What is Alibaba? 2020 Guide

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What is Alibaba?

Alibaba is a platform created back in 1999. Initially, Alibaba started off as a platform not dissimilar to Ebay and Amazon, linking B2C (businesses to consumers), B2B (businesses to businesses), and C2C (consumers to consumers). 

These three distinct entities are handles via three entirely separate platforms, which are:

  • Taobao (consumers to consumers, or C2C)
  • Tmall (businesses to consumers, or B2C)
  • Alibaba (businesses to businesses, or B2B)

Alongside these three platforms, Alibaba also have these sites:

  • Alipay – A bit like Paypal! Users can pay for goods through the Alipay app, and it has a separate function for investment options, too.
  • Aliyun – Cloud services
  • Aliyun App Store – Mobile apps

Today, Alibaba functions similarly to Amazon – a huge international corporation in the realms of cloud computing, banking services, merchant services, online shopping, and much more. The percentage of ecommerce in China controlled by Alibaba currently stands at a staggering 80%!

To understand the many hats worn by Alibaba, it is necessary to take each site individually and see which functions are applicable to which markets.

Alibaba

Shrewd FBA sellers source a lot of their inventory through platforms such as Alibaba, so in this way, Alibaba and Amazon are intrinsically connected.

This particular platform of the Alibaba umbrella is an online marketplace originating in China, enabling FBA sellers to generate and build their own products to sell on Amazon. When buying products in bulk using such a platform, there are potential profits to be made. 

When sourcing the perfect products to sell on Amazon, there’s some good rules of thumb to follow, to save you lots of headaches later on! These are:

  • Try and choose items that are small in size, this diminishes the shipping costs incurred
  • Try and source items that don’t weigh very much, again this reduces the shipping costs
  • The sweet spot for pricing on Amazon is roughly between $20-$50
  • Aim for items that are low in competition, yet high in demand
  • Seek out items that, upon reviewing on Amazon, have a fairly low number of customer ratings

To seek out these kinds of items, you can turn to Amazon Product Tools, of which there is a seemingly endless supply of in the market today.

What are Amazon Product Research Tools?

Amazon Product Research Tools take the work out of product research and product pricing and tracking for you.

Instead of wasting your valuable business time observing product inventories, struggling to summon up a brand-new, never-seen-before, product to jump out at you, you can alleviate some of this strain by using these tools. 

The best Amazon Product Research Tool will help you to:

  • Uncover brand -new product niches
  • Follow your competitors’ prices
  • Precisely determine competitive but lucrative prices for your items
  • Collect essential data from the Amazon Marketplace.

All of which are a minefield to accomplish purely using a spreadsheet! 

When you start to think about all the aspects of running an Amazon FBA business, and all the tasks that are involved, such as….

  • Product Research
  • Product Sourcing
  • Sales Tracking
  • Inventory Tracking
  • Competitor Monitoring
  • Gaining Customer Testimonials
  • Creating Quality Product Listings

Taobao

Taobao (a word which means seeking treasure ) links consumers to consumers, not dissimilar to Ebay in this way. Consumers browse Taobao to sell their items to other consumers on this platform. The majority of revenue is earned through the medium of advertising and commission, and as it stands currently, Taobao has in excess of 600million users who are active on the platform. 

Tmall

Globally, Tmall is the 2nd biggest ecommerce platform available today, and includes listings from over 70k international and Chinese labels. Tmall shares a whopping 47% of the entire B2C trade in China!

Using Tmall’s platform, shoppers can buy similar items to which they can find within Amazon’s listings – the usual suspects such as beauty products, technology products, and toys and games, to name a few. Tmall have a delivery service not dissimilar to Amazon Prime too, ensuring goods are shipped timely to their end customer. 

In addition to these aforementioned platforms, Alibaba has another one named Aliexpress.

Aliexpress

The main function of Aliexpress is drop-shipping. As an international seller, you have the facility to place orders for products, and Aliexpress drop-ships them to your consumers. This method is utilised widely by Amazon sellers with perhaps not as much capital to start their Amazon FBA business in the beginning.

This international platform under Alibaba’s umbrella gives the opportunity for merchants to purchase products at trade prices, without having to place huge orders and making massive investments in stock. 

How is Alibaba different from Amazon?

By and large, they Alibaba and Amazon operate in a similar fashion, with similar end goals. Alibaba is for China what Amazon is for America. But they are both massive ecommerce platforms globally, too. 

Alibaba aims its approach more towards trade between businesses. Predominantly an interface for sellers to sell bulk items at trade cost to global businesses, who then sell them on under their own private labels.  

