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Introduction:

Amazon is the number one marketplace in the world. With over 9.7 million sellers globally, with 1.9 million of those sellers actively selling this is the marketplace that eCommerce sellers cannot easily overlook. Fulfillment by Amazon (FBA) offers an excellent opportunity for entrepreneurs to build a scalable e-commerce business.

However, success in FBA heavily depends on product sourcing. From identifying dependable suppliers to negotiating favorable terms, your sourcing strategy can make or break your business.

Here is a guide to help you master the art of FBA product sourcing.

Tips for Finding Dependable FBA Suppliers

What should you look for when finding a dependable sourcing partner? We have produced a list of items that are crucial to evaluate when obtaining a supplier.

1. Validate the Supplier’s Credentials

  • Why it matters: You need to ensure you’re dealing with a legitimate business that can deliver quality products consistently. Unreliable suppliers can lead to production delays, inconsistent quality, and even legal issues.

  • How to do it:
    • Business License: Verify their registration in their country of operation.
    • References: Don’t hesitate to ask for contacts of other businesses they supply. Reach out to these references to inquire about their experiences.
    • Certificates: Depending on your product and target market, look for certifications like ISO 9001 (quality management), or any industry-specific certifications. For example, if you’re sourcing textiles, look for OEKO-TEX Standard 100 for harmful substances.
    • Online Research: Conduct thorough background checks through online platforms like Alibaba, Global Sources, or industry-specific directories. Look for reviews and ratings.

2. Order Samples

  • Why it matters: Samples are crucial for assessing the product’s quality firsthand. You can inspect materials, workmanship, and even test the product yourself.
  • How to do it:

    • Be specific: Clearly outline your requirements for the sample (e.g., color, size, materials).
    • Multiple Suppliers: Request samples from several suppliers to compare quality and pricing.
    • Pay for samples: While some suppliers may offer free samples, be prepared to pay, especially for more expensive items. This shows seriousness and helps weed out less committed suppliers.

3. Understand Market Pricing

  • Why it matters: Knowing the market price for similar products gives you a strong negotiating position. You’ll be able to identify fair pricing and avoid overpaying.
  • How to do it:

    • Market Research: Analyze competitor pricing on Amazon and other online marketplaces.
    • Cost Breakdown: Estimate the costs involved in manufacturing, shipping, and Amazon fees to understand the profit margins.
    • Pricing Tools: Use Amazon seller tools (like Jungle Scout, Helium 10) to research product prices and sales data.
photo of business partners signing a fulfillment contract

4. Build a Relationship with Your Suppliers

  • Why it matters: A strong supplier relationship can lead to better pricing, priority order fulfillment, and flexibility in the long run.
  • How to do it:

    • Clear Communication: Establish clear communication channels (email, video calls) and be responsive.
    • Transparency: Be upfront about your expectations for quality, lead times, and payment terms.
    • Cultural Sensitivity: Be mindful of cultural differences, especially when dealing with overseas suppliers.
    • Regular Contact: Maintain regular contact, even outside of order placements, to foster a good rapport.

5. Negotiate Minimum Order Quantities (MOQs)

  • Why it matters: MOQs can significantly impact your upfront investment.
  • How to do it:

    • Start high, aim lower: Begin negotiations with a lower MOQ than you actually need. This gives you room to negotiate upwards.
    • Highlight future potential: Emphasize your plans for repeat orders and potential for increased volume to justify a lower MOQ.
    • Consider splitting orders: If the MOQ is too high, explore splitting the order into smaller batches with a slightly higher unit price.

6. Focus on Total Cost

  • Why it matters: Don’t just focus on the unit price. Factor in all costs to get a true picture of your expenses.
  • How to do it:

    • Packaging: Inquire about packaging options and costs, especially if you have specific branding requirements.
    • Labeling: Confirm FBA labeling requirements and associated costs.
    • Freight Costs: Get detailed quotes for shipping, including taxes and duties.
    • Incoterms: Familiarize yourself with Incoterms (International Commercial Terms) to understand who is responsible for different aspects of shipping and costs.

7. Get Terms in Writing

  • Why it matters: A written agreement protects both you and the supplier and prevents misunderstandings.

  • How to do it:

    • Formal Contract: Create a detailed contract outlining all agreed-upon terms, including product specifications, pricing, payment terms, delivery timelines, quality standards, and consequences for breaches.
    • Purchase Orders: Use purchase orders for each order to specify details and confirm terms.

FBA product sourcing is a crucial skill that requires patience, research, and strategy. By finding dependable suppliers and negotiating effectively, you can create a solid foundation for your business. With the right approach, your FBA journey can lead to long-term success. Failing to take these necessary steps can break your new venture before you even get a chance to head out of the gate.

Online product research tips for Amazon product trends 2023

Reduce time spent on prep by up to 85%

Outsourcing tedious tasks like labeling, packaging, and bundling frees up your time to focus on other aspects of your business.

FBA Product Sourcing Platforms

Many resources are available to assist you in finding suppliers, but not all offer valuable insights into SEO, product description strategies, and identifying high-performing products. Some of these platforms even provide the ability to analyze your competitors’ products and their positioning within the Amazon marketplace. Here are a few sourcing platforms that are popular to use and an outline of what each one does.

1. Helium 10

Helium 10 has a comprehensive suite of tools designed to assist eCommerce sellers, particularly those on Amazon and Walmart, in optimizing their businesses. It offers a variety of features that cover product research, keyword optimization, listing creation, performance tracking, and more.

Online product research tips for Amazon product trends 2023

Average turnaround time of 24-48 hours:

Prep centers can quickly process your inventory, ensuring it reaches Amazon fulfillment centers promptly.

2. AMZ Scout

AMZ Scout designed to help Amazon sellers optimize their businesses and provides insights on product scoring, monthly sales, inventory levels, potential profits, plus competitor analysis.

3. Jungle Scout

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4. Seller App

Seller App provides tools to improve sales, manage operations, and make data-driven decisions. With instant insights sellers can obtain information quickly so they can select the most profitable products.

5. Alibaba

Alibaba is a global e-commerce and technology company based in China, offering a wide range of services and platforms for businesses and consumers. They also offer product sourcing from Chinese manufacturers.

6. Unicorn Smasher

Unicorn Smasher is an Amazon product research tool designed for Amazon sellers, particularly those starting out, to find profitable products and analyze market opportunities.

Key Considerations When Evaluating FBA Product Suppliers

To ensure a successful partnership, assess critical details such as:

  • Production timelines and completion schedules.
  • Adherence to agreed shipping deadlines.
  • Consistency with negotiated price points and quality standards.

By leveraging reputable sourcing platforms and maintaining diligent evaluation practices, you can optimize your product sourcing strategy and position your business for sustained success.

Summary

Mastering FBA product sourcing requires a blend of patience, meticulous research, and strategic planning. Taking the time to build strong relationships with dependable suppliers and honing your negotiation skills is critical for establishing a solid foundation for your e-commerce business. A well-thought-out sourcing strategy not only ensures consistent product quality and cost efficiency but also fosters long-term partnerships that can drive growth.

Neglecting these essential steps can result in significant challenges, such as supply chain disruptions, unanticipated expenses, or subpar product quality. These missteps can derail your business before it has the chance to thrive. By approaching product sourcing with diligence and a clear plan, you increase your chances of creating a sustainable and profitable venture for years to come