“How To Source Your Private Label Product In China, Without Getting Screwed By Alibaba Suppliers.”
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How To Avoid Alibaba Middlemen – Make Sure You Don’t Get Scammed
Thanks to Alibaba, finding a supplier for your Private Label Business is easier than saying, “Open Sesame.”
However, while it’s easy to find a supplier, it’s not always easy to find the right supplier .
Whether you’re new to Amazon FBA Selling or established, one of the biggest challenges you can face when importing products from China are Alibaba Middlemen.
On the surface, these are suppliers who sell themselves as reliable and trustworthy manufacturers, but underneath it all they are in fact con men looking to scam you.
But don’t worry, while there are plenty of horror stories about the scammers on Alibaba, with some dedicated research and the right advice, you can avoid Alibaba Middlemen and transform your Private Label Business into a success in partnership with suppliers you can trust.
Here’s my guide on how to avoid getting scammed on Alibaba.
Know Your Enemy: The Two Types of Alibaba Middlemen
There are two types of suppliers you need to avoid on Alibaba, Scammers and Trading Agencies.
If you care about your Private Label Business, you need to avoid Scammers at all costs.
They’re con men who claim to represent Manufacturers and Trading Agencies, but in reality don’t own legitimate businesses. They’re waiting for uninformed Amazon FBA sellers to send them money after promising to source products that they cannot deliver.
Once they have your money, they disappear. Leaving you without a product and in extreme cases, without a business.
To the uninformed, the listings for most Trading Agencies on Alibaba look like listings for Manufacturers.
However, appearances are deceiving. If a listing’s pictures look too good, it’s more than likely that the supplier is a Trading Agency, not a Manufacturer.
The difference between a Trading Agency and a Manufacturer isn’t always clear. Some Manufacturers are also Trading Agencies. These ones are ok. The ones you need to be vigilant about are the Trading Agencies that are not manufacturers.
Companies that are just Trading Agencies don’t own production facilities, and are middlemen will who go to manufacturers on your behalf, sourcing the product and skimming a percentage off your manufacturing cost.
I always recommend that Sellers go directly to Manufacturers. That’s because it’s the only way you will get the best prices and secure the level of control needed to deliver products that customers want to buy.
This is because there is nothing to stop a Trading Agency switching manufacturers without your consent, resulting in a drop in quality of your product, or even causing expensive delays to supply and shipping.
While the Scammer’s much worse than the Trading Agency, working with either will cause you serious headaches.
Understanding the Supply Chain
Now you know what you’re up against, you need the tools to identify legitimate suppliers for your business.
To do that, you may need to rethink your priorities as an Amazon FBA Sellers.
Now, as Amazon FBA Sellers, it’s normal for us to lock our sights on selling a product, overlooking the importance of effective sourcing.
If this describes you, pay close attention.
Your supply chain is what will make or break your business.
Your supplier determines the quality of your product, the price of your product and how reliably you can get your product to your warehouse. You at your supplier’s behest, all the time.
Remember: No Product. No Private Label Business.
But how do you assess whether someone’s a good supplier or not?
Understand Your Product
To find the perfect supplier, you need to truly understand your product.
That means that you need to take product research seriously. Make sure you know the following about your product:
- The right price. Price should not be the only factor determining the suitability of your product, however it’s important. You need to know how much your customers will pay for the product. The cheapest option is not always the best.
- Product Quality. For your product to sell, it needs to meet your customers expectations of quality. Do some research to understand exactly what they expect.
- Necessary certifications. You must understand exactly which certifications your product needs to meet. These are the legal requirements that your product satisfy before it can be legally sold in your chosen market.
If you’re finding it difficult to determine the certifications relevant to your product, get in touch with QIMA, formerly Asia Inspection, now.
QIMA are an excellent company specialised in helping Amazon FBA Sellers understand the regulations that their products need to meet, and the type of certifications Chinese manufacturers need to have when supplying products to your market.
If you understand your product’s price, expected quality and certifications you’re ready to start looking for a supplier.
If you don’t, then I strongly recommend that you do some more product research.
