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Get Started Selling on Amazon: The Complete Step-by-Step Guide (Part 3 of 12)

2
Sep

Read time: About 9 minutes!

Part 3: Finding the Right Suppliers for Your First Amazon Inventory Batch

In Part 2, we covered how to Research Hot & Profitable Products To Sell on Amazon.

In this part, we will look at some pointers to finding the right supplier for your Amazon store.

I’d like to point out that I am not a professional when it comes to importing or sourcing products. What I share here and on most of my blog posts is based on my opinion that is purely driven by what’s worked for me.

That said, I do my due diligence to research a potential supplier as much as I can and in the end go with my gut feeling. I suggest you do the same with all your transactions.

But most importantly remember this is business, there’s always some level of risk involved, your job is to minimize it as much as possible or better yet eliminate it.

The purpose of this post is to help you do both.

So, what makes a good supplier?

In my opinion, a good supplier will possess the most of the following qualities;

 

1) Sells good quality products

The quality of your products should be #1 on your list. Without this, you don’t have a business- especially not on Amazon.

How-to: Before buying samples (1-3 pieces) check the seller’s reviews to see what other buyers are saying about the specific product you’re looking to buy.

 

2) Competitive prices

This will enable you to play the “race to the bottom” game with no problem as you work on establishing yourself on Amazon the first few months.

How to: Price shop, there’s no shortcut around this. After I have picked out what product I want, I normally have a few tabs open then start my price analysis. I have also made a habit of emailing the supplier to request discounts directly or ask them when their next sale will be.

Every cent counts. It works every time.

 

3) Fast shipping

When you start, you will not have the JIT (just in time) inventory system down. So there will be a lot of last minute restocking moves.

For that, you’ll need a supplier that ships your good fast. I have been blessed to find manufacturers that ship things out FAST! Like I have placed my orders  from China on Thursday and had the goods on my doorstep by Monday afternoon.

shipping-time-dhgate-screenshot

How-to: Suppliers that have DHL shipping option are the best. I’ve noticed most that offer DHL and ship to the US offer free shipping and it normally takes 2-7 days.

 

4) Accommodating Return Policy

You want to be sure that in case of damaged goods and/or poor quality merchandise, you can return it for a full refund. The only thing you’d lose out on is time invested.

sellers-guarantee

How-to: Make sure you read the supplier’s return policy before purchasing. It also doesn’t hurt to contact them beforehand and asking specific questions from their return policy- be direct but respectful. As a rule of thumb, don’t do business with someone that does not accept returns.

 

5) Low minimums

When starting out especially when you’re testing out a product in the marketplace, you don’t want to buy 1,000 pieces of anything. 10 – 20 is good enough. This will help you gauge the quality before tying up all your capital in something that hasn’t proven to sell.

How-to: Look out for suppliers with low minimums (see anatomy of a DHGate Product Page at the end of this article)

 

Bonus: Other things I look at are; 10+ Transactions, at least 10+ 4.5 Star ratings and communication speed. The faster the better.

 

How to Spot a Scammer on Alibaba/DHGate and other Red Flags

As of 9/2/2015, I have found so many scammers on Alibaba and none on DHGate- that is not to say that none exist, I just haven’t encountered any yet.

I am yet to figure out why Alibaba has so many but my assumption at the moment is that it’s easy to set up a store on Alibaba, plus it being bigger and more established automatically attracts all sorts of scammers.

Here are a few things I have done to make them run away from me like they’re on fire.

Red Flag #1: Their prices too good to be true

When a supplier is selling you an iPhone for $20/pc with no minimums, c’mon the red flags should be going up everywhere.

They want you to pay with unsecured payment methods e.g. Wire Transfer, Western Union or MoneyGram. Granted in sites like Alibaba majority of the suppliers only use the above methods, I insist on PayPal because I know there’s buyers protection.

So if they insist on any of the above methods, tell them that it’s against your company’s policy to use those methods and that you only accept PayPal.

If they are legit, they will accept and add a 4.5% upcharge to the final bill but if they are scammers, you won’t hear back from them.

They are not willing to send you samples and if they agree to, they want you to pay via an unsecured method (wire transfer, moneygram, western union etc)

Red Flag #2: Goods that are obviously fake

Take your time to read product description. You can see what previous buyers have to say about the quality of goods.

Also be careful to read the title description, fake products have extremely deceiving names.

fake-gopro

 

Red Flag #3: Constant Nagging

There’s a thin line between following up on a lead and nagging.

Scammers will nag you every day with offers that are characterized by huge promises to deliver and ridiculously low prices. They will even offer you their boss’ passports to prove that they are legit and seem to prepared with any little piece of evidence you request and that is why they are scammers.

