First, Alibaba is widely thought of as an e-commerce storefront that sells physical products online.
But actually, Alibaba doesn’t sell anything!
Instead, Alibaba is believed to be the world’s largest catalog of e-commerce sites. You can find the factories where the products are made.
In fact, you should think of Alibaba as a matchmaking service, not an online marketplace.
Overall, most business owners use Alibaba to…
What is Alibaba? What You Can Do on Alibaba
First, Alibaba is widely thought of as an e-commerce storefront that sells physical products online.
But actually, Alibaba doesn’t sell anything!
Instead, Alibaba is believed to be the world’s largest catalog of e-commerce sites. You can find the factories where the products are made.
In fact, you should think of Alibaba as a matchmaking service, not an online marketplace.
Overall, most business owners use Alibaba to…
- Find a factory – You can almost always find a factory to produce your products. And by working with a manufacturer, you can participate in the manufacture, manufacture, and transportation of products.
- Create your own brand – Most Alibaba vendors allow you to place your own brand on any product you produce.
- Create custom designed Products – You can create custom products designed and manufactured yourself. The easiest thing to do is customize the logo. The more complicated part is developing new products based on your product design document.
- Buy Ready-to-Ship products – Products in stock on Alibaba may be relatively low compared to retail prices. The margin difference between the two will shock you.
- Find supporting services – such as shipping services, quality control services, etc.
Is Alibaba Legit? Is It Safe to Buy on Alibaba?
Of course, it is legit.
Alibaba, founded in 1999, will be 22 years old in 2021.
After nearly 22 years of development and improvement, Alibaba has become a relatively mature wholesale website for buyers to purchase.
As for the Safe?
Yes, Alibaba is absolutely safe. The trade assurance services provided by Alibaba can protect the rights and property of buyers and suppliers.
But you may still hear a lot about Alibaba’s fraud online. In fact, it’s not Alibaba that’s cheating. What you should really be careful about is the suppliers selling on Alibaba.
Buying from a Manufacturer or a Trading Company?
Broadly speaking, you will encounter two types of companies on Alibaba:
- Manufacturer
- Trading company (i.e. typical wholesaler)
Manufacturers on Alibaba
Manufacturers are characterized by mass production of the same product to reduce the cost of individual products.
So when manufacturers use Alibaba to promote themselves, they may list a very high minimum order (MOQ). This way of exchanging a huge quantity of products for lower production costs is very beneficial to manufacturers and overseas buyers.
But this is not friendly to some e-commerce owners who run small businesses.
Because purchasers engaged in e-commerce are often difficult to meet the MOQ requirements of manufacturers at the very beginning.
If you buy just a few dozen products and ask the manufacturer to customize the product and packaging for you, you will often get rejected by the manufacturer.
It makes no sense for a manufacturer to hold inventory or run an entire factory to produce ten or twenty products. It’s a lot of work and no money, so they’ll just say no.
Unless you meet their MOQ requirements, it’s hard to convince the manufacturer.
Therefore, if you are looking for customized products on Alibaba, you will need a considerable budget.
Trading companies on Alibaba
A trading company (i.e. typical wholesaler) will buy products from the factory for resale in small quantities.
Their product range is more complex. You can even buy kitchen supplies and fashion dresses from the same trading company.
Obviously, they’re a completely different kind of product.
Can you imagine a manufacturer that can produce kitchen products and fashionable women’s clothes at the same time?
In terms of MOQ, trading companies will also set their own MOQ. But different from manufacturers, the MOQ of trading companies is much lower, usually only 50-100pcs.
Some trading companies have stock, and their MOQ can be as low as 2pcs.
It is easy to print your logo on a stock product, so you can talk to a trading company about printing your logo.
But if you want custom packaging, it depends on quantity. Because the trading company is also cooperating with a packaging factory for the production of packaging. The MOQ of these packaging factories is usually 1000PCS, such as color boxes.
If it is some cheap packaging bags, such as OPP bags, or mailers, the MOQ often begins at 10W +.
5 Tips for Selecting a Reliable Supplier on Alibaba
Whether you work with a manufacturer or a trading company, you can always get the product you need.
But there are thousands of vendors on Alibaba. It is difficult to select high-quality suppliers.
A good supplier can let you avoid fraud and get a very good product. He will be a key factor in your business competition.
There are several ways you can screen good suppliers to avoid fraud.
Professional in their product
You can know the professionalism of the vendor by asking what material they use in their products.
If the vendors can resolve your issues, you can assume they have expertise in the product niche.
Do they attend any fairs?
Ask your vendor if they attend any exhibitions, for example, the Cantor Fair.
A few vendors do not spend a large sum of money on extensive fairs.
Vendors who participate in numerous extensive exhibitions are large as well as standard.
Timely response when communicating on Alibaba
Most of the time, you communicate with the salesman of the vendor using the apps to let them talk to you in no time.
A response on time can incline towards better service and may solve your issues in no time.