Is Alibaba a safe platform?

As platforms go, Alibaba is an environment to connect sellers with consumers. And with any such platform, it is entirely possible that scams happen. This is not a problem that is just with Alibaba, but all platforms online. 

There will always be “bad sellers” out there when you are dealing with ecommerce, whether it’s not receiving your orders at all, receiving sub-standard products, lack of communication, or fake products. 

Alibaba have realised that that branded products are a veritable minefield, and as such, you will have to try very hard to find branded products on Alibaba’s listings. 

You are even notified with an alert during the Alibaba search box process if you do try and seek out a branded product. 

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You will find that Alibaba offers everyone verification tools, ultra-safe means of payments, and covered by Alibaba’s Trade Assurance scheme.  

How do you find reputable merchants on Alibaba?

We’ve covered a little on “bad sellers” on Alibaba’s platform, and it’s definitely worth looking at some tips to find worthy, reliable merchants who you can place your trust (and business) with!

Firstly, check out Gold Suppliers on Alibaba’s platform.

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Gold Suppliers are a paid membership, meaning that you are more than likely going to receive good service from these suppliers, who have gone to the effort and expense to becoming an Alibaba Gold Supplier. In addition to this, on Gold Suppliers’ listings, you can see how many years they have been trading, for peace of mind that you are dealing with established suppliers. 

Alibaba Reviews and Ratings

Similar to Amazon, you can also check out the reviews on Alibaba of the sellers you are planning on trading with. Alibaba offers more information on the reviews of the service supplied, whether the delivery was on time, and the quality, too. 

Factory Inspections

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Factory inspections determine whether the company is a factory or trading business. If a factory inspection has been conducted, you will see verification images such as tools, the space in the factory – whereas trading businesses will often display images of office spaces. It’s worth bearing in mind that if you do check out this feature, it’s best to make sure the factory inspections have been carried out in the last couple of years, as circumstances could very well have changed from an inspection conducted 5+ years ago!

Some factory inspections even include video footage of their warehouses, providing that extra assurance. 

So, as you can see, there are many verification methods available on Alibaba’s platform to ensure you are planning to trade with a legitimate supplier. Good advice is to do your research, and be 100% confident that you are happy with your supplier before going any further. 

The Language Barrier

Probably the most challenging obstacle when it comes to global ecommerce. Thankfully, Alibaba cover this for us and aid communications fairly effectively. Offering fifteen language platforms, these are:

  • http://japanese.alibaba.com
  • http://spanish.alibaba.com
  • http://portuguese.alibaba.com
  • http://russian.alibaba.com
  • http://french.alibaba.com
  • http://german.alibaba.com
  • http://italian.alibaba.com
  • http://arabic.alibaba.com
  • http://korean.alibaba.com
  • http://thai.alibaba.com
  • http://vietnamese.alibaba.com
  • http://turkish.alibaba.com
  • http://dutch.alibaba.com
  • http://indonesian.alibaba.com
  • http://hebrew.alibaba.com/

Establishing Connections with Alibaba Suppliers

In order to see if the potential suppliers you have found are a good fit for your business, there’s some key pointers you can bear in mind.

When sending a RFQ (Request for Quotation), you can seek out the information you require in order to start trading with the supplier. Some RFQ templates are provided for you, and to which you can customise with your own requirements. 

It’s a good idea to introduce yourself and your Amazon FBA business in the RFQ, so your potential supplier understands a bit more about who you are, and what your business goals are. This is a two-way partnership after all, and it has to work well for all parties involved. 

If you can describe your item specifically, you demonstrate to your potential supplier of your serious intention moving forward. These details comprise:

  • Item Measurements
  • Material
  • Specifications
  • Packaging
  • Any other essential specifics (safety, branding, etc)

In addition, create a list of questions that you’d like your potential supplier to answer for you:

  • Can they produce this merchandise?
  • What is their own historical understanding with this item?
  • Can the item be modified? If so, how? 
  • Request cost for orders placed in bulk, and samples
  • Are they a manufacturing or trading business?
  • What is their lead time for products to be manufactured and shipped?
  • What is their lead time for samples to be produced and approved?
  • Can they give examples of shipping prices to different locations?

WeChat is a very popular app for liaising with suppliers in China. You can receive fast replies to your questions and queries, and also send images and videos with ease. Furthermore, if there are any glitches with a product, WeChat makes simple video calls easy to examine goods, and also do item inspections if necessary. 