Red flag #4: No company website

When someone tells you that they have been in business for more than five years but when you ask them to show you their website they tell you that it is still under construction and even send it to you some random link to have you see it for yourself, run!

Red flag #5: Discounts on Samples

If you are buying smaller quantities of samples (1-4pcs) you should not get a discount from an honest supplier because they are already losing money while with the scammer they are happy to offer you “very good price” as they like to say.

 

Why I like DHGate

-They hold your money in escrow

-There’s a lot of payment options

-They display their prices so I can budget (Alibaba displays on some but most you have to request a quote- takes too much time)

-They have many ongoing promotions that help me save plus when you spend your first $3,000, you become a VIP which has it’s perks including additiona discounts.

-They have a great buyer protection program one of them is a Dispatch Pledge which states that; When the seller does not dispatch the goods: If the seller doesn’t provide a valid tracking number within the agreed processing time, the system will automatically release payment to the buyer and also deduct US $20 from the seller’s account to compensate the buyer when the processing time has expired.”

 

The Anatomy of a DHGate Product Page

dhgate-product-page-overview

  1. Quick link to check reviews, don’t accept anything less than a 4.5 or 4 (minimum).
  2. This is the number of sales for this specific listing. I normally make sure the product has a minimum of 10 transactions.
  3. Countdown timer for a sale. I’m always on the look out for this to make sure I save- every cent counts.
  4. Item price, normally changes based on show in highlighted box below the drop-down menu.
  5. This drop-down reveals all the shipping methods. ePacket is popular and mostly free, however I normally look out for free DHL shipping since it’s much faster in comparison.
  6. Fine print of the shipping time.
  7. This is the name of the supplier, click on the link to go to their store and learn more about them.
  8. “P” for Premium Supplier (there’s also “T” for Top Supplier). Both good badges to have, read more about it here.
  9. Shows the length of time they have been selling on DHGate (still not clear on what “Sponsored supplier” means and I can’t find info anywhere, but I’m guessing it’s a good thing).
  10. The number of total transactions this particular supplier has carried out on DHGate, the more the better, I go for at least 1,000.
  11. Their overall feedback. I go for a minimum of 99%.
  12. Link to their DHGate storefront, this will give you a better idea of what else they sell.
  13. Two links to contact the supplier, I always use the chat feature to negotiate prices and clarify specific information.
  14. Always check what kind of protection a supplier is offering, each supplier is different.
  15. Shows all the various payment methods, the fact that they accept Visa & MC is good because most Credit Card companies offer fraud protection.
  16. This links to the supplier’s return policy. It’s always good to read the return policy and ask questions if something is unclear.

I hope this gives you a place to start in finding the right supplier for your Amazon store. Remember this is a business and it comes with a certain level of risk, so tread with caution but don’t be to afraid to make a few mistakes here and there.

When that happens, just learn from your mistakes and build from that.

I’ll keep adding more information on here as I learn more about the landscape so check back often.

As always, if you have any questions or are stuck and need help completing any of the steps outlined here, leave me a comment below or email me and I’ll be happy to help.

Keep Reading 

Up Next, Part 4: Getting Ungated on Restricted Amazon Categories

This post is a part of the ongoing Get Started Selling on Amazon: The Complete Step-by-Step Guide series, follow the links below to read them:

Part 1: Creating Buyers & Sellers Accounts for Selling on Amazon
Part 2: Researching Hot & Profitable Products To Sell on Amazon
Part 3: Finding the Right Suppliers for Your First Amazon Inventory Batch (Current)
Part 4: Getting Ungated on Restricted Amazon Categories
Part 5: Listing Your First Product on Amazon
Part 6: Testing the Market Before Making the Big Purchase
Part 7: Purchasing Stock to Sell on Amazon
Part 8: Shipping Your First Amazon Order, YAY!!!
Part 9: The Magic in Positive Ratings & How to Get Them
Part 10: Improving Your Seller Ratings & Ensuring Your Account is Not Suspended
Part 11: Moving Up to Fulfilment by Amazon (FBA) (Coming soon)
Part 12: Scaling Up Your Amazon Operation (Coming soon)

amazon-selling-business-in-a-box-tims-30-streams-passive-income

15 Responses

  1. What kinds of goods are you selling and what kind of an agreement do you have with the manufacturers as to reimbursement and shipment and followup to assure that the new customers are satisfied with thebhandlingnof the products received.

