If you’re an Amazon FBA seller, then you’re aware of how sourcing quality suppliers and negotiating is vital to your success. And if you’re looking for suppliers in Asia, then Alibaba is the place to go (in most cases). But dialogue with Chinese suppliers can be tricky – it’s important to know what to say, when to say it, and how to say it!
In this blog post, we’ll cover the best Amazon FBA tips and strategies for sourcing & negotiating with Alibaba suppliers – so that you can get the best deal, optimize your cash flow, and improve your bottom line.
Use this outline to skip to any section of this guide:
- Research and prepare ahead of time
- Evaluate the number of potential suppliers
- Identify your goals and targets
- Communicate clearly and concisely
- Let your supplier offer their price first
- Watch for potential scams
- Be prepared to haggle
- Use a sourcing agent (if needed)
- Stay positive throughout the negotiation process
- Know when to walk away from a deal
- Maintain a positive relationship
- Be prepared for headaches and obstacles
Research and prepare ahead of time
Before reaching out and negotiating with a supplier… you always want to conduct baseline research of your product, niche, and sourcing opportunities. At this point, you’ve probably gauged overall viability of your product/niche from a marketing and target customer standpoint on Amazon, but now you’ll want to begin looking into:
- Which of these products are offered by suppliers
- What prices, variations or different SKUs do they offer (on their front-end listing pages)
- Potential size/weight factors that affect cost of shipping overseas
Start by looking at product listings on Alibaba to get a general idea of these factors, but keep in mind – once you begin to negotiate, these details will probably change and adjust based on new details they reveal. Many suppliers don’t keep their front-end listings fully updated, so you’ll have to get the specifics during initial inquiry & negotiation.
You’ll notice many different prices on search pages (and after clicking on each listing page). As we all know, these prices are certainly negotiable and often inaccurate, but they can give you a baseline understanding of general prices ahead of time. Take a look at the quantities they offer for bulk orders as well – which can give you a sneak-peek into the initial investment you might need for bulk orders.
Evaluate the number of potential suppliers & opportunities
As you’re browsing different suppliers… take note of the number of potential options you might have available. You obviously don’t have to begin initial inquiries and negotiations quite yet – because at this stage, we simply want to gauge the overall “supplier market size” so to speak, with a rough ballpark estimate.
Why? Because if the product you’re looking to source appears to be widely-available and offered by a large number of suppliers… this is going to have a crucial impact on your first negotiations. More suppliers means you can (potentially) be more strict and tight on your requirements and ability to budge on price during negotiation.
On the other hand… if there does NOT appear to be a large amount of potential suppliers for the product you’re looking to source, then you may need to budge a little bit more. This might also be the result of your supplier being aware of the same thing too – since they can search through Alibaba just like you.
For example – if you’re an Amazon FBA seller sourcing a generic wooden cross necklace… there’s no need to be highly-flexible on price. But if you’re sourcing a specific niche product with unique features, then you might need to open your flexibility and take what you can get (since you might be talking to one of the only suppliers offering this product).
Always be aware of this dynamic before heading into negotiations with suppliers. You don’t want to catch yourself in a spot where negotiations become compromised – and the remaining options are thin. On the other hand, you don’t want to overpay on a widely-available product when you have so many more options & suppliers to explore.
Identify your goals and targets
Once it’s time to begin initial inquiries and dialogue with the suppliers you identified, the first step in negotiating with any supplier is to know exactly what you need and want. This may seem like a no-brainer, but it’s important to have a clear understanding of your needs before you start talking to suppliers. Otherwise, you’ll be at a disadvantage from the start – and you’ll come off indecisive or inexperienced (which can lead to a supplier taking advantage of you, or attempting to do so).
Some things you’ll want to identify before heading into initial talks include:
- The exact type of product, variation or SKU you want
- What samples you might want to try first
- The quantity you need (which may become flexible)
- Your budget and/or funding situation
Once you have these factors identified, you need to narrow them down to specific points during the supplier negotiation process. Of course, you may have a range of “acceptable outcomes” – such as price points, quantities, turnaround times, etc. – but you never want to give a manufacturer vague answers such as “we want thousands of units ready in the next few days.” Try to be as specific as possible, while also allowing yourself to adjust with the natural flow of negotiation.
