Starting a business buying from Alibaba

[bluejays]

I was recently thinking about starting up a passive part time business of buying some hardware from Alibaba and selling it here on Amazon or opening a Shopify site. The questions I have are around quality and precision.

1) the product I’m considering buying is a product where if not aligned correctly, meaning if not manufactured with proper quality, would mount incorrectly on a wall. What controls are there with vendors from alibaba, on how the product is manufactured, how the paint job is done for the given product, and other such quality assurances one would need?

2) How reliable are vendors on Alibaba when it comes to shipping, and do you find issues with Canadian customs holding shipments up, etc?

3) What are the general fees with selling on Amazon and getting Amazon to ship for me? Ie: pick up the product from my house and deliver it to a customer within Canada?

4) What are Amazon’s general rules for disputes with customers/vendors?

Thanks in advance. I have no idea about starting my own business but it’s fulfilling I’m sure.

[BlackArcher101]

I would honestly question if now is a good time to start that, with manufacturing and shipping all messed up from Covid still, and for the near future. Be careful.

You will most definitely have QC issues comes up, and you won't have a leg to stand on to get your money back from mfg's in China. You get what you pay for.

Also, this would probably answer a few of your questions. https://sell.amazon.com/sell.html

[Ducay]

There is already way too many resellers drop shipping stuff from Alibaba on Amazon that I'd wager being successful at all would be impossible, let alone get a decent $ for your time. Most of those resellers are Chinese based and are fine working on razor thin margins, and also have better ability to deal with the manufacturers, so you'll have a leg down there as well.

Lead times, QC issues, etc, all add into the difficulty, and really all it takes is a couple refunds requested through Amazon (you'll take a big ding stll) and all your profits will evaporate.

[bluejays]

Thanks for the feedback guys. I think I've found a particular niche product where it's a good arbitrage opportunity with very few sellers on amazon that have it, where the markup is decent enough to even account for a 10% defect rate to make a simple part time, more or less "passive" income where even just a handful of sales is fine with me to start. If it gets better, then I can always scale up.

What I would hope to do is order the product from Alibaba, and make said product more of a kit for installation through attaching the tools needed so the user can install it more effectively. Plus if I'd get it in bulk shipped from there I could always test each piece out first, and use Amazon to ship it. It's not hugely ambitious but something to try for me with very little capital to try it out with. I was more concerned with others' experience on quality control above all with Alibaba. A bored hole wrong where a screw doesn't fit, or is misaligned, is a pain. Consistency is key and that's my concern, but it could just be a bias.

[PepsiFree]

Aside from not really giving with the idea of starting a reseller business on Amazon, as those are the worst, it’s probably important to note that if not a lot of people are selling it on Amazon, the demand is probably pretty low.

What’s the product you’re trying to sell?

[bizaro86]

Originally Posted by PepsiFree

Aside from not really giving with the idea of starting a reseller business on Amazon, as those are the worst, it’s probably important to note that if not a lot of people are selling it on Amazon, the demand is probably pretty low.

What’s the product you’re trying to sell?

If its actually a good idea posting it publicly on the internet is a 100% guaranteed way to have the margin competed away.

[PepsiFree]

Originally Posted by bizaro86

If its actually a good idea posting it publicly on the internet is a 100% guaranteed way to have the margin competed away.

Not really, no.

I can pretty much guarantee that whatever the product is, there’s not going to be a massive influx of CPers starting Amazon reseller businesses based on the thoughts of one person.

[Locke]

Originally Posted by PepsiFree

Not really, no.

I can pretty much guarantee that whatever the product is, there’s not going to be a massive influx of CPers starting Amazon reseller businesses based on the thoughts of one person.

[bizaro86]

Originally Posted by PepsiFree

Not really, no.

I can pretty much guarantee that whatever the product is, there’s not going to be a massive influx of CPers starting Amazon reseller businesses based on the thoughts of one person.

Wouldn't need to be a massive influx of CPers. Would just take one. Also, its not like CP is a closed system.

I used to have a resale book business on Amazon (back when paper books were still a thing). Lots of people I met through that have gone into third party import resale/dropshipping, as they already had Amazon accounts with good feedback, etc. Its a fiercely competitive business - I definitely think the starting small is a good idea for a few reasons.

You'll make mistakes, so its better to make them small.

If the first vendor you try sucks its better to have a small order. If nobody buys it its better to have a small order, etc etc.

[marsplasticeraser]

Ok I’m a guy that buys on alibaba and know a guy that has a fairly large manufacturing presence in China. But bear in mind these are but personal experiences and anecdotes.

As for alibaba, it’s hit or miss. I’ll often order samples from a few sellers and then check quality and go from there. Once you find a good seller it’s just keeping on them and checking quality. Hard part for you is you’ll be using distribution centres so quality checks will be more difficult. I believe you can outsource qc in China so somebody can review before shipping to distribution, but I haven’t done it.

