I bet you are working on an ecommerce company, right? That’s why you are finding a factory to work with. Alibaba is the largest online marketplace of manufacturers in the world and it’s a great starting point for you to begin your search for suppliers. What many merchants don’t realize though, is that the manufacturers listed on Alibaba aren’t just factories. They are trading companies, wholesalers, and agents as well. Sorting through this plethora of Alibaba suppliers can be a nightmare if you don’t know what to look for.
In this post, we will have you find out How to find the best factories on Alibaba.
How to Find the Best Factories on Alibaba – Starting Your Search for Alibaba Suppliers
On Alibaba, you’ll see two ways to search through Alibaba on their search bar: One is based on products and the other is based on suppliers. Use the “Products” search option if you’re still in the brainstorming stage and are trying to figure out what product you want to produce. When you’re actually looking to find a factory to work with, you’re going to want to use the “Supplier” search option.
By searching for suppliers, you’ll be able to see a list of potential manufacturers rather than just a list of products to purchase. Suppliers will showcase all of the products they have produced on their own Alibaba webpage.
Though you’re more likely to see relevant products when you search by the “Products” option, you’re going to be less likely to find an actual factory you want to work with. That’s why we recommend searching based off of suppliers, as your end goal is to find the right factory to work with after you’ve decided which product you want to manufacture.
How to Find the Best Factories on Alibaba – The Differences Between Alibaba Suppliers
You’d think that every supplier is made the same. Unfortunately, that’s not the case and there are many frauds on Alibaba that will claim to produce products they actually can’t. This is why you need to be extremely careful when finding your partner factory on Alibaba.
So, what separates a factory, trading company, and wholesaler from one another? For the most part, factories are the actual company that produces products whereas trading companies or wholesalers are considered middlemen.
ALIBABA SUPPLIERS TYPE #1: TRADING COMPANIES
These are companies that deal with a wide array of products and often have close ties with factories. They make money by adding a margin to the actual product they supply to merchants. For example, this company is the best option to search for the best large room air purifiers.
Most ecommerce entrepreneurs want to avoid trading companies as they will decrease your margin and can cause complications in your production process. If you’re really looking for a small production run, however, you may have to go through a trading company as it won’t make sense to work with a large factory at a small scale.
ALIBABA SUPPLIERS TYPE #2: WHOLESALERS
These companies are similar to trading companies in that they add a margin to the cost of the products they sell in order to earn money. Wholesalers are common in America as they enable companies to buy domestically, instead of having to deal with international imports.
Wholesalers often have a warehouse too, meaning you may not have to hold as much inventory while your lead times and shipping times may be reduced.
ALIBABA SUPPLIERS TYPE #3: FACTORIES
When searching for Alibaba suppliers, this type of supplier should be your target. Factories are the companies that actually produce the product you’re looking to manufacture. They own the factory and know where the raw material to produce your product comes from.
Most companies you’ll find on Alibaba won’t be factories, as their marketplace is swamped with trading companies and wholesalers.
How to Find the Best Factories on Alibaba – Key Points to Analyze in Alibaba Factories
If you are starting your own business, you look at a supplier’s page on Alibaba, right off the bat, you want to see if the supplier you’re looking at is a “Gold Supplier.” This is Alibaba’s main way of monetizing their marketplace: Every supplier that joins Alibaba must become a “Gold Supplier.” Companies in China looking to list on Alibaba’s marketplace spend around $5,000 a year to get this badge and outside of China, in areas like Taiwan or Hong Kong, suppliers spend $2,999 a year.
These suppliers are sold on many upsells and cross-sells to boost their exposure. In general, Alibaba’s marketplace is pay-to-play so the more a company pays Alibaba, the more exposure they will get. Keep this in mind, as it means the highest ranked supplier for a certain product like watches, doesn’t mean this supplier is the best. In fact, you may often find better factories that aren’t ranked as high as they are already near capacity and focused on production, rather than sales.
Note: If you are new to business, you may want to know How to Start an Online Business.
Now you can spend less time sourcing Alibaba suppliers and more time selling!
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