The company’s home page
Most sellers post pictures of their exhibitions, certificates, offices, and so on. But make sure to determine if the photos are real or photoshopped.
Vendors appear to be more trustworthy if they post photos of their products.
Is the company profile completed?
Check if these are verified vendors, Trade Assurance, and certified sellers. This is an initial check for Chinese vendors.
How to Purchase on Alibaba Safely and Avoid Fraud
Before contacting a supplier, you should always check these things to make your purchases safe.
Choose Alibaba Golden Suppliers
If a supplier wants to become a gold supplier, he must pass Alibaba’s on-site inspection. The purpose of the on-site inspection is to ensure that the suppliers really have the business qualification of Chinese merchants, supervised by the Chinese government and that the actual operation office can be seen on the inspection site.
This is what Alibaba calls an A&V check. To pass the test, suppliers pay 29,800 RMB, or about $4,500.
The fee for this inspection is in the form of an annual fee, which means that the gold supplier will have to pay 29,800 RMB per year.
If you see a gold supplier that’s been in business for at least three years, there’s a 99.9% chance that you’re not dealing with a scammer.
Because crooks don’t pay a lot of money to cheat you. Most scammers use free accounts.
Adherence to the gold supplier is the gold rule against cheaters.
Choose Verified Suppliers with Blue Badge
On Alibaba, you’ll see some vendors with a blue badge.
This blue mark means that part of the supplier’s qualification has been verified by Alibaba, for example, SGS, TÜV Rheinland, etc.
They check things like below:
- Basic profile
- Company overview
- R&D capabilities
- Production capabilities
- Quality control capabilities
- After-sales service capabilities
Here is a comparison of gold and certified suppliers:
Choose Alibaba Trade Assurance Service
“Trade Assurance” means the supplier supports this free service that protects your orders from payment to delivery. Suppose either Product Quality or Ship Date varies from what you and the supplier had agreed to in the Trade Assurance online order. In that case, Alibaba will help you reach a satisfactory outcome, including getting your money back.
You should try to choose a provider that supports credit insurance services. You should also pay attention to the supplier’s Trade Assurance Limit.
If you compare this amount to a credit card, you’ll get a better idea.
Just like credit card companies give you credit limits, the higher your credit limit, the better your credit rating.
If a supplier’s credit limit is very high, it means that the supplier is behaving very well with Alibaba. So the supplier is definitely not a cheat company.
Check Alibaba Ratings & Reviews
The review and rating of a supplier can indicate whether the supplier is trustworthy.
Its ratings show how other buyers rate the seller, how they respond to buyers, and how many trades are made for the products. It will give you an index of suppliers, such as stars. Five-star suppliers must be ideal partners.
Although Alibaba offers a rating service, it is not a retail platform. You can’t expect Alibaba to offer you tens of thousands of reviews like Amazon, complete with photos and videos were taken by buyers.
Check Supplier Index on Alibaba
Supplier Online Performance Index (SOPI) is a data-driven index used to show suppliers’ business performance on Alibaba.com. Their performance was measured in terms of presentation quality, product buzz, transaction volume, and service quality, with the lowest score of the above four as SOPI.
In addition, SOPI can be divided into six levels (0-5), with five of the highest levels. Level 0 suppliers are represented by a gray diamond icon, while the remaining suppliers have a corresponding orange diamond indicator.
SOPI is actually an upgrade of metrics such as Transaction History to more accurately measure supplier performance. Although not all orders are completed online, it shows that suppliers with high SOPI are more mature suppliers.
Check Order Transactions over the Last 6 Months
Alibaba allows buyers to view sellers’ total orders and the total value of transactions over the last six months.
Using this data, you can see if the vendor is a fraud. The more order data accumulated over the last six months, the better the supplier is doing in this niche market.
5 Risks When Ordering from Alibaba
Get your payment but don’t ship your products
Because of Alibaba’s Trade assurance service, even if the seller does not deliver goods, you can apply for a full refund.
At present, this kind of non-delivery situation has rarely happened on Alibaba.
Usually, it is more common that the seller does not deliver goods on time. For example, the seller promised to deliver the goods within seven days, but on the eighth day, you still haven’t seen the delivery notice.
In this case, you can also apply for a refund through Alibaba.
Price raises before placing an order
There is no absolute lowest price in the market, only relative lower price. When you find a vendor offering a particularly low price, watch out!
Chances are, by the time you’re ready to place your order, the supplier will find some excuse to tell you the price has gone up.
Lower the product price, while adding the profits on shipping fees
Some suppliers will transfer the profit of the product to the freight. You might get an illusion.
You are happy and think you’ve found the lowest price on your product.
But add in shipping costs, and overall, you’re not really getting a discount. It is possible that the supplier you choose may not be the most competitive in the final price.
Bulk order is not perfect as the sample
In many cases, the sample is always perfect. Because suppliers want you to place orders from them. They will be very serious when producing samples. When you receive the sample, you will be very satisfied with their product.
