As former professional Amazon and eBay sellers, we've had many negotiations with suppliers over the years. Many of these suppliers were Chinese manufacturers we met through the online marketplace Alibaba. What follows is our practical guide for how to negotiate with Alibaba suppliers.
Negotiating with sellers on Alibaba involves thorough research on product and market prices, initiating communication to build rapport, and presenting competitive yet reasonable offers. Throughout the negotiation, maintain flexibility, consider terms beyond price, and aim for win-win outcomes.
Effective documentation of agreements and timely follow-up further solidify successful negotiations. In this article, we'll go through the exact step-by-step process we used for years to find successful products to sell that were mutually beneficial for us as well as the suppliers.
Alibaba is one of the largest and most popular platforms for connecting business around the world. It's also one of the most well-known sources for finding an Amazon FBA supplier. When it comes to dealing with sellers, remember that there are two primary levers we can pull in order to arrive at an acceptable deal:
This is perhaps the most obvious negotiation point - if you can't arrive at a price that makes sense for your business to achieve an acceptable margin, then there is no deal to be made.
When negotiating on price, start by understanding the market value of the product and setting a competitive yet reasonable offer. Over time, continue to negotiate the price down further by highlighting bulk purchases or long-term partnerships to leverage discounts.
Be prepared to counteroffer and negotiate based on factors like order quantity, payment terms, and potential for future business.
Shipping all the way across the world isn't cheap, and it's common for shipping prices to be the element that makes or breaks a deal with a supplier.
There are numerous ways for suppliers to lower the shipping cost, including choosing different freight methods, or combining their shipments with other shipments bound for the same part of the world. This may, of course, change the length of time it takes for the shipment to get to your business' doorstep, but it can make a huge difference both to individual deals and in the aggregate.
As you're communicating with suppliers, ensure to make shipping part of the discussion. For more details, see our full article on how to negotiate shipping on Alibaba.
With millions of products and suppliers available, knowing how to negotiate effectively can help you secure the best deals, build strong relationships with suppliers, and ultimately grow your business. Here are the steps we used in our negotiations over the years:
Before you even begin negotiations, take the time to research both the product you're interested in and the suppliers offering it. This includes both taking a look at the competitive offerings on Alibaba, but also knowing the market on eBay, Amazon, Walmart, or any other e-commerce outlets you plan to use.
This will allow you to determine what reasonable wholesale prices might be for items, but also help you determine your price ceiling before entering a negotiation.
Though messaging a supplier on Alibaba is, generally, a faceless interaction, making a good first impression goes a long way. From there, building a good relationship with the supplier will allow you to establish more trust for the negotiation going forward.
Introduce yourself, ask questions about their business, and express genuine interest in their products. Building rapport can lead to better communication and more favorable terms during negotiations.
Remember the research you did in step one? It will come in handy here. Before you even begin going back and forth, determine what you're trying to achieve from the negotiation. For instance, if you're trying to assemble e-commerce kits or bundles, perhaps the supplier could provide you with multiple products to further sweeten the deal.
Whether it's a lower price, better payment terms, or customized packaging, clarity about your objectives will guide your negotiation strategy.
Begin the negotiation with a reasonable but competitive offer. This shows the supplier that you've done your homework and sets a positive tone for the discussion.
One tip we found over the years: avoid lowballing. Though it's tempting to lob out a lowball offer out of the gate, it has more tendency to backfire than to work. If the seller believes you're trying to take advantage of them, it can damage trust and stop the negotiation dead in its tracks.
While price is the essential component of the negotiation, don't overlook other aspects of the deal. Consider factors like:
Negotiating these terms can sometimes be more beneficial than focusing solely on price.
Negotiation is a give-and-take process. Be willing to compromise on certain aspects while standing firm on the things that will make or break your business's profitability. Take into account the implications of Amazon repricing that may change a deal's profitability over time.
Flexibility demonstrates your willingness to work with the supplier and can lead to mutually beneficial agreements. Remember that if you arrive at a successful negotiation, there will be plenty of time to renegotiate things going forward.
Time can be a powerful negotiating tool. If you're not in a hurry to make a purchase, use that to your advantage. If you're willing to walk away or engage in multiple negotiations simultaneously, suppliers may be more willing to offer discounts or concessions to secure your business. This is especially the case if the supplier is eager to meet sales targets.
Just like you would in any other business transaction, aim for outcomes where both parties feel satisfied. Remember that if you purchase supplies for inventory on Amazon or another e-commerce marketplace, you'll be coming back to this supplier again. There's no sense in prioritizing short term gain over the ability to secure a profitable supply chain over the long haul.
A win-win negotiation fosters a positive relationship and increases the likelihood of future cooperation. Look for creative solutions that address the interests of both you and the supplier.
Once you've reached an agreement, make sure to document the terms in writing. This includes pricing, delivery schedules, product specifications, and any other important details. Save any emails or messages sent between you and the supplier so that you can refer to them in the future.
Clear documentation helps avoid misunderstandings and serves as a reference point in case of disputes. As you business grows, it's highly unlikely that you'll remember the details of every discussion you have with every supplier.
After the negotiation is complete and the deal is done, don't forget to follow up with the supplier. Express appreciation for their cooperation and confirm the next steps. Maintaining communication fosters trust and lays the foundation for future collaborations.
Remember that suppliers on Alibaba are used to negotiations, and they expect it. If you're willing to go back and forth, you'll secure much more profitable deals over the long term.
By following these steps and honing your negotiation skills, you can navigate the complexities of international supply and secure favorable products for years to come. Remember, successful negotiation is not just about getting the best price; it's about building strong relationships and creating value for both parties involved.
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