Research to Avoid the Middlemen
Once you’re confident that you understand the product that you want to import from China, you need to start looking for suitable Alibaba suppliers.
- Every supplier must have trade assurance and be verified. These are the basics. Make sure every Alibaba supplier you’re considering has trade assurance and is verified. You can do this easily by checking the correct options when you start your search.
- Length of Operation. Pay close attention to how long each supplier has been operating on the platform. The longer the suppliers’ trading history, the better.
- Pay Attention to Total Revenue. The supplier’s total revenue is a good indicator of a trustworthy supplier, normally the more the better. But remember, suppliers with the most substantial incomes will be less likely to offer product customisations. If you’re sourcing a complex product, it’s consider a middle tier supplier. They’re normally more flexible.
Once these basic criteria have been met, you can start compiling a list of companies that satisfy your product requirements.
Just remember, before committing to an order you need to do more in-depth research on each individual listing.
A Trading Agency And Manufacturer
Once you’ve developed a shortlist, start scrutinising each potential supplier. The first step is to confirm whether the supplier is listed as a Trading Agencies or a Manufacturer.
You need to find suppliers that are listed as both Trading Agencies and Manufacturers.
This is because you need to be working directly with a manufacturer, however, for the supplier to be able to ship your products abroad, they require status as a Trading Agency.
As a result, only consider suppliers that are both Manufacturers and Trading Agencies.
Location, Location, Location
Next, you will need to consider each supplier’s location.
There are two reasons location is important:
- Cheaper shipping. If the supplier is based near the coast, their products will be cheaper to ship than inland suppliers.
- Verifying whether the company is real. The listed address will give you an indication of whether the company is legitimate. It’s simple, factories are located in low rise buildings with a maximum of three floors, while Trading Agencies are normally listed in large office blocks.
When assessing location, use your common sense.
If a company is located on the 50th floor of a skyscraper in Hong Kong, even if it is listed as a manufacturer on Alibaba, it probably isn’t.
One Trick Ponies
Look for suppliers that only offer a small number of products made in a single material.
Manufacturer specialisation is crucial and often corresponds to good product quality.
This is because most reputable manufacturers in China, whether they’re big or small factories, focus on producing variations of the same type of product, manufactured out of the same material, not huge, diverse product offerings.
If you find a supplier offering an enormous range of products, each made out of a different material, it’s more than likely that their items will be poor quality.
So don’t waste your time with them.
If you’ve done your product research right, you will know that your product needs to be manufactured in a factory that has certain certifications.
Make sure that every potential supplier has all of the necessary certifications that your product legally requires.
This is very important and something that you cannot overlook. If you are sourcing products as an Amazon FBA Seller, your products MUST meet the legal requirements of your chosen region.
If you are unsure about this, seek the support of an Chinese inspection service like QIMA.
Call Potential Suppliers
When you’ve compiled a list of promising suppliers, consider calling them
That’s because it will help you determine whether a supplier is actually a Manufacturer or a Trading Agency.
I’ve noticed that Sales Reps at Manufacturers (with Trading Agency status) normally have a poorer grasp of spoken English than Sales Reps working for Trading Agencies without Manufacturer status.
You won’t be able to determine this unless you call the supplier, because the difference between written English is not normally noticable.
So remember, poor spoken English is a good sign that you’re manufacturer is legitimate.
Work With A Good Sourcing Agent
Finally, when you have drawn up a list of potential suppliers, seriously consider working with a reputable Sourcing Agent.
You’ll be surprised at how well a Sourcing Agent can help you find the perfect supplier and negotiate product price reductions on your behalf.
I know that a lot of Amazon FBA Sellers are often put off by the expense of a Sourcing Agent, however in my experience their services cost less than the eventual savings they make for you.
Now you know what to look out for, get out there onto Alibaba and start looking for the supplier that’s right for you with confidence.
Just make sure that you watch out for those middlemen
What’s been the worst experience you’ve ever had with a supplier? Do you have any more top tips on how to spot a Scammer
Let us know in the comments below!