A Beginner’s Guide to Product Sourcing With Alibaba

By QuickBooks Canada Team

2 min read

Alibaba is an online marketplace that sells items in bulk, and it offers retailers a relatively easy way to source inventory globally. Whether you have an e-commerce site, a booth at a flea market, a brick-and-mortar shop, or any other retail establishment, you may want to understand the basics of using Alibaba.

Finding Products

Browsing on Alibaba is pretty much like shopping on any other e-commerce site. You type the item you want in the box, and look through the results. However, in addition to looking for products, you can also search by supplier. When you see something you like, you can look at the profile and contact the supplier for more information.

Alibaba Listings

As Alibaba focuses on bulk orders, each product has a minimum order quantity, which can range from the hundreds to the thousands. The supply ability shows the supplier’s capacity for producing more items, and it indicates the speed at which you can restock items. For example, if you sell 1,000 glow sticks every month, you don’t want to work with a supplier who can only create 500 glow sticks per month, as that won’t meet your demand. Prices are displayed per unit – if the per-unit price for glow sticks is $2 to $3, you would pay between $2,000 and $3,000 for 1,000 glow sticks.

Due Diligence

Before making an order, you may want to speak with the supplier and find about its manufacturing process or where it purchased the items. You can also assess suppliers by looking at their verification ratings – Alibaba uses three distinct verification levels. Consider utilizing the site’s inspection service, which dispatches an inspector to the factory to physically examine the goods for you.

Shipping

One of the most daunting parts of sourcing products from overseas can be the shipping process. On Alibaba, many suppliers sell goods as free on board. This means the price of each items includes the cost of getting the goods from the factory to the port – you just need to arrange the journey overseas and through Canadian customs. Use Alibaba’s logistics portal to learn about and select shipping methods.

DropShipping

If you don’t have warehouse space to store your inventory, you may want to utilize drop shipping. This is where the manufacturer sends the products directly to your customers instead of sending them to you. You can find suppliers who offer drop shipping by typing “dropship” and your product keyword into the search box. Alternatively, you may have items sent to a drop shipper in Canada to hold the items for you until you request to have them mailed to your customers.

Payment

When paying on Alibaba, you cannot just enter a credit card number. However, you can use a bank transfer or Western Union – both of these options can be risky, because you send the money before receiving the goods. On the other hand, you can opt to use an online payment service, or you can use Alibaba’s escrow service. The escrow service tends to be the safest, as a third-party holds your funds until you receive the goods.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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