Supplier Pre- Evaluation process 

Using a product that has been identified as a potential high volume, high margin and high ROI product using the Amazon Scout tool, we are going to go through the process of identifying potential suppliers and confirming that this product does deserve our attention.

The product we have chosen for this demonstration is a Metal Lemon Squeezer

As the image (click on image to expand) depicts, the key statistics indicate that:

  • The average monthly sales are: 9946
  • Selling Price is: $9.99
  • FBA fees are $5.01
  • The theoretical cost of product is: $ 1.90 (Including shipping to the USA)
  • The theoretical profit per product is $3.08
  • Expected Margin of 30.85%
  • Expected ROI 162%

If a suitable supplier can be identified and all the numbers are confirmed to be correct , the product should be a very profitable product to introduce into the Amazon store. 

Find your product on Alibaba, either through the search bar or image search. The example we are going to use is a metal lemon squeezer which has met all the criteria for being a suitable and profitable product to sell on Amazon. (Click on image to see actual results on Alibaba)

Step 1 : Pre – Evaluation of potential suppliers

Summary of process

Pre-evaluate the list of potential suppliers so that the approach is done only to the most credible and trustworthy (according to the Alibaba rating system) by ranking them, through a weighting system on the key metrics, namely:

  1. Years in business
  2. Trade Assurance
  3. Gold Supplier Status
  4. Assessed Status
  5. Verified Status
  6. Supplier Online Index Rating
  7. Response Rate

Whilst Alibaba takes enormous effort to rank and rate suppliers, the bottom line is that it is you who is going to transfer money to a supplier in China.  A supplier  whom you have never met, never done business with and who is expecting you to make a significant payment for a bulk order of products to be shipped to another service provider (Amazon) in another foreign country. The due diligence in this process is crucial.

In step 1, we take the Alibaba rating system and try to put some order to the various rating, tabulate them in a logical manner and ultimately decide whom of the various suppliers we are going to approach, if they meet our selection criteria

The following image depicts the results of an evaluation done on the first 2 of the suppliers found in the image/ link above:

Download here: Supplier Pre-Evaluation

All the data can easily be collected from:

  1. The summary of the suppliers as per the image above – link to Alibaba supplier summary sheet 
  2. And from drilling into the supplier page details (click on the supplier image to see supplier page)

Next – Step 2

Approach the top 5 to 10 of the top-rated suppliers with an initial approach of determining if you can build a relationship by:

  1. Evaluating responsiveness
  2. Evaluating level of English
  3. Evaluating whether they are prepared to go the extra mile

YBO Resources

Next – Supplier Responsiveness

Previous – Finding a Supplier