Chapter Quick Links:
- How to use AliBaba to find private label manufacturers
- Negotiation with private label product suppliers
- How to order private label product samples
- Make your first product order
- Design your custom product packaging
- Create Amazon listing
- Perform product quality check before shipping your goods
- How to send products to an Amazon Fulfilment Center
- Create your Amazon shipment
- Actionable steps: find private label manufacturers
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How to use AliBaba to find private label manufacturers
After completing your Amazon keyword search your next step is to start looking for private label manufacturers.
The best place to find good product manufacturers is Alibaba if you’re looking for producers in Asia, especially China. Alternatives to finding manufacturers is Global Resources as well as any local producers you might have available.
For the purposes of this manufacturers guide we’ll be focusing on AliBaba, but the research principles apply for the most part everywhere.
The first thing you need to do is create your Alibaba account and profile with your company details. This step is important to show manufacturers that you are a serious buyer, not just a “window shopper”.
Once you have your AliBaba account created, take your product keyword list and start searching for your keywords in the supplier database.
To find the good private label manufacturers for your product you need to take into account several factors related to the suppliers you find:
- When has company listed on Alibaba? Older companies are more trustworthy but might charge higher prices. Newer suppliers might be a gamble, but they will almost certainly offer better prices since they’re trying to grow
- Does the supplier offer trade assurance? This is a highly recommended service for the first transactions with the supplier. In essence, it’s a guarantee from AliBaba that in case something goes wrong with the production or the supplier doesn’t respect the terms agreed, you will get your money back. This only applies if your main negotiations and agreements with the manufacturer have taken place in the AliBaba platform. Take note that this service also costs a percentage fee of the total transacted amount.
- Does the manufacturer have any transactions in the platform in the past 6 months? If not, it might be a sign that they already have a lot of established clients with which they work “offline”. It could also mean that they just aren’t too good and people haven’t trusted them with any transactions lately.
- What is their Average Response Rate? You’re looking for at least a 75% rate to make sure someone actually looks at your message. If you reach out to suppliers or low response rates you are most likely wasting your time. They either don’t have great communication skills or they aren’t necessarily looking for new customers.
- What is the MOQ (Minimum Order Quantity) they are offering for the product? It’s generally not advised to start with large quantities of product, so finding suppliers that are flexible in this regard is important.
- Do they have any certifications, if applicable to the product? This depends very much on the niche, but if they have anything official to back up their expertise, it doesn’t hurt.
- What is their FOB Price for the product? This is the list price of the product you are looking for. Generally it is listed as the FOB price, also known as Free on Board. This is a commercial term we will cover a bit later in the guide. In short, within this price, the factory guarantees the production and transport to the nearest terminal, either dock or airport.
- What are the Payment Terms offered by the manufacturer? You should be looking for T/T, which is bank transfer, as this is the safest to start. This is linked to Trade Assurance, some make sure they have that as well.
- Is the Company a Manufacturer or Trading Company? Manufacturers have lower prices but might lack customer service. Trading companies are intermediaries between you and manufacturers. They are more expensive, easier to deal with but also bring extra risk and communication barriers since they are an added layer between you and the product supplier.
- When was the company created and do they offer pictures of the facilities, production lines etc.?
- Is the company marked as a Gold Supplier? This is a badge of quality offered by AliBaba to top companies. By picking Gold Suppliers you increase your chances of getting a higher quality product, but the prices will be higher.
- Does the supplier have an AliBaba Onsite Check? Another badge offered by AliBaba, this time related to their inspection at the company’s facilities. Generally this means that the company was verified by a representative from AliBaba, and the details on the supplier page are accurate.
- Are they also marked as an assessed supplier by a 3rd party assessment service? This is the same as the AliBaba onsite check, just performed by an independent assessor.
You can use the Alibaba platform to compare suppliers or you can make your own spreadsheet based on your discussions with each one. Make sure that your selected manufacturers mark as many of the above criteria as possible.
It’s important to contact multiple suppliers, usually a minimum of 15-20 for each private label product. This needs to be done because some will not respond, will not fit your requirements, have bad communication, some may just not “feel” right, and some will offer bad samples.
You need to have at least 3 to 5 good suppliers on your short list so you can have options as well as room for negotiation.
Also, keep in mind to look at the manufacturer’s entire product catalogue to make sure it has complementary products to the first one you chose. This is going to be crucial in growing your brand and business.
Once you find a supplier covering your requirements, you can contact them through Alibaba with a standard message.
Always make sure that the main details about the order are discussed on Alibaba chat, so you can be covered by Trade Assurance if anything goes wrong.