Once you have a good understanding of your needs, you can start searching for potential suppliers on Alibaba.
Communicate clearly and concisely
Keep in mind – your supplier is often using a translator to understand your English. This means you should speak in crystal-clear, simple language for a translator to convert easily. And if the supplier’s representative you’re speaking to DOES understand English, it might only be basic-level understanding. Avoid complex sentences and phrasing.
Also, assuming you have already established basic communication with your Chinese manufacturer or supplier, there are still some cultural differences that may impede clear and concise communication. For example, in China, it is considered impolite to say “no” directly. As a result, your supplier may hesitate to give you a straight answer if they cannot comply with your request. It is important to be patient and try to understand their point of view.
Another difference to be aware of is that Chinese businesses tend to value long-term relationships. They may be more likely to make concessions if they feel like they are building a relationship of trust with you. Keeping these cultural differences in mind will help you to better communicate with your Alibaba China manufacturer or supplier.
Let your supplier offer their price first
Dealing with suppliers can be a tricky business. On one hand, you want to get the best possible price for your goods or services. On the other hand, you don’t want to upset the supplier, cause them to ignore you, and risk permanently losing their business.
One way to approach this situation is to allow the supplier to offer their price first. This shows that you are willing to be flexible and that you value their input. It also gives you a starting point from which to negotiate. Of course, you should not accept the first price that is offered. But by giving the supplier the opportunity to make the first offer, you can help to build a rapport and create an atmosphere of cooperation that will lead to a successful agreement.
Watch for potential scams
When looking for suppliers on Alibaba, it’s important to be aware of the potential for scams. While there are many reputable suppliers on the site, there are also some that are not so legitimate. Here are some tips to help you avoid getting scammed:
1. Don’t skip due-diligence. Take the time to look into potential suppliers before working with them. Check out online reviews and see what other buyers have said about their experience with the supplier.
2. Ask for references. A reputable supplier should be able to provide you with references from past buyers. This can give you an idea of what it’s like to work with them and whether or not they’re reliable.
3. Be cautious of too-good-to-be-true deals. If a supplier is offering rock-bottom prices, it’s likely too good to be true. Be wary of these deals, as they could be a sign that the supplier is not legitimate.
4. Get everything in writing. Once you’ve found a supplier you’re comfortable working with, be sure to get everything in writing. This includes the price, delivery date, and terms of the agreement. This will help to protect you if there are any issues later on.
By following these tips, you can avoid getting scammed by Alibaba suppliers. Do your research, ask for references, and be cautious of too-good-to-be-true deals. Communicate clearly and get everything recorded in Alibaba’s chat system to help protect yourself.
Be prepared to haggle
As an Amazon FBA seller, negotiating with Alibaba suppliers on product price often involves a complex series of considerations – from product quality and shipping costs, to volume discounts and bulk purchase deals. It’s important to approach these negotiations with a clear strategy and understanding of your bottom line.
Haggling is an expected part of the process. Alibaba manufacturers are well aware that shoppers will try to negotiate for a better price, and they are typically prepared to offer a discount if it means making a sale. However, there are also risks associated with haggling. If you low-ball an Alibaba manufacturer, they may simply refuse to do business with you – and haggling can be time-consuming anyway. As a result, it may not always lead to the best possible price and it’s important to weigh the pros and cons of haggling before starting a dialogue.
On one hand, you can try to haggle for a better price by playing one manufacturer against another. On the other hand, you can focus on securing volume discounts or bulk purchase deals that offer lower prices as the amount purchased increases. Ultimately, the best strategy will depend on your specific needs and available resources.
However, whatever route you choose, it’s essential to be prepared and stay focused on achieving your goal. With careful planning, persistence, and a bit of luck, you should be able to find just the right deal that allows you to grow your Amazon FBA business effectively while staying within your budget.
Use a sourcing agent (if needed)
Many companies find sourcing products from Alibaba suppliers to be a cost-effective way to obtain good-quality goods. However, working with an Alibaba supplier can be tricky, as there are many scams and suppliers of poor-quality products. To avoid these problems, it is advisable to use a product sourcing agent.
