So you have decided to become a seller through Amazon FBA. What next? Two things – one, you need to find products to sell on Amazon FBA and two, you need to source the products you will be selling on Amazon FBA.
In this post we will discuss the top tactics to make money with Amazon FBA by finding profitable products from Alibaba.
To put sceptics at bay, let us first see why we are focusing on Alibaba.
Largest Supplier Globally
As you might be knowing, Alibaba is the world’s largest supplier network. It acts as the mediator between buyers and sellers. As there are hundreds of sellers of every level for all products, you can get a deal that suits you.
Completely Online Business
That Alibaba is an online marketplace means you can buy the products sitting in any part of the world. You can ship the products directly to Amazon FBA warehouse, without having to store them at your end even for a day. This ensures that you have a completely online business with no offline infrastructure, and you can conduct your business from any part of the world. As long as you have internet connectivity you are in business.
Is Alibaba trustworthy?
However, in some quarters Alibaba holds the reputation of being full of scams and hence untrustworthy. But no one can deny the fact that it is also the best place to source products due to the sheer number of manufacturers and suppliers selling there.
How to secure yourself against scams
If truth be spoken you can get cheated by a supplier even when you deal offline. The best way to avoid getting scammed is to be careful. If Internet enables others to cheat you, it also offers you the opportunity to look for information regarding those very suppliers.
Here are some precautions you can take to safeguard yourself against fraudsters on Alibaba:
• Review the company profile thoroughly on Alibaba as well as independent Google search
• Check if the supplier has some Quality certification like ISO 9001
• Look at the supplier’s product catalogue to check if he specializes in the item you want to order
• Purchase only from Gold Suppliers
• Ensure that the supplier provides trade assurance, i.e. protection of goods from purchase till delivery
• Check out payment methods supported by the supplier
Finding a Profitable Product
To make profits selling any item, the first rule of thumb is to find the hot items selling on Amazon. Let us see how you can find a profitable product.
1. Go to Amazon website and look at bestselling products.
2. Browse through page 1 or 2 listings and try to locate items that do not need very specialized manufacturing. It will be easier to ensure the quality of general products.
3. Discard those items that are sold by top brands, because it will be difficult to compete with them initially.
4. Include those items that have poor image quality or poor reviews. If these products are on bestselling list despite these shortcomings, this shows that customers are looking for better suppliers for the product. You will be able to sell good volumes if you fill the gap.
At the end of these four steps you should have a list of around 25-40 potential products to sell on Amazon. Put them all in a spreadsheet so that you can compare data on them easily. Now comes the second part of the search process.
Research shortlisted products
Search for each item you have shortlisted using the search bar at the top of Amazon page. So, if one of your items is mobile screen guard, type the exact word “mobile screen guard” in the search box and see what comes up. Look at the list of products that comes up carefully. These are your competitors, because most of your customers will find you in the same way through organic search.
If you want to make profits, you must be in the first page of the search result, ideally top 5 because that’s what comes up on mobile screen.
You should use analysis tools to glean out metrics like estimated sales, number of reviews and ratings, so that you get to know what you are up against.
Know your Numbers before Moving Further
Before you move further you must know the cost involved in starting your FBA business on Amazon. Unless you know the costs, you will not be able to calculate the profits you can rake in by selling on Amazon FBA. After all we are talking about finding “profitable” products on Alibaba.
The first cost you will incur is setting up on Amazon. Some of the costs include opening Amazon account, buying UPS codes, product photography, product branding, etc. As you are moving your inventory directly from Alibaba to Amazon FBA warehouse, you do not need to maintain a warehouse of your own, eliminating on infrastructure and people costs completely. It can be a one man show where you work single handed on your laptop from the comforts of your home.
You will need to keep some products in stock, even if it is at FBA warehouse. The amount will depend on how much inventory you keep. Initially you can see the average number of products sold by your competitors. Or forecast demand based on product movement during giveaway. We will be talking about setting up giveaways on Amazon in a moment. Keeping 2 months’ inventory is sufficient. As you understand sales trends, you can order more from your supplier.
Now that you know your costs you can easily calculate profit figures for each quotation you receive from suppliers, which we will discuss in the next section.
Finding Suppliers on Alibaba
Now that you have shortlisted products that you want to sell through Amazon FBA, you must find a supplier who can provide high quality goods within reasonable rates. As indicated earlier, you should source your products on Alibaba to make profits. Let us see how to find the right supplier on Alibaba.