Things you can include in your message:
- Details about your Company and goals
- The MOQ and Price for the product you are looking to source
- The lead time based on the MOQ
- Details regarding pricing for a logo, packaging and their sample policy
- A Product Instruction Sheet with details regarding any changes you want to make to the product
On top of Alibaba chat, you can also use WeChat and Skype to speed things up once you have the main details in place on Alibaba.
But remember, always negotiate the final details in the AliBaba chat, especially prices, quantities etc.
Negotiation with private label product suppliers
The key to a successful sourcing of a private label product is going to be communication with the suppliers.
You can use Skype and WeChat once you have advanced past the first negotiation details with a supplier to speed things up. Use images as much as possible since this the best way to make yourself understood. Try to be as clear and concise as possible in your communication.
It’s also important to take into account the time difference and try to adjust to their working hours. This might mean you’ll have to work either very early or very late, depending on your location. Unfortunately this is a sacrifice you’ll have to make in order to maximize the contact you have with suppliers each day.
Don’t let them fill in gaps or make assumptions related to your requests. Also back-up your requests with pictures or diagrams if possible. Don’t leave anything up to interpretation.
When establishing a relationship with a potential supplier start by:
- Describing the Brand and present yourself as a serious buyer
- Your plans to sell on Amazon and Shopify and the long term perspectives
- State your expectations related to them: reliable and responsive, cares about quality, help you in building a long term brand and a cooperative relationship
- Try to add a personal touch. Chinese culture is very much based on personal relationships, so trying to connect at a personal level is not a bad idea.
Some tips for negotiation:
- Try to make them think you are bigger than you actually are and always talk about yourself as a team of people working in an actual company
- Ask for a full catalogue to see the future product perspectives
- Tell them you want a long term cooperation
- Let them know, discreetly, that you are knowledgeable about the industry and product, so they don’t try to inflate prices
- Ask about some future discounts after you agree on MOQ, based on future higher quantities as you grow
- Ask them about any certifications they might have
- Ask about the production process, their factory, their suppliers, potential delays in the logistics, maybe pictures of the factory
- Do they perform quality checks on their side and what the process looks like
Compare answers from different suppliers and determine the best ones.
You can even do some ping pong between them if you show you got better offers and try to negotiate a bit more.
In the end, if you received similar quotes, don’t go overboard with the negotiation as you might end up hurting the quality of the final product.
If a supplier says the product can be done much cheaper than the other offers you received, then that is a warning signal that he is not going to offer the same quality.
Finally, to keep everything in order you’ll need a template for your product specs. This will help keep things organized, concise and clear, ideally in an Excel spreadsheet that you can easily share or convert to PDF or Word if needed.
Things to keep track of in your supplier product template:
- Product pictures and description
- The materials you want to use
- Features that the product must have
- Things that the supplier must have special attention to
- Size and packaging details
Ultimately, you want a supplier that sticks to the directions you gave them in this product sheet and gives you the product in according to it.
How to order private label product samples
What things to take into account when ordering samples:
- The samples need to be customized based on your specifications. You should avoid generic, line samples.
- The sample must include the packaging. At this point you need to discuss pricing and details for your product packaging: type of material, polybag, size, shape. This is a very important aspect, since the package is the first client contact with your product, and can increase the perceived product quality.
- Ideally the product sample includes your logo. This can be omitted depending on how complicated it is to print / mold it. This is a good time to learn what methods the manufacturer has to include the logo on your product.
- You can generally pay for the samples with Paypal.
- Expect the samples to be quite expensive: around 10X the production cost, since it’s a custom product. If you order with them, the manufacturer usually takes out the sample amount out of your first order.
- Make sure to ask for an invoice for your accounting, and that all your data is correct: company details, invoice nr., goods are correctly described etc. This will be needed for the customs check.
- Depending on the product, you can request multiple samples of sizes, materials, colors, etc.
- Ask if they have new / improved versions of products that you can sample
- Make sure you ask details about the materials used and any certifications involved in the production process. These details might be needed for customs clearance or even for listing on Amazon.
Try to order samples from at least 3-5 suppliers so you don’t limit your options.
Once you have the samples, test them thoroughly: the quality of materials, any strange smells, resistance to tearing or breaking, wash-ability etc.
If possible, ask for opinions and feedback from people who use that type of product frequently to get a better idea if you have a good product in your hands.
Finally, you can try another round of negotiations , but don’t be extremely aggressive, as this will most likely impact your quality.