Tips for Liaising with Alibaba Suppliers

  • Using your created template, get in touch with around 10-20 suppliers, and make a note on a spreadsheet of all the responses and answers. Potentially, a lot of the suppliers that you contact won’t be a good fit, but this is part of the learning curve, and it’s worth taking the time to delve deeper into learning about these suppliers because hopefully it will be an established, long-term working relationship. 
  • Leave aside price haggling initially, as there’s time to sort that out later once you’ve got a definitive list of suppliers you want to trade with. 
  • Don’t bargain too hard on price from the very start. It is more imperative to develop trust and faith with the supplier, and once that is created then you can settle on an equally beneficial price point.
  • Ensure your potential supplier has the capability and previous knowledge with your products you wish to buy from them. Ask for qualifications and experience for reassurance. 
  • Check that communication lines are open between you and your potential supplier from the start. The last thing you want is for a stressful relationship with one sided communication!

Some Signs of a “Bad” Supplier:

  • Absence of experience – do they not have at least a few years listed on Alibaba? Or not have experience manufacturing the kind of item that you require? 
  • Pricing is out of the ball park - if the pricing is vastly different from other quotes you’ve got, whether it is way too high or way too low, suspicions should be raised. 
  • If you don’t get any reaction to your preliminary RFQ, definitely don’t deal with this supplier. If communication is poor with your initial enquiry, it isn’t going to get any better over time!
  • If they haven’t fully replied to all your RFQ questions, this is an indication that they won’t be a good fit. 
  • Avoid dishonest suppliers. 

2020 Best Sellers on Alibaba

Electronics – as you might expect – are right up there with the best selling products on Alibaba’s platform.

Others include (not in priority order):

  1. Rechargeable Battery Chargers
  2. iPhone Cases
  3. Bluetooth Speakers
  4. Drinks Bottles
  5. Power Banks
  6. Air Freshener Products
  7. Laptop Batteries
  8. Wireless Bluetooth Earphones
  9. Jewellery
  10. iPhone Cables
  11. USB Cables
  12. Makeup
  13. Car Phone Holders
  14. Nail Art Products
  15. Teeth Whitening Powder
  16. Makeup Brushes
  17. Bamboo Toothbrushes

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So, how do you go about buying items from Alibaba?

You can follow these steps like so:

  1. Head to Alibaba’s platform
  2. Browse the search feature to seek out your items
  3. Review the search results and determine which items you’d like to purchase
  4. Either Start Order or Contact Supplier to go ahead and start trading

This sounds very simple and straightforward; however it is necessary to follow the aforementioned steps mentioned when it comes to determining trusted sellers on Alibaba. 

You do have the option to order samples of products you are interested in, and this is 100% worth doing as you need to be sure that you are happy with the:

  • Shipping time
  • Quality of the items
  • Verified genuine product

So how do you determine which are going to be the most excellent products to sell on Amazon, when it’s a veritable minefield, of both products and categories?

Finding the Best Products on Alibaba

To do this, we need to start with Amazon. If you are an Amazon FBA seller seeking products to sell from Alibaba to Amazon, then Amazon is the way forward here.

This way, you can determine fairly quickly which products are likely to sell, and sell well – for maximum profit!

Amazon actually gives you all the answers. A list of best-selling products. And this list is updated on an hourly basis. 

Amazon Best Sellers List

This file contains the categories on Amazon that sell the best at that present moment in time, and the elements which also sell the greatest on Amazon’s Marketplace. 

Conduct your product research using Amazon’s Best Sellers List. Amazon actually have all the knowledge you want

Top Amazon Selling Categories in 2020

  • Toys and Games
  • Cameras and Photos
  • Electronics
  • Video Games
  • Cosmetics
  • Books
  • Kitchen Equipment
  • Health and Fitness

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Your aim is to find out what your potential customers want, and then deliver it to them. At a cost-conscious price, with excellent customer service.

You can also research in the Customers Also Bought segment of Amazon. The perceptions found here are vital, and give you ideas of other products that may also be super profitable for your business.

Using this method, you can find out which areas and categories have low or high competition, and low or high demand for products. 

Low Competition, High Demand is Key

Be mindful of cost of product shipping, product durability, and saturation of the current market for your intended products. 

Sourcing Products from AliExpress

Similar to Amazon’s Best Sellers List, Aliexpress offers a Weekly Best Selling list. This list gives you the insights into what is selling particularly well at the moment. However, to be ahead of the curve you are best placed to source products that will become best sellers , rather than being best sellers at this moment in time. 

Conclusion of Alibaba and Amazon

Understanding the method of sourcing items from Alibaba in China, to therefore sell on Amazon’s Marketplace is a skill which takes time and effort. You can then transfer this skill onto any marketplace globally, once you have this under your belt. 


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