As of 2014 Alibaba is the worlds largest eCommerce company. That includes both Amazon and eBay combined. It’s also the largest supplier directory…meaning your most likely to find the best and worst suppliers there.
If you haven’t already check out the video below to learn how to open your first Alibaba account.
Advantages & Disadvantages to Sourcing From Alibaba
Manufacturing costs are low in China and the largest business expense is usually the cost of goods which is why most people turn to overseas manufacturing. There is a common misconception that products from China are cheap or produced unethically.
You can choose to work with incredible manufacturers that only have excellent manufacturing processes and have been inspected by Alibaba.
There are a number of advantages and disadvantages to using Alibaba and working with manufacturers in China for your products:
Thousands of suppliers to choose from
High quality products from specialized manufacturers
You can order and negotiate small test quantities
Low manufacturing costs and increased profitablility
Slow communication because of language barrier
Longer shipping time or expensive expedited shipping
Perceived lower quality from customers
We created an incredible guide to help you navigate the disadvantages to buying from overseas manufacturers. Every single one of these disadvantages can be eliminated with some patience and proper selection practices.
Helpful Tool to Find the Best Private Label Manufacturers
If you’re using Alibaba to search for factories, the best tool to utilize is FactoryConfirm, a Google Chrome extension that uses data analytics to see the likelihood of a factory being legitimate. There are some main giveaways that can help you understand if a company is actually a factory:
Does their name have the words trading, industry, or technology in it?
How many product categories do they manufacture in?
What does their business license say?
Chinese Business License
These questions are a good starting point for you to analyze a factory.
Communicating with factories requires an entirely different set of questions. Therefore the questions you ask a factory should be clear-cut and in very basic English. Some of my favorite questions to ask are:
Step 2: Ask Your Private Label Manufacturers Production Specific Questions
What companies have you worked with in the past? Where are most of those companies based?
Though a lot of good factories won’t disclose who they work with, if you can understand where most of those companies are located, you’ll have a good idea as to the quality standards they adhere to. Most factories that sell into America or Europe produce higher quality goods than factories that sell into Asia or Africa.
What is your typical minimum order quantity?
Most factories want to produce more products. It’s just a matter of fact that they make more money when larger orders are placed. With that said, if you make them believe in your brand, they’ll often be willing to start at a lower order quantity. Don’t think the number they say right off the bat is finite.
What is your average sample time?
Sample times make the process that much more exciting. Most people think it takes weeks to get a sample made. For simple apparel items like a shirt or hat, samples can literally be done in less than a week. Sample times will vary drastically depending on the type of product you are producing.
What are your typical payment terms?
Most factories work on a 30% down to start production, 70% paid before shipment payment term. This unfortunately means you need to pay for 100% of your production before you actually receive your product. For larger production runs, it is always smart to send in a quality control team before paying the 70% remaining balance.
Now that you know what questions to ask a factory, it’s time to learn how to manage a manufacturing process.
Step 3: Manage the Manufacturing Process and Get Samples Made
You found a factory to work with:
Now it’s time to teach you about managing the actual production process.
Every product starts with at least one sample and you don’t want to go into a production run without a sample produced by the factory you’re planning to work with.
Know your specifications for a quick turnaround:
What colors do you want?
Any specific materials you want to use?
Do you have a logo? And do you want it on the sample?
When you start discussing your product with factories, you’ll soon realize the abundance of options.
As an example, for watches, you can literally customize everything from the logo on the crown to the entire watch face. Knowing what you want will save you in the long run as you don’t want to have to produce multiple samples because you forgot some design details.
Step 4: Get Photo Updates of the Manufacturing Process
Ask for image updates that showcase progress is being made. You’ll want to ask a factory what the timeline looks like for each part of your product. If one part gets delayed, you know the whole production will be delayed.
The key to a smooth production run is staying on top of the process. So, even though most people manage a production run through email, you may want to consider tools that enable you to actually map out the process.
Now that you know how to find the perfect manufacturer and manage a production run, it’s time for you to start your own business!
Leave any question below and I promise to help you out along the way…
Nathan Resnick is the CEO of Sourcify a platform that makes sourcing easy. Nathan has brought dozens of products to market, ran ecommerce stores generating over six figures in revenue, been a part of campaigns on Kickstarter raising a total of over one million dollars, and used to live in China