Most of the times, the price you agreed on in your initial talks is going to be the baseline for negotiations. Don’t expect major changes. That’s why it’s important to set the expectations correctly from the beginning as this will set the tone for the whole process.
Inevitably the suppliers will give various reasons to raise the price, and you need to be ready to counter them with objective arguments and convince them why the price needs to actually go lower.
Any negotiation is difficult, more so with a different culture, across the internet. It’s important to do your homework regarding the market for the product, the prices of materials and anything that can give you an edge in the negotiations and makes suppliers think that they are dealing with an experienced player in this niche.
Make your first product order
The basis of your first private label product order is going to be the Purchase Order. Also known as a PO, the purchase order is a commercial document sent to the supplier which includes the products, quantities and prices that have been agreed upon.
The Purchase Order is useful because:
- It keeps track of your order details
- Offers better communication with the supplier, avoiding any misunderstandings related to the order
- Helps organize your logistics and accounting
The details you should include in the PO are:
- Company details, both yours and the supplier’s
- PO Number so an Invoice can be issued against it
- A description of the product ordered
- Details regarding the quantities and prices
- Terms and conditions as well as agreed delivery dates
As always, it’s better if you are organized and don’t rely on the manufacturer to keep things tracked and in order. Chinese suppliers tend to not put much stock on legal or administrative details, so make sure you always double check the official documents.
Design your custom product packaging
Product packaging is important as it’s the first contact of the customer with your product. This becomes even more relevant for a new private label brand, so you need to make sure you stand out.
You’ll have to find the right balance between esthetics and functionality, without breaking your budget, and still offer a “premium” look and feel to your customers.
To start the package design process you first need to make sure you understand your product in detail in terms of size, shape, and materials used.
Next you need to know, at least at a high level, who is your target audience: women, men, young, old, urban, rural, etc.
The second step is determining your needs regarding the packaging itself.
You’ll need to know what kind of graphics you want to use – simple, colorful, complicated, classic – as well as the type of material for the package.
Regarding the types of material for you package, the most common and recommended is the Carton Packaging, for multiple reasons:
- It’s eco-friendly
- Flexible and light
- Odorless and Colorless
- Rigid and resistant
- Versatile and easy to personalize
Keep in mind that a nicer package can make a difference in perceived value. A good quality carton, an unconventional shape, bright colors can all make you stand out. However, do take into consideration the practical side of your packaging as well.
You will want something that is easy to transport and stack in master cartons and that will protect your product during the entire shipping process.
Another important aspect to consider is the packaging dimensions. Shipping costs are calculated based on weight and volume, so the bigger and heavier the packaged product, the more expensive the shipping will be.
Most sizing options fall into two major categories: Standard vs. Oversized.
A standard product weighs under 20 lbs (9 Kg) and is no bigger than 18” (45.7 cm) X 14” (35.5 cm) X 8” (20.3 cm). Anything over this is considered oversized.
For products sold in sets you need to take into account the total combined weight and volume of the package.
For more detailed and specific sizing charts you can consult the official Amazon list of product size tiers.
On top of the design and logistics, there are also some distinctive elements that need to be added on the product packaging:
- Mandatory packaging elements:
- Branding – logo, motto etc.
- Company name
- The materials that the product is made of
- Product description and details
- Bar Code
- Country of Origin (e.g. Made in China)
- Optional packaging elements:
- Email address
- Telephone number
- Company website
- Recyclable packaging sticker
- Washing, cleaning and caring instructions
- Product sizes and number of pieces in the package
After you have all your design details in place you should start looking for a supplier for the package.
Usually your product manufacturer can also handle packaging. However, if the manufacturer can’t meet your requirements, you can ask them to reach out to partners for a quote.
Of course, you can also take this into your own hands, as the process should be similar to finding a supplier for the product. Take into account if the time spent is worth it though, and if you’re not better off just letting the supplier find a suitable option.
Regardless of the method you use to find the product packaging supplier, you’ll have to ask them for MOQ and pricing, as well as the unpacked box in vector format. Keep in mind that the minimum order quantity for packaging tends to be higher than for products, especially if the box is particularly unusual.
Once you have a potential supplier, the next step is finding a package designer. Make sure you have all the below details available:
- Box size
- Vector format packaging from the supplier
- Logo in vector format
- Product pictures (if available)
- Pantone colors that you want to use
- Company name
- Product materials
- Brand description and the message you want to send to customers
- Product origin (e.g. Made in China)
- Any extra details you want to add (email, website etc.)
- Examples of similar boxes
- Any particular graphical elements you want to add
- Safety element – a custom made sticker on the inside of the box that represents a unique safety element. This can help you identify your products in case of hijackers.