If this is a serious business and you’re looking long term you should really plan the relationship more. Heading to China to meet is massive for ensuring quality remains high.

On Amazon the tough part is getting your products to rank. There is a whole sub genre of seo for Amazon. Also warehousing and distribution is expensive.

With all this said, still a ton of opportunity to do this type of business, and the most successful are the tiny niches you’re thinking of.

[Sliver]

Good luck. I hope you're able to find a good manufacturer in China...they definitely do exist. I'm lucky to have one. My contact is always checking in on me and my family, sends the nicest messages and is just generally a great person who I totally trust and has never let me down.

Shipping, as BlackArcher pointed out, can be a big risk right now. I had an 8-pallet order shipped in November that was $5k. Just placed another order the same size that is now $7k for shipping. That's a big freaking difference that necessitates a price increase.

[KTrain]

Originally Posted by fleury

I was recently thinking about starting up a passive part time business of buying some hardware from Alibaba and selling it here on Amazon or opening a Shopify site. The questions I have are around quality and precision.

3) What are the general fees with selling on Amazon and getting Amazon to ship for me? Ie: pick up the product from my house and deliver it to a customer within Canada?

If you're doing any labeling, packaging and prep for shipping, that isn't a passive income. That will actually take your time and eat into your profits so consider that cost as well. Over time it will get cheaper as your processes improve but factor that into your costs.

[bluejays]

Originally Posted by marsplasticeraser

Ok I’m a guy that buys on alibaba and know a guy that has a fairly large manufacturing presence in China. But bear in mind these are but personal experiences and anecdotes.

As for alibaba, it’s hit or miss. I’ll often order samples from a few sellers and then check quality and go from there. Once you find a good seller it’s just keeping on them and checking quality. Hard part for you is you’ll be using distribution centres so quality checks will be more difficult. I believe you can outsource qc in China so somebody can review before shipping to distribution, but I haven’t done it.

If this is a serious business and you’re looking long term you should really plan the relationship more. Heading to China to meet is massive for ensuring quality remains high.

On Amazon the tough part is getting your products to rank. There is a whole sub genre of seo for Amazon. Also warehousing and distribution is expensive.

With all this said, still a ton of opportunity to do this type of business, and the most successful are the tiny niches you’re thinking of.

Thanks for all the words of advice. I'll have to read into most of this a little more and when it comes to visiting China, that would probably come a little after establishing more scale. At this point it's just exploratory. As for getting the products to rank, good advice. Thank you!

[bluejays]

Originally Posted by Sliver

Good luck. I hope you're able to find a good manufacturer in China...they definitely do exist. I'm lucky to have one. My contact is always checking in on me and my family, sends the nicest messages and is just generally a great person who I totally trust and has never let me down.

Shipping, as BlackArcher pointed out, can be a big risk right now. I had an 8-pallet order shipped in November that was $5k. Just placed another order the same size that is now $7k for shipping. That's a big freaking difference that necessitates a price increase.

Thanks for the advice. When some were pointing out shipments I was assuming shipping delays. I didn't realize shipping itself is more expensive right now, so probably right in holding off for the time being unless I can get it to come in a month from now or something for a cheap shipping cost.

[bluejays]

Originally Posted by KTrain

If you're doing any labeling, packaging and prep for shipping, that isn't a passive income. That will actually take your time and eat into your profits so consider that cost as well. Over time it will get cheaper as your processes improve but factor that into your costs.

Yes totally. It's not completely passive but if I'd be spending an hour or so a day it may as well be. More a side hustle. I work in lean six sigma, so I have a decent understanding of quality. It would be nice to design products myself and whatnot but it's too early for that. Thanks.

[jayswin]

Don't these companies just take anything that starts to show success, replicate it and kill you?

[bluejays]

Originally Posted by jayswin

Don't these companies just take anything that starts to show success, replicate it and kill you?

No idea. They do have the products themselves already produced though. Just not sure about the quality.

[#-3]

Originally Posted by jayswin

Don't these companies just take anything that starts to show success, replicate it and kill you?

Don't know specifics, but I do know a key plank in one of the more credible anti trust cases against Amazon is this.

They let guy run a semi profitable business on their platform for 2-3 years test driving markets, then the follow their sourcing backwards and margin / recommendation engine them out of existence.

[blankall]

A major think to consider with online sales is the percentage points the money transfer companies take on your sales. They hide a lot of them in awful exchange rates too.

[bizaro86]

Originally Posted by blankall

A major think to consider with online sales is the percentage points the money transfer companies take on your sales. They hide a lot of them in awful exchange rates too.

If you're doing any meaningful volume of USD/CAD conversions, you should either get a foreign account (I use Interactive Brokers) or a regular brokerage account and do Norbert's Gambit. Basically buy an interlisted stock in one country and sell it in the other.

Currency exchange for way, way less. Because if your margins are only 15%, then giving up 2.5% for money transfer is 1/6 of your profit.