This article was adapted from How to negotiate wholesale prices on Alibaba.com.
Finding a competitive price when sourcing products is important, but it’s not easy. You need to negotiate with your seller. And when dealing with sellers on Alibaba.com, you also need to consider possible language and cultural differences.
Successful price negotiation is about finding the right balance, where you pay the right price for the right quality, while the seller can make enough money to cover their overhead costs. A good negotiation leaves both parties happy with the outcome.
Here are a few tips to help you go about negotiations with a seller on Alibaba.com.
Do some research
First, ensure that the seller is trustworthy. Seeing a verification badge on their online profile provides a level of assurance.
Next, identify the costs your seller incurs and what their competitors charge. Your baseline price should be within a reasonable range for them. Most sellers aim for a 20% profit margin, so it’s reasonable to ask for a 10% discount.
Use a translation tool
You may be negotiating with someone from a different country who speaks a different language. Multilanguage conversations are easiest with a translation tool. We recommend both buyer and seller interact on the Alibaba.com App. The app provides real-time translation so cross-language negotiation isn’t an issue.
Sell them on the value you bring
Sellers are more inclined to work with established companies with proven sourcing power. Tell them how long your company has been established, and what level of purchasing you do, if it’s impressive. Tell the seller how many units you want to buy, your shipping destination, and how frequently you want to buy.
Alibaba.com sellers are also more likely to give you discounts if you’re a high-volume customer. They want to sell as much product as possible so if you’ll be purchasing frequently and in large quantities, you’ll get a better deal. Provide sales projections if you need to convince them. Or share records of past purchases.
If you’re a newer business, look for manufacturers willing to work with someone smaller, and who is willing to grow with you.
Don’t be afraid to ask questions
If the seller says prices need to go up by 10%, don’t hesitate to ask why. Don’t take it at face value. Dig deep to understand why things are happening. Asking questions will also help you understand their business better.
Ask for a sample
Asking for product samples can create the sense that you are a serious buyer interested in placing an order. When you receive the sample, you can see if it meets all of your specifications without having ordered in bulk. You can also see how it compares to competitors.
Be willing to walk away from a negotiation
You are in a position of power when you’re talking to a seller. Don’t be afraid to say no and walk away. The seller will often come back with a better price and better terms. Talk to multiple Alibaba.com sellers to encourage competitive pricing. Let the seller know you have competing quotes that are equally attractive.
Be innovative in negotiating
When your seller won’t negotiate on price, you can negotiate other things that affect your cash flow. You could negotiate the amount of deposit, or how long it will take to pay off a purchased order.
Other aspects you can negotiate on without affecting price include payment terms, faster shipping, responsive ecommerce fulfillment, warranty improvements, and better packaging.
As the buyer, you are in a position of power. The seller you’re speaking to wants your business. So don’t be afraid to negotiate the price of the products you plan to source. And if at the end of negotiations, the seller doesn’t meet you in the middle? Know that it’s okay to walk away and find someone new.
New to sourcing on Alibaba.com? Join our Expert Q&A with Brett Ducker, CPSM, and Yikun Shao Tuesday, October 12, at 2pm ET, to learn everything you need to know to get started. We'll cover how to find the right supplier to meet your needs, how to communicate and negotiate online, and options for shipping and payment. Follow us on LinkedIn to get notified when the event goes live.
This week's #B2BTuesday Tip:
Go into negotiations with your seller having done research on market price. See what competitors are charging. Use that as leverage when speaking with your seller.