You have multiple options when it comes to finding a designer. The most obvious is to find someone locally as it might be easier to communicate your ideas. However, it might not be the cheapest option or not even the one to offer the best results.
You can find plenty of talented designers on freelance platforms, such as Fiverr.
Regardless of the platform you’ll use, you should take into account a few things when choosing a designer:
- Find someone with a decent turnaround time, preferably of a couple few days
- Keep you budget and costs in perspective. Don’t go for high end designers as you can get nice quality for lower prices as well.
- The designer can deliver an AI format (this is regularly used by manufacturers)
- Provides you all source files and print-ready materials
- Provides commercial rights to the design
- Gives the option of multiple or unlimited revisions in case you need to make changes
- The designer has at least a few good reviews and high rating
Create your Amazon listing
By this point you should have received and reviewed your samples, made any final negotiations and settled on a supplier for your product. In addition, you should have a packaging design as well as a supplier for it.
Most likely the supplier will need an advance to start the production.
Once this is done and the first products come off the line and you’re satisfied with their quality, you can kick off the listing process on Amazon.This will create you future product on the Amazon platform and will be the basis for the entire shipping and logistics process.
First of all, make sure you have all your product details on hand, namely the product instruction sheet with details, colors, sizes, weights etc.
In addition, you will need a UPC, also known as Universal Product Code, which can generate the Amazon barcode for your product. You can get a UPC code for each variation of color or size you have for your product.
When your Brand grows, and you add more products to your private label catalogue, you can also register with GS1, a worldwide authority, to get barcodes directly assigned to your company.
The Amazon listing creation process is for the most part straight forward, but you can find some general steps below:
- Go to Seller Central – Catalog – Add Products – Create a new product listing
- Classify your product and select an appropriate category. Look where you main competitors are listed and go with that option
- Complete the “Vital Info” Section with: your UPC Code (unless you have multiple variations, then you can do this in the next section), your Product Name, your Brand Name (both Manufacturer and Brand sections)
- If you don’t have variations you can skip the “Variations” section. Otherwise, use this section to link your UPC numbers to each combination of color and/or size. This will generate SKUs (Stock Keeping Units) which are Amazon internal codes that you can use to track your products
- In the next tab select the FBA option as you will be using Amazon’s fulfilment network to deliver your products
- You can skip the Images section for the time being
- Your new listing will appear after a few minutes in the Inventory – Manage Inventory section.
- Make sure you confirm that you want Amazon to fulfill orders with the Amazon FBA option. You will be taken to another section to complete any Dangerous Goods information. Hopefully you didn’t choose a first private label product that fits in this category.
- After you’ve done this, make sure you CLOSE your listing. You don’t want this to be active and get negative history since you don’t even have your goods in storage yet.
After the listing is created and closed, your FNSKU from Amazon should be updated and available.
You can print these FNSKU labels directly from the Manage Inventory page, using the same menu to enable FBA and close listing.
Print more barcodes than the actual products, just to be sure the manufacturer has enough, as some might get damaged, replaced, mislabeled etc. You will receive a PDF which you can send to the manufacturer directly.
Make sure that everything is named and labeled correctly in your PDFs and e-mails, so nothing is left to interpretation regarding any matches between sizes, colors etc.
Perform product quality check before shipping your goods
As production of your new product is under way, you should keep in constant contact with your manufacturer. Ask for pictures of the product, the packaging, how the products look on the production line, etc.
Most importantly, you need to make sure you arrange for an inspection BEFORE making the final payment to the supplier. I recommend you find a 3rd party service to do this, as they should be unbiased. Generally forwarding companies also have quality check services.
Before requesting the QC, ensure you have your product detail sheet properly set up with as many details as possible and prepare a Quality Check sheet with specific things that need to be looked out for.
As part of the quality check sheet you can include the following items that need special attention:
- Visual check – does the product or packaging have any visual flaws? Are they dirty or dusty? Any marks or scratches?
- Functional check – does the product actually work as intended?
- Dimensions check – does the product fit the dimensions in your specs? Is the box according to the size specs? What is the size of the master carton? Does everything match the packing list?
- Product packaging check – are the model and quality as agreed? Are the barcodes properly attached to the boxes? Does the polybag have a suffocation warning sticker?
It goes without saying, but only make the final payment once the QC passed successfully.
There’s also the option to arrange for a quality check once the products arrive at their destination, just to make sure the packages are in good shape. This will bring extra costs, but might be worthwhile if you have more fragile packages.