But when it comes to actual production, your order will be made in bulk. So there will be defective products in it.
In the face of large quantities of products, suppliers will not help you detect defective products one by one.
So a lot of people feel that way: Bulk order is not perfect as the sample.
Sell fake or infringement products
There are many vendors on Alibaba who sell imported items at an affordable rate. For example, DJI Drone, electronic appliances, and mobile phones.
Such types of items contain infringement problems. They are hard to go through customs as well.
Kindly do not rely on luck and try to import these products to your country. You will get in great trouble during custom clearance.
Case Study on Alibaba Scams
Fake Branded Products
Does Alibaba sell fake products? The answer is no, but some Scammer will do.
They would then sell such fake products on Alibaba, AliExpress, eBay at a relatively low price.
For example, when you search “GG” instead of GUCCI, you will see many products under this keyword.
A “Gucci” belt sold at $10. And sometimes, they would make a subtle change on the products, like changing the letter, making GUCCI into CUCCI, to fool buyers.
Products Received are not Products Ordered
This kind of scam is most likely to happen.
Some suppliers will offer you a relatively low price than other suppliers to get your order.
However, when you receive your order, you will find that the products you received are not what you ordered. Because suppliers need to sacrifice quality for such low prices.
Therefore, before you place an order of a large amount, place a sample order to test if the supplier is reliable.
Charge Extra Fees
After you have placed the order at a rather low price, some suppliers will charge you extra fees, like customs fees, service fees,s and so on.
As the order is ongoing, you have to pay such fees to get your products.
In this way, even if you got the products at a favorable price, other extra fees will still swallow your profits.
Therefore, don’t get tricked by the lower price. To avoid such a situation, you need to make all the costs clear before you place the order.
Trick You on Sample Orders
Usually, most suppliers are willing to send samples to buyers. But some suppliers will trick you on sample orders.
Do not choose the order type as a sample, unless it is a sample order.
Sometimes, if your order value is under $500 and the supplier chooses to make the order as a sample order, then you need to be careful about the products received.
The reason is that samples are allowed to be flawed, and you can’t complain and dispute on the platform.
Some suppliers will trick you in this way if you are a fresher. In short, to avoid such tricks, don’t choose the Sample Order option.
How to Pay to Alibaba Safely?
After you confirm the order with the supplier, the supplier will create a credit insurance order for you and send a payment link to your email.
By clicking the payment link in the email, you will be directed to Alibaba’s payment interface.
You can see that Alibaba offers four payment methods as shown in the picture
These payment methods are all supported by Alibaba.
But you can choose one or the other according to your situation.
Credit Card (Security：4 Stars)
Paying Alibaba bills with a credit card is the most convenient and secure. If you have any dissatisfaction with your product, you may protest payment to your bank.
This way you can protect your own interests.
But before choosing this method of payment, you need to make sure that your credit card limit is sufficient to cover your Purchase bill on Alibaba.
T/T, AKA Wire Transfer (Security: 2 Stars)
Wire transfer is the standard method for payments to factories in China. Wire transfer does cost some money, but it is cheaper than the other payments.
Most Chinese factories take wire transfers as payments. Because it allows free transactions to foreign countries.
Paypal (Security: 4 Stars)
Not officially supported by Alibaba, but PayPal still provides a safer payment gateway for the buyer.
Some suppliers do accept PayPal payments outside of Alibaba and you can often ask them to do so.
When you send money via PayPal “Goods and services” option, you come under PayPal’s buyer protection program which is very secure.
If there are any problems with your order or ordered products then PayPal ensures that you get your money back as smoothly and quickly as possible.
Western Union (Security: 1 Stars)
Western Union was originally used to send money across borders between relatives.
This has to be the least secure method of payment for any transaction anywhere in the world.
Never use Western Union because you will never get your money back. Even if you trust suppliers, you should ask them to use some other payment method that offers at least some buyer protection.
Western Union should only be used if the provider is part of your family, and even then we would recommend other PayPal-like services.
Western Union is great for sending money to your loved ones, but it’s not good for business.
What is Alibaba Trade Assurance?
There seems to be a lot of confusion with Alibaba Trade Assurance…
As mentioned earlier, Trade Assurance is the safest way to buy products from Alibaba suppliers and it’s 100% free.
This means your order will be protected until you receive the product, and you won’t have to pay extra for this service. (There is actually a fee for using the credit insurance service, but Alibaba rules that the buyer pays for it, not you.)
Therefore, if for any reason you place an order and you never receive the product, Alibaba assumes full responsibility. After that, they will handle disputes with suppliers for you.
No matter how Alibaba handles disputes with suppliers, the service will always protect your interests.
Alibaba wants to create an easy and safe purchasing experience for customers. That’s why Alibaba will guarantee you a refund if your order does not meet the exact requirements agreed to by you and your supplier.
In this way, Alibaba can make customers trust their platform more.