inventory that might be more complex. You will have a variety of suppliers, so at any stage of your supply chain something could go wrong.

  • Less control over pricing

Cons:

  • Lower profit margins

  • No quality control

  • Limited customer service capabilities

Walk With Me Here: A Step-by-step guide to finding a supplier on Alibaba

1. Know what you’re looking for

You’ll already have an idea of what exactly your product should be able to do. Sizing, functions, main materials, order size - have these prepared beforehand so you can streamline your conversations.

If you’re looking to find a manufacturer to basically make some tweaks on an existing product, you’re looking for an Original Equipment Manufacturer (OEM). If you’re looking to build something new, look for an Original Design Manufacturer (ODM).

2. Have suppliers come to you: submit a Request for Quote (RFQ)

From the top of Alibaba’s home page, you can navigate to Sourcing Solutions >> Submit RFQ. 

This is a great way to go, because you can upload your specifications and get contacted quickly with multiple quotes. Once you get a few quotations, you can take a look a the suppliers a bit more in depth.

3. Dig through products to find suppliers

From the search bar, you can simply type in the keywords of the product you’d like supplied. Here’s an example if I’m interested in importing travel mugs.

You’ll get a page with two main tabs: Products and Suppliers.

There are 103,677 travel mugs already made and ready to go. I can start filtering by price range, minimum order number, and supplier location.

After I’ve narrowed down a bit, it’s time to start scrolling through and see if there are any good matches for me. If there are, whoever supplies it is likely to be able to make small modifications (such as colour changes) as well.

The other way to go is to check out the Suppliers tab. These are all of the factories and companies who make a variety of travel mugs.

Check off some of the boxes

Like with product filters, there are a few important narrowing techniques to use. You can tick the “Gold Supplier” and “Trade Assurance” boxes to start narrowing down to suppliers with a few extra insurances. Note though, that becoming a “Gold Supplier” doesn’t actually have much to do with quality and more to do with whether or not the company paid to be a “Gold Supplier”.

“Assessed Suppliers” means suppliers who have been inspected by a third party. It’s another good way to avoid scams.

Look at Transactional Level and Response Rate

You can also filter by transactional level (a general measure of how much business they do and how frequently - though not to do with quality of the products), and response rate. Having a high response rate means you’re more likely to be working with a partner that is easy to do business with.

Start requesting!

Finding the supplier on Alibaba is going to take a bit of digging, simply because there are so many available. Each supplier will have a way to contact them and request a quote. If you already have prepared a spec document, you can simply copy and paste the same message.

Throwing some shade: How to avoid dodgy dealers

This is, of course, one of the drawbacks of having a very open and saturated marketplace such as Alibaba. It can be really easy for scammers to get up and running, without basically any sort of vetting process. Add to it the fact that manufacturers are probably in a different country so you are less likely to meet them and check out their factory; and may have an additional language barrier - it can easily be a recipe for Worries and Woes.

Here are a few things you should do to reduce your chances of fraud or even just shoddy manufacturing.

Be weary of deals that are too good

Someone who is selling seemingly the same thing for a few cents less per unit? Probably legit, and they’ve found a way to cut costs. Someone who’s selling it for half the price? Likely a scam.

Get Alibaba Trade Assurance

If you have trade assurance, you’re able to claim money back if something goes wrong. If the seller doesn’t offer trade assurance, it’s a bit of a red flag and you should be extra cautious.

Always ask for a prototype first

High quality sellers will give you samples or a prototype first. Always get a sample before making a big inventory purchase.

Get the money straight

You always want to submit payment to a secure payment processor (for example, avoid Western Union). Never pay an account that’s not their listed bank account. Yeah, those “Can you just pay my manager’s personal account” or “Our bank account was hacked, can you pay my personal one instead?”....we see you. We call you out.

Off-brand

Anything that claims to be branded is fake (or perhaps obtained by non-legitimate means). Plenty of brands do manufacture in China, but they’re not going to allow their products to be resold on Alibaba. Do yourself a favour - avoid the lawsuit and avoid the scam.

We’re here to help

Elkfox is a Shopify expert and can help you navigate some of the tough stuff related to starting or growing an e-commerce business. Give us a buzz.

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