Creating an Account
The first thing that you need to do is create an Alibaba account. Remember you need not be a Chinese company or a legally registered company anywhere in the world to buy products on Alibaba. Creating an account is essential to contact suppliers and exchange messages with them.
Next you simply need to search for the product using the search bar at the top of Alibaba website. When the list of suppliers is displayed, fill in further search criteria in the left bar to eliminate products that do not meet your requirements. However, take care not to make it so focused that you lose out on good deals. Starting from a broad search you can keep refining till you have the relevant suppliers on your search results page.
Check out suppliers’ credentials and details like transaction volume in last six months, response rate, minimum order quantity, transaction level, number of years on Alibaba, etc. and make a list of potential suppliers.
You should have a list of 10-15 suppliers initially, for all the products you entered in the spread sheet for potential list of products. Now you need to contact each supplier individually using the “Contact Supplier” button at the bottom right of each listing.
Communicating with Suppliers
On Alibaba you do not order immediately, you contact the supplier first. When you click on the “Contact Supplier” button, the message interface opens. You are prompted to enter as many product details as possible, and you should. However you should not leave it at that. Here are some tips to write that first message:
• Never reveal that you have not sold this product earlier
• Give a detailed plan of how many samples you want and how you are going to escalate your order till you reach a final number
• Ask if they will credit the price of samples later; yes, suppliers often do this
• Sound professional
• Give an idea about the process you will follow to test, validate and inspect the products
• Use simple language because language could be a problem
Finding Original Manufacturer
In Alibaba you will find many middlemen, who source goods from others and sell it to you. So, in a way, they are like you – getting goods to sell at a profit. They will not be able to offer you good price. If you looking for great deals, try to find the real manufacturers. It is usually difficult with not much data on companies available on the site, but here are some ways you can try to find manufacturers:
• Use https://www.1688.com instead of https://www.alibaba.com which lists suppliers. Use Google translate to get information. Once you have name or specific information about a brand, you should be able to get contact information from Google.
• Ask for an inspection of manufacturing unit. If you have a Chinese contact you can trust, request for an inspection on your behalf. If budget permits, make an inspection yourself. Everything fails, abandon the idea.
Negotiating with Suppliers
Once you have contacted all suppliers on your list and got a quotation from each one of them, it is time to negotiate. Remember, everything is negotiable on Alibaba. However, set a limit to how much price reduction you are looking at. If you push too much, you might get an inferior quality product. After all they are also there to do business, so they also need to make profits. Try to seal a deal that is fair to both parties, not just you.
Here are some information you must get from all your suppliers before undertaking the final round of negotiations:
• Prior experience supplying products to your country
• Typical turnaround time
• Knowledge of FBA packaging requirements
• Payment terms for new customers
• Amount of customization they can do for the product
Using Initial Order or Samples for Giveaways
When you order samples from the supplier, you should plan to use them for giveaways. Remember if you negotiate properly, you should be sourcing this for free. Or you can get it credited to your account later. You can use the giveaways for gauzing customer response, increase product ranking for targeted keywords and get reviews. Usually 25 pieces are considered standard for giveaways.
When you set up giveaways, Amazon allows you to set up superurls that you can promote outside Amazon to drive traffic. Whether the visitors convert or not into buyers, you will have traffic to your product page that will be considered organic search result by Amazon algorithm.
When customers make purchases, request them to leave a review and feedback. Be careful to request a review for the product, not just a seller feedback; the two are different and reviews are what you are aiming for.
Depending on the result of your giveaway, you can decide how much you should order from Alibaba for the first lot of inventory.
Pitfalls to Avoid on Alibaba
Alibaba is a good place to source products to sell on Amazon FBA, however there are some pitfalls you must be careful of:
• Always ask for pictures before getting the samples. If the samples do not match the pictures, drop the supplier immediately.
• Never get branded products from Alibaba. They are just counterfeit products and you could get into trouble from original manufacturers if you try to sell them on Amazon.
• Analyse the email responses carefully. They should sound professional and must be detailed. The supplier must be willing to share company or product details whenever you ask.
• Google the supplier to check if it is legitimate and has not been involved in any frauds.
• Ask the supplier for references and cross-check them for assurance.
• If one supplier is much cheaper than others, it is probably fake. Either the company or the product. Avoid it like hot potatoes.
In this post we saw the steps you must take to find profitable products, source them on Alibaba and sell through Amazon FBA. You must keep refining the process detailed here to suit your specific needs as per your product as well as working style.