How To Find The Best Manufacturers On Alibaba (Avoid Middlemen)?
by Joey Peng | Date: 5th-Sep-2019
When it comes to sourcing, there is nothing more important than finding a good supplier. Because they control your product raw materials cost, product quality, packaging, shipping, and communication, literally they can make or break your business.
If you’re ready to buy from China, especially from Alibaba to start your Amazon FBA business, you’re going to need to read this article first before you create your first purchase order to the suppliers. Why? Because there are millions of products and millions of suppliers listed on Alibaba, but not all of them are direct manufacturers, not all of them are honest business people. There are plenty of middlemen, resellers are ready to take a cut of your profit, and there are bad people is going to scam your money if you’re not careful.
So how to how to find the best manufacturers and avoid middlemen or resellers?
Don’t be scared! In this article, I’m going to share with you 4 simple-to-follow steps to help you with the Alibaba research. If you follow these steps, the risks of you getting scammed is going to close to zero and the chance of you finding a good direct manufacturer is going to increase dramatically.
Without further ado, Let’s get started!
Gentle reminder: If you’ve already found the best manufacturers and you want to negotiate the MOQ with them. You might want to check in our another article “How to Negotiate with Suppliers for MOQ? (Complete guide)“. You will learn the practical negotiation tips and it’s with email template involved.
Shopping guide when find the best manufacturers on Alibaba
When we search suppliers on Alibaba, we don’t have to spend days qualifying them. To make our research as efficient as possible, we need to have some shopping guide.
What differentiates rookies from the pros is that when rookies look at products on Alibaba, they immediately jump on price and MOQ, but pros won’t do that, they won’t waste time doing that. Because right now we’re shopping for suppliers and we’re shopping for quality. When we find a good supplier who can produce good quality products, we can always negotiate price and MOQ.
Let me give you an example.
If you’re looking for a yoga product, you tap in the keyword “yoga mat”, there will be over a hundred thousand product listing on Alibaba, around 140,380 products, see below:
But if you search and sort by suppliers, there will be only 1923 suppliers selling these hundred thousand products:
And, out of the 1923 suppliers, there are only 519 suppliers that are Gold suppliers, Verified suppliers, and Trade Assurance suppliers:
What are these suppliers mean?
- Gold Supplier is a paid membership.
- Verified Supplier is a supplier for whom certain aspects of its company profile, management system, production capabilities, and product and process controls have been assessed, certified and/or inspected by independent third party institutions, such as SGS, TUV SUD, Intertek, Bureau Veritas.
- Trade Assurance is a free service offered by Alibaba. If your purchase order is not produced to the specification, you can dispute payment through Alibaba.
If you look at the following pyramid, this is actually the Alibaba suppliers ranking algorithm. What we need to do is to take advantage of all the built-in screening filter Alibaba already has on their website to have them find the suppliers on the top of the pyramid. Therefore, next time if you’re looking for a yoga product, you can find a few suppliers out of the 519 to become your business partner.
Now you know how to find the best manufacturers on Alibaba more efficiently, Let’s go through the next, how to qualify them? There are 4 simple steps to qualify these suppliers.
4 Steps to qualify the suppliers on Alibaba
Step 1 – Who They Are?
When we’re looking at a supplier’s profile, we will look at the 4 things: supplier name, business type, number of years selling on Alibaba, company certifications.
You might be wondering, why supplier name? What does it matter? Actually, in China, the company name is very structured. When they register a business, the business name must include 4 essential elements, which are:
- Registration location,
- Company name,
- Main products,
- Partnership type.
For example, a company in Ningbo city want to call themselves “Goldenstar” and if they’re involved in plastic rubber related products, and they’re limited liability company, then the company name will be “Ningbo Goldenstar plastic Co., Ltd”.
However, because Ningbo is a city-level registration, they can not call themselves “Zhejiang Goldensta plastic Co., Ltd”, since Zhejiang is the province above Ningbo. And definitely, they can not call themselves “China Goldenstar plastic Co., Ltd” because China is the state-level company registration.
So on the business type, when a supplier lists their product on Alibaba, they must disclose themselves either as a manufacturer or trading company. Sometimes you will see the supplier list themselves as a manufacturer and trading company.
