To avoid the drawbacks of the platform, you need to do some research on your suppliers before you buy. We suggest starting by filtering your initial search to weed out some of the bad candidates.
Make use of all available filters to narrow down your suppliers search
There are a few different types of suppliers you’ll run into…
- Manufacturers
- Wholesalers
- Dropshippers
- Importing agents
Let’s go over the differences with each supplier, so you have a better understanding of who (and what) you want.
Manufacturers
A manufacturer is a company that produces items for use or resale. The majority of AliBaba suppliers are manufacturers.
Because manufacturers are the direct creators of the products, they can offer very low prices on items. However, their minimum order quantities (the minimum number of products you can buy in one shipment) are often very high.
Usually, manufacturers sell direct to suppliers such as light and bulk wholesalers and liquidators (since they can afford to buy in bulk and hold lots of inventory).
Therefore, most retailers find that manufacturers are unreachable (in terms of product sourcing). Keep in mind that some smaller manufacturers will work directly with retailers. It never hurts to ask!
Wholesalers
When you buy products from a wholesaler, you don’t have to buy in bulk.
Wholesalers are able to house a lot of products for you which means, you’re getting products at a discounted price.
In other words, the more you buy, the better the price!
A manufacturer is able to pass on better prices to a wholesaler because they typically buy in bulk and have the storage space to house the goods until they’re sold.
Of course that’s the benefit of wholesale. The downsides are just needing lots of capital and storage space!
Dropshippers
Using a dropship resource means there is no volume purchasing. Instead, you’re buying one product at a time.
When you compare this with wholesale suppliers (where products are purchased up front), a drop shipping model means you’re not paying for the products until they’re sold.
It works like this:
The downside of drop shipping is the price. Because you don’t buy in bulk, you can’t get the best price for the product. With wholesale suppliers, you can.
There are a few other downsides, like not being able to brand yourself and potentially long shipping times. But this is an issue no matter what supplier you use, since AliBaba suppliers are all in Asia, so even bulk purchases will have long shipping times.
But it also means no holding of inventory, no shipping or packing, and in some cases no need for customer service! (For example, FBA (fulfilled by Amazon) will take over support for you.)
Importing agents
Agents can be quite tricky at first, because they’re nothing like wholesalers, dropshippers, or manufacturers.
Rather, they play the role as the middleman. They bring customers and clients together and, sometimes, do it for free.
To give you an example of what we mean, imagine Company X (maybe you) as an import/export agent, AliExpress is a manufacturer, and Amazon is a department store looking for goods that AliExpress sells.
In this scenario, Company X would act as the middleman between AliExpress and Amazon. X would see that Amazon is interested in acquiring goods that AliExpress owns, and works hard to bring the buyer and seller together.
Notice how eBay would not be taking title to the goods and would not provide the services that a distributor would perform.
I know this is a little complex, so here’s a visual:
There are two types of agents to look for (if you choose to take this route)…
- Traditional import/export agents. An export agent works in the country where the product is produced. An import agent is based in the country where the product will be sold, in which case, represents the buyers.
- Brokers. A broker is an independent agent who brings buyers and sellers together (as explained in our scenario above). A broker differs from the traditional import/export agent because they don’t usually represent a company. Instead, they’re hired to bring together one-of-a-kind or nonrecurring deals.
