A Practical Way to Dominate Alibaba Suppliers and Negotiate the Best Price (Including Templates)
In China, negotiation is part of everyday life.
Times are changing and Alibaba suppliers are getting smarter every day.
Most of Chinese sales representatives — usually ladies in their 20s — tend to come across as friendly and get attached to you on a personal level.
While you interact with them and start to build a mutually beneficial relationship, bear in mind that, although it doesn’t seem like it; they are highly trained sales peoples.
And they want to get the best price as much as you do.
How do you approach Alibaba suppliers?
As promised in the title, here’s a template for approaching Alibaba suppliers:
Approaching supplier’s template pdf
This template has been tested over and over, that’s why I strongly advise you to read and understand it thoroughly.
Overall, using this template will:
- show suppliers that you are a serious business.
- imply that you are interested in creating a long-term relationship.
- position yourself not making you look like an amateur.
- give suppliers all the information they need to provide you with an initial quotation.
Before sending the template out, make sure to add all your product-related questions, and don’t be ashamed of sending this template to as much as 20 different suppliers.
The goal at this stage is to find trustworthy suppliers that “tick all the boxes” (e.g. proficient in English, been in business for years, can OEM your products, have a good track record etc.).
Sales representative very well know how their factory makes money, so the price they first quote you will strongly be affected by the fact that:
- a big percentage of first-time clients will never make a second order, and that;
- recurring clients make up for the majority of the manufacturer’s income (not to mention they’ve already been through the excruciating process of setting up their first order).
And it’s because of the above two reasons that their initial product quotation will range anywhere between 3 to 10 times what it costs them to produce it.
But don’t despair; with a good strategy, authority and experience you can easily get their price to drop by at least 30% (considering a relatively low product price point).
Always wait for suppliers to be the first to give a price quotation — which they usually will do right off the bat — and never, under any circumstances, start negotiating before having tested the samples.
Not only negotiating before testing the samples is unprofessional, but for your own sake, you are negotiating on a product you haven’t even tested, how are you going to measure its value?
If you are running a serious business — which I assume — then you shouldn’t just be aiming at achieving the best price.
It’s vital that you find a product that you can supply over and over from a manufacturer that you can rely on in the future.
As a rule of thumb, you should buy two to three samples for quality assurance.
Paying a lot for samples is not uncommon, don’t be afraid of paying up to $100 for the first couple of samples.
And know that it’s never recommended negotiating a cent on the dollar during this process.
Time to get down to business!
You’ve finally received the samples from all the different suppliers.
You’ve seen, touched, tried and tested all the samples.
You’ve also double-checked that you are dealing with a serious and trustworthy supplier.
Now what?
This above example is a negotiation I had with a supplier this summer.
Key techniques to take away from the document:
- The website www.1688.com allowed me to show the supplier that I know how much it costs them to manufacture the product (in this case it was traded for ~¥150/set in the Chinese market for the same quality material, measurements and weight!)
- The competitor’s screenshot allowed me to rebate their initial price quotation in a logical manner.
Chinese suppliers can be the most persistent people throughout negotiations — and the reason why these two techniques are so effective — is because they shove practical proof in their face.
Further analysing the example, we can see that the price I quoted ($4.8/set), is way lower than their initial quotation ($8.9/set).
This is done with the purpose of meeting with their price somewhere in the middle.
Also, notice that I say:
“the price I quoted is as high as we can go.”
Well… I don’t really mean that.
It’s a simple way of having them to understand that unless they drop their price significantly, then I wouldn’t even bother getting back to them.
Throughout the negotiation, don’t be afraid of receiving noes or walking away from a deal.
Always be ready to walk away from a deal.
And remember that walking away from a deal doesn’t mean that the deal is over.
This strategy can be used for having hem to get back to you. And trust me… They will get back to you most of the times!
What percentage of their quotation can you negotiate?
Obviously, there is no universal answer to that question, as percentages are bound by the price point of your product.
But considering a relatively low price-point product, then 70% of their initial quotation would be a great success.
Generally speaking, it’s quite unlikely that on your first order you will achieve a price that’s lower than 70%.
Don’t forget that all the sales representatives that you are negotiating with, have managers on top of them that they are trying to please.
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