Always ask for pictures of the products on arrival and have the master cartons checked to see everything arrived according to the package list.
Once you’ve made sure things are in good condition at arrival, you can start the shipping process to the Amazon Fulfilment Centers.
How to send products to an Amazon Fulfilment Center
Before starting the shipping process for your private label product, there are a few things to do:
- Send the manufacturer the barcodes you printed off the Amazon listing of your product
- Establish how many products fit into a master carton shipping box to estimate shipping costs
- If you plan on doing quality check in China, which is highly recommended, then make sure the products aren’t fully packaged yet
- Have the supplier prepare the invoice and packing list
This is a good time to review the Incoterms agreed at the negotiation stage. Incoterms are international commercial terms agreed between the buyer and seller. These are used worldwide and determine the delivery point, shipping cost, export-import obligations and insurance costs for each party involved.
The most common incoterms are EXW and FOB. You will usually receive prices in FOB terms, but if you have a local forwarder, which I highly recommend you find, you can negotiate an EXW price.
This way, you can let the forwarder handle the entire transport in China, from the manufacturer’s factory to the shipping terminal. Overall you might save some money, both on the product price and the costs with shipping.
An far-from comprehensive overview of the most common Incoterms used can be found below. These are just guidelines to give you an idea what to expect. Ultimately you will discuss these with both the manufacturer and the forwarder when the time comes.
EXW = ExWorks:
- The manufacturer delivers the goods at the gate of his factory
- You (or your forwarding company) take care of export customs and paperwork
- You (or your forwarding company) ensure the goods reach the airport/dock from which the goods exit the country
- You (or your forwarding company) pay the transport and insurance fees
FOB = Free On Board:
- The manufacturer delivers the goods to the nearest airport / dock
- The manufacturer handles the export customs and paperwork
- You (or your forwarding company) ensure transport from the airport/dock to the final destination
- You (or your forwarding company) pay the transport and insurance fees
There are also a few Incoterms options available that cover cases where the goods have reached the destination country (assuming the USA for this case):
DAT = Delivered At Terminal:
- Includes everything in FOB
- Includes taxes at the arrival terminal (airport/dock)
- Does not include transport to another location from the terminal (e.g. Amazon Fulfilment Centers)
DAP = Delivered At Place:
- Includes everything in DAT
- Covers costs for the transport of goods for the arrival terminal to another location (e.g. Amazon Fulfilment Centers)
You need to make sure your forwarder gets all the correct transport details from the manufacturer in terms of number of master cartons, weight, volume, etc. These will be used to determine the correct transport method as well as establishing an accurate quote to cover your costs.
Create your first Amazon Shipment to Fulfilment Centers
After you’ve arranged transport for your goods with the manufacturer and forwarder, you need to let Amazon know that you will be sending inventory to their Fulfilment Centers.
In your product listing you can manage the inventory from Seller Central – Product – Send/Replenish Inventory.
Fill in the details for the shipment starting with the shipping address. This can be either directly China or an intermediary warehouse in the USA. Specify the types of packages you have: either mixed products in cartons, or cartons with a single type of product.
Follow the steps in the process, making sure that all of the details are correct. Pay special attention to the measurements and the difference between inches and centimeters.
Make sure also select “No prep needed” under prep guidance, since the packaging has already been done by the manufacturer.
Review everything and move on to “Work on Shipment” where you will have to decide how the goods reach Amazon.
First of all you should have “Small Parcel Delivery” selected, since you have everything in boxes.
Second, you need to decide the carrier, depending on the location from which the goods are sent: UPS/FedEx from the USA or Other from China. Always check with your forwarder to confirm any details you’re unsure of.
Select the type of boxes you will be sending to the Fulfilment Center and fill in the box size details. Again, make sure you are accurate in your dimensions, the products in each box and that you use the correct sizing system.
Finally, you can complete your shipment and you will receive your box labels that you can send to your forwarder to stick on your shipment boxes.
These will be used by the transport companies to keep track of your products and to know the destination: the Amazon Fulfilment Centers.
Actionable steps: find private label manufacturers
- Create the Product Instruction Sheet
- Find 15-20 suppliers on AliBaba and contact them
- Start talking in detail with suppliers about their offers
- Order samples from at least 3-5 manufacturers that left the best impression
- Once you decide on a supplier, create your PO, submit your order and create a nice package for the product
- Initiate the listing process on Amazon and begin preparing your shipment
- Perform quality checks throughout the production process
- Once the products are ready and they pass quality checks arrange for the shipment to be sent to Amazon Fulfilment Centers