When you're a small company producing relatively small volumes of products, it can be difficult to find a credible and reliable partner from which to source ingredients, packaging and the materials you need for manufacturing. Especially if that supplier isn't based in the same country as you.
That's why giant online marketplace Alibaba.com created a customized sourcing service that small businesses and entrepreneurs can use to research and engage sourcing partners located all over the world.
The service, which became widely available in August 2011, allows buyers to create a request for quotation that is submitted with Alibaba.com -- helping them find everything from parts makers to raw ingredients to packaging. Within two days, the buyer will receive a list of up to 10 potential suppliers that fit the specifications. After that, it's up to the small-business owner to evaluate the options and make a decision.
Susie Wang, cofounder of 100 Percent Pure Cosmetics, uses the Alibaba.com sourcing service to help find an buy all natural ingredients for her products -- from farms around the world. As an example, the company buys lingonberries from Sweden, Kona coffee from Hawaii, shea butter from Africa, and vanilla from Madagascar.
Wang, who requires that packaging for her products be made from recycled materials, uses the service both to ensure the quality of her ingredients and to find its packaging. "In cosmetics, there are no U.S. manufacturers who product packaging, which is why we have to source outside the U.S.," she said.
Wang's company is based in San Jose, Calif., where it produces 500 different cosmetics products and employs about 50 people.
Rick Kostick, 100 Percent Pure's cofounder and CEO, said the Alibaba.com service allows him to build a better relationship with his overseas suppliers. He can look at pictures of farms and factories, and use the instant messaging function to communicate directly with partners rather than going through a broker. "This is not just about pricing," Kostick said.
Small businesses don't pay anything to make a request for quotations. Gold-level suppliers suggested by Alibaba.com have already been inspected and certified by the giant online commerce company; U.S. suppliers have to pay a fee of $3,000 for this accreditation, said Alibaba.com spokeswoman Candice Huang. Otherwise, buyers can request an inspection of the factory or supplier they are considering. Until the end of May, Alibaba.com is offering a promotion on the inspection service.
Alibaba.com reports that approximately 1,000 requests for quotations are submitted daily, and the service has handled about 88,000 requests successfully. The top five industries for transactions facilitated by the customized service are machinery, apparel, agriculture, food/beverage and automotive/motorcycle.