Do these 5 things BEFORE using a Chinese Aliexpress Dropshipper or Alibaba Supplier!
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#1: Check to see if your suppliers has been to a tradeshow
If you are trying to decide between two suppliers, checking to see if either has been to a tradeshow is a great way to help pick between them. Going to a tradeshow is very expensive and so a lot of legitimate suppliers do not go because it is hard to make enough money back to make it profitable. What this means is that if a supplier has gone, then it indicates they are financially is a good position (which means they are unlikely to go out of business any time soon).
If your supplier is on Alibaba, you can go to their profile and check to see if they have visited any tradeshows. If your supplier is based on Aliexpress, find the brand of the item that you would like to sell and then go to Alibaba to locate the manufacturer. You can then visit the manufacturers profile page to see if they have been to a tradeshow.
#2: Avoid using pictures with models
If you are working with a Chinese dropshipper on Aliexpress or a Chinese supplier on Alibaba and they have stock photos that use models, we recommend that you don’t use those photos yourself. This is because Chinese suppliers have a history of illegally taking pictures from model’s social media accounts (like stealing the images from Instagram). They can get away with this in China, but in the West the model can contact Facebook/Amazon and get your ad/listing taken down. Avoid using pictures with models so that you don’t infringe on copyright.
#3: Check to see if you’re working with a manufacturer, trade company or wholesaler
On Alibaba you will usually encounter two types of suppliers: manufacturers and trade companies. A manufacturer is the factory that originally made the item. A trade company is a middle-man between a manufacturer/factory and you. Neither is better than the other, they both have advantages and disadvantages. The advantage with a manufacturer is that you’re going straight to the source and it’s usually cheaper. On the other hand, a trade company usually charges more since they make a commission on the sale, but their reps usually speak better english which makes communication much better (sometimes they can negotiate lower prices than if you were buying straight from the manufacturer as well so it’s good to check even if you are price sensitive). You can check what the company is in their Alibaba profile.
On Aliexpress you’ll usually encounter either manufacturers or wholesalers. Manufacturers tend to brand their store their generic label brand (e.g. Transhome) and only sell products under their brands. Wholesalers will usually name their store something less generic (e.g. Mr & Mrs Store) and will sell products from a variety of manufacturers. Wholesalers are sometimes more expensive but they have a wider selection of products.
#4: Recap your agreements and contracts in writing
If you and your supplier are negotiating a contract or an agreement, make sure that you get your suppliers to recap it and write out the agreement in text. It’s very easy for both cultural and language differences to cause misunderstandings. Ask your suppler to recap each element of your agreement in text (either by email or by sending a copy of your contract in writing).
#5 Prioritize products that have multiple manufacturers
The profit margins for Chinese manufacturers is very small, because they sell their items so cheaply. That, along with the fact that doing business in China is relatively difficult means that unless a factory is well managed, it can go bankrupt and have to close. If you’re dropshipping an item or private labeling it for Amazon and your supplier goes out of business, then unless you have a backup supplier that manufactures the same item - you will have nothing to sell and your money will dry up.
That is why, when choosing between products, it’s good to look for one that has multiple manufacturers and suppliers. Then, on the off-chance your supplier has to close it’s doors, you can switch to a new one - and your business can continue, and you can keep making money.