A reputable product sourcing agent will have a trustworthy track record and good relationships with Alibaba suppliers. As a result, they will be able to source products from reliable suppliers at a reasonable price. Furthermore, a product sourcing agent can provide valuable advice on how to negotiate with Alibaba suppliers and how to avoid scams. By working with a product sourcing agent, you can be sure that you are getting high-quality products from reliable suppliers.
If you’re looking for a reliable sourcing agent to help you find Alibaba suppliers, there are a few things you should keep in mind. First, make sure the agent is experienced and has a good track record. Second, ask for referrals from other Amazon FBA sellers who have used the agent. Finally, get a written agreement in place that outlines the agent’s fees and terms of service.
Once you’ve found a reputable sourcing agent, they can help you with all aspects of finding and vetting Alibaba suppliers. They can save you time and money by finding the right supplier for your needs, negotiating prices, and managing shipping and logistics. In addition, they can provide valuable insights into the Chinese market and help you avoid common pitfalls.
If you’re selling on Amazon FBA, using a sourcing agent is a great way to simplify the sourcing process and focus on other aspects of your business. With their help, you can source high-quality products at competitive prices, ensuring that your business is successful.
Stay positive throughout the negotiation process
This one might seem obvious and tempting to skip, but please keep reading… because learning to have a positive and open mindset is 100% required in this process. You simply must avoid becoming frustrated with potentially-low offers, lapses in communication, mistakes & mixups on precise details, and small examples of poor judgment from a manufacturer – because one of these are bound to happen at some point.
Whether you’re negotiating prices or working out the details of an order, having a good attitude can help to smooth out any difficulties that may arise along the way. Additionally, maintaining a positive state of mind can actually aid in the dialogue itself – allowing you to be more flexible and open-minded as you try to find common ground between your needs and those of your supplier.
Ultimately, having a good mindset when dealing with Alibaba suppliers can help you to forge strong relationships that lead to successful talks and cost-effective deals for all parties involved. So remember to stay positive, no matter what challenges come your way!
Know when to walk away from a deal
When it comes to sourcing products from Alibaba suppliers, one of the most important things to remember is to know when to walk away. Dialogue can often be long and difficult, and it might seem tempting to settle for less than what you want in order to ensure the deal goes through. However, it is crucial that you keep your eye on the big picture and don’t sacrifice quality or other important considerations in order simply to get a deal done.
Maintaining a clear head and sticking with your negotiation strategy can help you avoid making costly mistakes that can end up undermining your business. So if you find yourself in the midst of a tough supplier negotiation on Alibaba, always remember that sometimes the best solution is simply to walk away.
This goes right back to the “initial research phase” in the beginning of this article. If you find a wide selection of potential suppliers offering the same product – don’t be afraid to simply put your dialogue on pause and come back to it later (if needed). Bounce around a bit and dedicate high effort into finding the price, quantity & turnaround time that works best for your sales forecast and cash flow situation (and possible marketing/PPC efforts too).
Maintain a positive relationship after the initial transaction
Don’t let small obstacles or screw-ups hurt the relationship – especially if it turns out your initial purchase was great! This might affect future pricing and “prioritization” with your supplier – such as their willingness to adjust and negotiate on turnaround times. If they value your relationship over other clients (meaning other retailers purchasing from them too), you might be able to gain further advantages from the sourcing process.
Be prepared for headaches and obstacles (with shipping times and product quality)
Unfortunately, many overseas manufacturers can drop the ball at times. You need to have an FBA prep inspection process ready to catch product quality issues before they reach Amazon and cost you 4, 5, and sometimes even 6 figures in lost inventory expenses. By catching their mistakes early on, you can also evaluate how often they make them (in case you need to move on from the supplier).
Plus, almost every overseas manufacturer is incapable of prepping your inventory (based on Amazon’s strict packaging & labeling requirements) – so that’s another reason to partner with a dedicated FBA prep service. They can also store your inventory and drip-feed into Amazon’s warehouses, which can help mitigate the blowback from supplier shipping delays and missing units.
Wrapping Up
So there you have it – our best Amazon FBA strategies & tips for sourcing and negotiating with Alibaba suppliers. By adopting these strategies, you’ll be sure to get the best possible prices on your future bulk inventory purchases – while keeping positive relationships with suppliers. Follow our blog for more high-level Amazon FBA strategies from ZonPrep!
