So, you've found the perfect products for your business, and you'd like to know how to negotiate on Alibaba to get a better deal? Or you have yet to find the suppliers to negotiate with? Read this article!
There's a lot more to negotiation than the talk. You need to create a professional impression, research prices so you can be realistic about your expectations, and find a few trustworthy and relevant companies you want to negotiate with.
In this article, you'll learn much more than how to negotiate price on Alibaba; you'll learn about all these steps of negotiation step-by-step, including how to do all those things on Alibaba and multiple negotiation strategies. You can even do everything as you're reading this article. While there are other things you can negotiate on without affecting price, we mainly focus on the price in this article.
This might not be the first thing that comes to mind when thinking about how to negotiate in Alibaba, but it can make the difference between a successful and a failed negotiation.
Just like you want to get a feeling of whether the supplier is trustworthy, the supplier wants to get a feeling of whether you'll be a serious buyer for them that they can benefit from.
If you're a very new company of just 1 person, you might not benefit from filling out all these details, but you could still add certain details such as your website or the platforms where you sell (e.g. Amazon). If you're an established company, it's definitely a good idea to fully fill in your profile.
To fill in your profile, follow the steps:
That's it! In the picture below, you can see an example of the Company Information details filled in.
Before you can negotiate with any supplier, you need to know what's a realistic price to ask for during the negotiation process. You can do this by searching for other products and finding the prices of similar products.
Let's say you'd like to purchase this customizable gift box with a book shape:
Now, search for something like customizable book shape gift box on Alibaba (these are keywords from the title of this product).
Then, you'll want to create a Request for Quotation (RFQ). As the name describes, this is a request to receive quotes from sellers. To create a Request for Quotation, follow these steps:
If Incoterms are confusing for you, and you're not sure which one you should use, a China sourcing company or another overseas partner like Advanta Sourcing can help with that. Don't just assume that DDP is the best for your product because it puts the least amount of responsibility on you; this trade term also has its draw-backs.
Once you've received several quotes, you should have an idea of what a competitive price is for your product.
After you've received your quotes, you should already have a few potential companies as candidates. If you're happy with the quotes from these companies and these companies seem trustworthy, you can skip to the next section, Successful price negotiation: How to negotiate with an Alibaba supplier. Otherwise, read this section to find several other companies you can negotiate with.
It may be easier to search for Manufacturers than for products. When searching for Products, you might see multiple manufacturers for the same product. This can make it more time-consuming to find relevant manufacturers and contact them.
You can do this by going to the homepage of Alibaba, clicking on Manufacturers above the search box, and then typing in your desired product. In this case, we'll search for customizable book shape gift box.
However, the downside to this is that you can't use as many filters as you do when searching for products. Therefore, if you need to use specific filters, such as some of the ones mentioned below, you may benefit from searching Products instead of Manufacturers.
When you place an order through Trade Assurance, you pay to Alibaba, which holds your funds until you've confirmed that you've received the goods, and you're satisfied with their quality. If the supplier fails to deliver the goods on time or the products are not as described, you can file a claim with Alibaba to receive a refund of their payment.
To use this filter, simply check the box on the left side of your screen next to Trade Assurance.
If you search for Manufacturers, this is applied by default. However, if you search for Products, this isn't applied by default.
Verified companies on Alibaba are suppliers that have been vetted and verified as legitimate and trustworthy businesses. When a company is verified by Alibaba, it means that the company's business license, legal status, and other relevant information have been verified by a third-party inspection company approved by Alibaba. You may even stumble across a Gold supplier, which is the highest-rated a supplier can be on Alibaba.
To use this filter, just enable it on the left side of the screen.
Products that are exclusively ready to ship can't be customized. Therefore, if you want to customize your product, don't use this filter.
Setting a maximum MOQ you're open to can save you from having to negotiate the MOQ (minimum order quantity) down. For example, you can do this if you don't want to be required to order at least 3000 units. To do this, enter the maximum MOQ you're willing to accept under the Min. order filter and click on OK.
If you've already received a few quotes from your RFQ, you should have an idea of the maximum (max) price you're willing to pay. You already know that your baseline price should be in a reasonable range for the supplier. So, you could set this number to the lowest or the average amount of the quotations you received for your RFQ.
For example, you might decide to set the maximum price you're willing to pay to $10 based on the quotations you received.
Save them on a notepad, Word, or wherever you'd like to. In the next section, you'll finally learn how to negotiate with these suppliers, so you can start negotiating right after reading it!
