As a small business owner, an important element to creating and sustaining a successful business is a constant and reliable source of quality products. The key question of course is where to find these suppliers and manufacturers.
If you are open to finding manufacturers and suppliers from other countries, particularly China, check out Alibaba.com . Alibaba.com has emerged as the leading marketplace for those who wish to buy and sell their products globally.
Whether you are looking for a manufacturer or buyer for your products, Alibaba.com provides a business-to-business marketplace where you can find potential partners. While the site has started mainly as a marketplace for finding Chinese manufacturers, Alibaba.com now attracts manufacturers from more than 240 countries – even from U.S. based manufacturers as well.
If you’d like to use Alibaba.com as your marketplace for finding business partners, suppliers and manufacturers, check out the book “The Official Alibaba.com Success Guide: Inside Tips and Strategies for Sourcing Products from the World’s Largest B-to-B Marketplace” by Brad and Debra Schepp. The book is an excellent guide for international outsourcing and for navigating Alibaba.com. Jack Ma, Founder and CEO of Alibaba.com provides an interesting introduction where he writes about his vision about the site and how he started Alibaba.com.
The book focuses mostly on the SMEs (small and medium enterprises). As a result, many of the book’s tips, strategies and even case illustrations are instantly relatable to small or home-based business owners.
Some of the tips the book provides include:
- Build your business model. Before you even begin to start looking for suppliers, get your business ready. Determine if there’s a market and demand for your products. Understand how you are going to move your goods. If this is for a new product, consider creating a prototype to make it easier for your potential partners to see how you envision and want your product to look and function.
- Make sure that you are dealing with a real company. Take steps to verify that the companies you want to deal with actually exists. Request for their street address (not P.O. Box) and search online. Call — even if you have to do it in the middle of the night — to check if a real, live person actually answers the call during their office hours. Look for the Trust Pass logo in their Alibaba.com profile, which indicates that the company has passed an authentication and background check.
- Work directly with the manufacturer to lower costs, not trading companies, distributors and other middlemen. Perform due diligence carefully to make sure that the company is indeed the manufacturer.
- Be sensitive to cultural differences. Learn the business etiquette and cultural mores of the country you are planning to work with. Avoid using slang in your language when communicating with the foreign companies.
- Download Alibaba.com’s TradeManager, as this tool can be an essential part of your interactions with the site, both with prospective suppliers and Alibaba.com support personnel.
- Set criteria for your products. Clearly specify the conditions you want from your partners — e.g. proof from manufacturers of safe working environment, high standards of environmental responsibility, absense of child labor, etc.
- Beware of frauds and potential scams. Educate yourself on how to spot and avoid scams, as well as Alibaba.com’s procedures for trading conflicts and complaints. Start by reading the resources in Alibaba.com’s Safety and Security Center. More importantly, use common sense. Be skeptical when the company offers you unbelieveable bargains (Hermes bags for $60!) . Run away from those who insists on getting paid only through Western Union or wire transfers to their personal, not business, bank accounts.
It is important to note that while the book provides a good introduction to the complex world of import and export, its focus is how to use the Alibaba.com marketplace. The authors, however, included resources that can help you get more knowledge and information on international trading, export and import guidelines.
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“Be sensitive to cultural differences. Learn the business etiquette and cultural mores of the country you are planning to work with. Avoid using slang in your language when communicating with the foreign companies.”.
This is one of the most crucial aspects in my opinion and actually, one of the most overlooked. Alibaba is a fantastic resource, just because it opens up so many international opportunities but it really pays you to look into the culture of the country you’re dealing with. You’re not expected to be able to write a thesis on it but just knowing a little goes a long, long way. I know that from experience.
These are good tips for identifying the right supplier. In addition to everything listed here, I would emphasize on maintaining strong relationships with your suppliers. Such relationships are important to ensure that the you get a good quality of service from them.
For example, in case of a product emergency (sudden spike in sales and you need an additional shipment from the supplier), these relationships will help you. These relationships will also help you if you are facing a cash crunch and want to delay the supplier payments by a few days.
I recently spoke with a buyer at a large corporation (machinery manufacturer) about this topic. They were constantly pushing their suppliers to lower the prices. In order to meet their demands, the supplier lowered the quality of the product without their knowledge resulting in millions of dollars lost due to product recall.
The moral of the story is that businesses should not treat their suppliers as external entities with clear demarkations. Instead they should try to be as inclusive as possible and engage in collaborative business practices.