7 Big and Little Reasons for Alibaba Product Sourcing
August 7, 2017
When Alibaba went public in 2014, its IPO fetched $15 billion, a figure just shy of Facebook’s valuation. According to the Wall Street Journal, Alibaba is beyond big. According to its website, Alibaba is a Chinese e-commerce company that provides consumer-to-consumer, business-to-consumer, and business-to-business sales services via web portals. Among e-tailers, it’s considered the go-to site when developing a product sourcing strategy that makes the most sense. It aligns small businesses in the US with Asian product suppliers, typically lower-cost Chinese suppliers and manufacturers.
Why an Alibaba Product Sourcing Strategy is Good for US Small Businesses
Economies of scope & scale
As the largest e-commerce website in the world, Alibaba offers great scope and scale. Its size and diversity of goods allows it to offer the most competitively priced products by various suppliers and manufacturers. As all small businesses know and appreciate, the economies of scope and scale result in cost savings.
Organization & simplicity
For a website of its size, Alibaba organizes its suppliers and products in an extremely simple format. This makes sourcing products from Alibaba quick and intuitive. Finding a niche can be a major, time-consuming part of a small business owner’s process. Simplicity at the sourcing stage is a major benefit.
Caters to small business
If lower costs, great variety, and simplicity aren’t enough, Alibaba’s suppliers and manufacturers cater to small businesses by offering a full range of white-label opportunities. This allows US small businesses to source products that can be branded with their own name, rather than serving solely as a distributor or drop shipper.
With the majority of Alibaba suppliers and manufacturers located in China, US small businesses have access to tremendous resources, including favorable foreign exchange, skilled talent, and logistics expertise. Those resources have yielded nearly half a trillion USD in imports from China in 2016 and are on track to exceed that in 2017.
The US dollar is approximately six times more valuable to Asian suppliers listed on Alibaba than domestic product sourcing.
Contrary to what a lot of people believe based on overall lower wages earned, the quality of life in China is quite good. Its literacy rate is roughly 95% compared to India’s 74%, and Chinese life expectancy is over a decade longer than India’s.
China invests heavily in infrastructure that keeps the export machine well-lubricated and highly fluid. When it comes to shipping goods abroad, the Chinese system is well-equipped to ensure that its US trade partners are satisfied.
Top Products Sold Through Alibaba
Despite thousands of suppliers offering nearly two million different products, finding the best-selling products on Alibaba is a lot easier than one might think. A search for ‘top selling products’ from the home page will list items by their current sales activity.
At the time of this writing, cotton gypsum plaster is the top-selling item followed by four types of vape kits. Since vape kits and gypsum plaster may not appeal to all small businesses, Alibaba offers twelve main categories as well as countless sub-categories and sub-sub categories. In each instance, Alibaba lists the category, sub-, and sub-sub-category’s respective best-selling products.
Other Products Available on Alibaba
In providing its site visitors with so many categorical options, Alibaba makes it simple for small businesses to align their product sourcing activities with categories listed on domestic platforms like Amazon.
There are nine top-level categories on Alibaba that align well with Amazon’s (Amazon’s in brackets): Agriculture and Food (Grocery & Gourmet Foods); Gifts, Sports & Toys (Toys, Gifts, and Baby; Sports and Outdoors); Apparel, Textiles and Accessories (Clothing, Shoes and Jewelry); Health & Beauty (Beauty and Health); Auto & Transportation (Automotive and Industrial); Home & Lights and Construction (Home, Garden and Tools); Bags, Shoes and Accessories (also Clothing, Shoes and Jewelry); Machinery, Industrial Parts and Tools (also, Home, Garden and Tools); Electronics (Electronics, Computers and Office); Electronics Equipment, Components and Telecoms (also Electronics, Computers, and Office).
Who Relies Most Heavily on Sourcing Products from Alibaba?
Given the retail powerhouse that Amazon has constructed, it’s no coincidence that Alibaba’s functionality aims to improve the product sourcing cycle for US small businesses. Those businesses include anything from straight product resellers (both straight resellers and white-label product vendors), e-tailers who serve a specific niche but seek greater variety in their online store, and companies that design goods but offshore their manufacturing.
With more than $22 billion in revenues, all types of small businesses rely on the resources aggregated at Alibaba.com. Given the right tools, niche, and costs, Alibaba can be a formidable business ally for any domestic small business that sells products online.
How Veem Can Help with Alibaba Product Sourcing
Especially for small businesses who typically don’t send high dollar amounts but do it frequently, the sticky process of using banks for international wire transfers can be quite a burden. With anti-money laundering and anti-terrorism laws getting more complex, certain banks may expect you to have your recipient’s name, bank account number, address, passport number, date and place of birth – not typically the vendor data you might have on hand.
Veem helps small to medium-sized businesses streamline their global payments process, bypass the banks, skip the clearing houses, and get back to business.
Learn more about Veem