What does that mean is that this supplier not only can produce the product, they can also export the product directly to overseas companies. Not all of these Chinese factories have an export license, therefore, they have to use a middleman which is the trading company to sell the product to you.
Number of years selling on Alibaba
The number of years selling online is obviously very subjected. I would prefer to use a supplier have a minimum of 3 years of eCommerce business experience because their communication and their business maturity will be enough, so I don’t have to babysit and mentoring them.
The last one is company certifications, which is different from product certification. Any companies can produce any products and have the 3rd party issue a certification, but not all companies have the system in place want to go through the step to get a company certification.
Let’s take the ISO system as an example. ISO9000 will certify the company’s quality system, and ISO14000 will certify the company’s environmental system.
So if a company have gone through these steps and got the ISO certification, it is definitely nice to have as a company.
By looking at these 4 elements: supplier name, business type, number of years in business and the company certifications, you should have just a basic idea of who they are.
Step 2 – What They Do?
If you look at the supplier’s main products and product categories, you should be able to figure out if this company is offering a concentrated line of product related to the product you want to buy, or they’re scattered and offering all kinds of product which make them not efficient.
For example, the product category from this supplier shows that they’re more concentrated on yoga products.
While another supplier offers not just yoga products but also many other sport related products.
The more concentrated the company does on one product, the more leverage they have on the raw material purchase. Their worker skill is much better because they do repack it day in and day out. And the quality is much more reliable and consistent.
If you’re searching for the product, you need to know what are your must-have certs and what are your next have certs. You can look at the supplier’s product page to see if they offer those.
Step 3 – Where They Are?
Where they are located? When you do the detailed address check, you need to be more attentive. If their address indicating that they’re on the 15th floor, suite 101 or room 120, looks like an office address, and the supplier claims themselves to be the manufacturer, you need to question why their address is showing an office address? The address should be a factory address, it should be 2 hours away in the industry area from the city. If they are showing an office address, you need to question that to the supplier.
On a higher model, you can also check if the city where the supplier is located outside of the 5 major coastal provinces. The reason is that 80% of the manufacture activities are done in the 5 coastal provinces.
From the below chart you can clearly see that most of the industrial centers are located in the coastal provinces. It’s also with big chance that you can find the best manufacturers from these industrial centers.
Besides, if your supplier is far away from the coast and they are in an inland city, when you’re ready to purchase the product, you’re going have to pay a lot more money transporting the good from the factory to the port. And when you’re adding moren and more different products, it will be much harder for you to consolidate this supplier with other suppliers.
Therefore, keep this in mind when you check the supplier’s address.
Step 4 – How They Do?
This is obviously you can find out after you contact the supplier. But if your supplier’s English skill is so good, you might be wondering, do they do it for a living? Are they really a supplier factory rep? Or are they actually a middleman or a trading company?
If you don’t trust what you have checked, you can always do these two things. One is, use a surprise factory tour. For example, you can call your supplier and tell them that you have a purchasing agent in China, he is happened to be nearby the factory area, and ask them “can you arrange a quick factory tour for my agent”?
The other is, you can ask your supplier do a quick video call , like “Hey, I want to get an idea of what your factory look like, can you get onto the production floor and do a quick video call with me? ”
Using these techniques to find out if your supplier is truly a direct manufacturer. If they always find excuses, you need to put a questions mark on that whether they are the direct manufacturers?
So, now you have the basic idea of who your suppliers are, what they do, where there are and how they conduct their business. I hope you can learn something from it and know how to find the best manufacturers on Alibaba.
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I have recently ordered similar products (Paper Bags) from 2 different companies on Alibaba, 1 was very expensive and i had to buy because i knew him through Linkiden as well. The other supplier was super cheap and does only bags. However the first 1 does multiple products. Does that mean 2nd one is manufacturer and the 1st one is just the agent.
From the product they supply, it doesn’t mean that the 2nd one is manufacturer or the 1st one is just the agent. To find out, you can ask them to send you some materials, such as photos of production lines, or their office, etc. And you can also check how they respond to your questions about the product specs, production technique, etc. If you still cannot find out, you can have a video call with them to have a further check.