    1. Rod, while I can’t disclose exactly what products I sell, I can tell you that if you follow the method I share, you should be able to sell same or close to similar products. I try to restrict the retail range between $35-$100. Some sellers have found success with lower price points too but I don’t advice you to go below $12 retail when selling via Amazon because of their fees etc.

      Each supplier has different terms but DHGate holds your funds in escrow until you receive the goods and confirm that the quality is satisfactory. Furthermore, I have received returns from customers because they tried to use some of the goods I sent them and they were defective, in such cases, I just contacted my supplier to include extra units in the next shipment to cover my cost.

      I hope this helps.

  2. Vidas

    Hi Tim,

    As I pursue the same goal (BTW, inspired by you, Tim!), I’m also in need of suppliers, but I think about a different approach to sourcing. First, I did find a bunch of probably reliable suppliers while researching different trade associations (IMHO, scammers usually get no memberships of any associations nor sellers of cheap counterfeit rubbish do! :), second, I gonna visit them in person accompanied by a hired business assistant fluent in Chinese to check the goods and to negotiate terms and prices by myself, third, in order to get better prices I gonna buy goods in larger quantities. I would be selling more likely branded items which would be bought directly from trademark owners. Of course, this would turn a bit more expensive for the very beginning, but I cannot risk losing my reputation!
    Dear fellow sellers, do you have any thoughts/insights on my planned sourcing model?

    1. Thanks for your kind words Vidas-
      Your approach is great, especially the idea of sourcing from suppliers that have to pay a membership fee. As far as actually physically visiting them in China and hiring a business associate to help with translating, although a great idea and feasible for some, I think it’d be hard for most people including myself to do especially for the first few products as it requires a significant amount of upfront investment.

      That said, I still think it’s a great idea!

      I would maybe save doing that for when you launch your own private label? That way you can go and spend time making sure the quality you’re getting for your brand is good. I’ll be discussing some of these techniques in part 12 and beyond.

      If you end up going this route, I’d love it if you could come back and share your experience. I’m sure a lot of people would appreciate your insight on that.

      Stream on!
      Tim

  3. Nugi

    Hi Tim,

    I love your detailed and informative articles, I learn so much from it! Soon enough I wish to be able to follow what you are doing. I have one question, when you are importing products from Chinese wholesalers to US, do you have pay import tax for these products coming into US?

    1. Thanks for your kind words Nugi-

      So far, I haven’t had to worry about that because the quantities haven’t been that much. So the seller normally takes care of that by declaring lower value for the goods.

      I have however received minimal bills from DHL in a few orders- I’m talking less than $50 for orders worth close to $2,000.

      Talk to your supplier during negotiation regarding this.

      Thanks for stopping by and Happy New Year!

      1. Nugi

        Happy New Year, Tim! 🙂

        I’m trying to understand this further since I am a complete newbie. So the $50 bills from DHL you just mentioned is import tax / custom, not shipping cost? It makes sense since shipping is free from your suppliers? You also mentions about orders worth close to $2000, is this the price you get from your suppliers or your final sale price for all items?

        I found out that any items worth less than $200 doesn’t incur import tax. Do you do it this way?

        Perhaps you would show me the cost run down from the orders you have made. For example, when you make a typical order from your suppliers, what is the following:

        Wholesale cost per unit
        Number of unit
        Import tax
        Shipping cost (if any)
        Final price per unit

        Of course, leave out other details, just wanting to know the numbers. I’m already aware of other costs such as Amazon fee and FBA fee. Am I missing any other fees?

        As you can see I’m eager to do this but my fund is very limited. So I can’t afford to be hit unexpected costs which can make me lose money.

        Thank you!

        1. Nugi, all good questions however I don’t want you to overwhelm yourself. The best way is to just ask your supplier if there are any other hidden costs during negotiations. Most DHGate suppliers ship free to the US- take advantage of them because price listed is what you will divide by the number of units you purchase to get your per unit cost.

          For the sake of responding to your questions, yes the $50 was import duty. The $2,000 worth of merchandise is a random example of an order I have placed in the past- this included total cost including shipping. This is what after I receive the goods would help me calculate my base unit cost.

          Like I said before, I’ve never really had to deal with import tax but to give you an example of my breakdown see below…

          Wholesale cost per unit $5
          Number of unit 1,000
          Import tax $0
          Shipping cost (if any) $700
          Final price per unit $5.70 ((($5 * 1,000) + $700) = $5,700)/1000))

          But talk to your suppliers and sort all details out so you know what you’re getting yourself into before exchanging money.

          I wish you all the best and please let me know if there’s anything else you’d like me to clarify further.

  4. MADHU

    hi tim , can you help me on how to earn without investing because now i am unable to invest because of my financial problem. please reply me ASAP.

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