You're basically looking to write the perfect messages to negotiate. Follow these tips to maximize your chances of a successful negotiation! Here at Advanta Sourcing, we use these and even more strategies ourselves when we contact suppliers for our clients!
Making a good first impression can be a make or break. Unlike what you may be used to, Chinese people start a letter with someone's last name followed by their first name. It would be rude to only use someone's first name. Therefore, you can start a letter similarly to this example: Dear Mr./Ms. Lastname Firstname.
You can find out the name of the supplier's contact person on Alibaba by using the Contact supplier button on the listing page.
If you can find anything authentic to praise the company about, then do so in the first paragraph of your message! Giving people genuine compliments makes them like you more, and increases your chances of a successful negotiation. For example, check if the company has won any awards and mentioned that.
However, make sure you sound genuine when you are praising the company. Otherwise, it might make a bad impression rather than a good one. If you can't find anything genuine to praise about, avoid it.
Here's an example:
Dear Ms. Huang Caty,
I noticed that you won an award in [award name], which is impressive! Your business seems like a great partner for the product we're interested in, and we'd love to work with you.
Tell them that you're looking for a long-term partner, and let them know how regularly you're expecting to order from them. When a supplier sees that you can benefit their business long-term, they are much more likely to be open to negotiation.
Here's an example of what you might say:
We're looking for a long-term partner to purchase [product] from, as we're expecting to need around 5000 of these after 4 months. In 8 months, we expect that we will need to order around 8000 of those.
By offering to buy more than their MOQ, you further increase your chances of a successful negotiation. Ultimately, it's much better and more profitable for companies when someone orders a larger number of products.
You might say something like:
Right now, we're interested in buying 2000 of these.
Let's say the best 0ffer you received for your RFQ is $1.20. You think this is a decent price, but it can be slightly cheaper. One seller you'd like to negotiate with is selling it for $1.21.
Encourage competitive pricing by asking them if they can sell it for around 10% or 15% less, and mention the offers you received.
You might say something like:
We submitted an RFQ and received prices similar to yours. However, we're looking for a slightly smaller price as we're looking to buy a lot of these long-term. Would you be able to offer $1.05 per piece for these?
Being polite goes a long way, no matter in which part of the world you live.
You could simply say something like this:
Thank you in advance for your consideration! I look forward to your reply.
Best regards,
Yourname
Yourcompany
We've already given you a few example texts, but here you can find these texts combined, so it gives you a better sense of what a message might look like:
Dear Ms. Huang Caty,
I noticed that you won an award in [award name], which is impressive! Your business seems like a great partner for the product we're interested in, and we'd love to work with you.
We're looking for a long-term partner to purchase [product] from, as we're expecting to need around 5000 of these after 4 months. In 8 months, we expect that we will need to order around 8000 of those.
Right now, we're interested in buying 2000 of these.
We submitted an RFQ and received prices similar to yours. However, we're looking for a slightly smaller price as we're looking to buy a lot of these long-term. Would you be able to offer $1.05 per piece for these?
Thank you in advance for your consideration! I look forward to your reply.
Best regards,
Yourname
Yourcompany
The shorter the message, the more powerful it is. As you can see by all the sample texts we've shown you in the previous paragraphs, there really isn't that much text.
If it's too long, it's very likely parts of it will be ignored, or you might not even receive a reply. You can ask a couple of questions, but don't ask too many.
It's not worth it. Most suppliers won't benefit from it, and neither will you benefit from it long-term. Instead, just focus on the long-term savings you'll get from discounts on repeat orders.
Send a similar message, but personalized, to other suppliers from your RFQ. Also, you should have saved a list of other URLs of products you may be interested in if you wanted to get even better prices. Contact these suppliers as well.
You should now have received replies similar to one of these:
If you received the third reply, great! If you received the second reply, you still have a chance.
If you make yourself look like you're an employee just like the person you're communicating with, you have a better chance of getting a better price.
You could reply with something like this:
Thank you for your reply, [name]! I really appreciate your offer. Unfortunately, I just spoke to my boss, and she told me that it is above the price that we are looking for. Would you be able to offer $1.10 instead? Because I am offering to buy more than your MOQ. Thank you.
Don't expect a supplier to reply to you in hours. There might a huge time difference between China and your country. Therefore, it can take a day to receive a reply.
If you want to get the absolute best prices for your products, using a China sourcing company with plenty of experience in negotiation can really help.
In fact, Alibaba only represents 3% of the factories in China, so there are plenty of cheaper and better places to get products!