Are you looking to buy products through Alibaba to sell online? Worried about being scammed?
I admit, when I first dabbled with sourcing goods via Alibaba back in 2010, I was scammed out of $75 and vowed never to use the site again.
But I came to realise that I’d made foolish mistakes. So I returned to Alibaba in 2014 with an open mind, and have since sourced tens of thousands of products. In fact, I now earn a living by selling those products online via the Amazon FBA program.
In this article I detail everything I’ve ever learnt about importing goods through Alibaba. I provide advice for verifying the authenticity of sellers, striking a good deal, and importantly — protecting your investment.
Is Alibaba Safe?
If you only listen to people that’ve had negative experiences using Alibaba you’ll be lead to believe that the site is rife with crooks & scammers.
Sure, there are some “bad eggs” operating on Alibaba — and everywhere else online for that matter — that you have to avoid. But the fact is Alibaba is the world’s largest e-commerce platform. It’s one of largest Internet companies, one of the biggest venture capital firms, as well as one of the biggest investment corporations in the world. It hasn’t got there through scamming small businesses.
Alibaba is undoubtedly a highly powerful platform that’ll enable you to bulk source products of all kinds from around the globe, at prices low enough to generate a profit at the retail end. You just need to take care.
I Was Scammed Once (And Never Again)
It’s ironic that I preach the merits in using Alibaba — yet I was the victim of a scam back in 2010. Let me explain.
I was trying to source electronic goods. At the time, I believed there was an opportunity to buy hard drives in bulk, and re-sell them via eBay. In hindsight, the whole idea was flawed. But more importantly, I made two fatal mistakes in the buying process.
- An agreement was made outside of Alibaba. The negotiations for the purchase were made over e-mail, and therefore no protection was provided.
- The payment was made outside of Alibaba. I was provided with payment details that did not correspond to an Alibaba account.
It makes me cringe whenever I think about this whole situation. It’s probably the silliest $75 I’ve ever wasted in my life. Thankfully it wasn’t more.
Why I Fell For It
My colleague had been in discussion with a factory over a sample of an item we wanted to purchase — an external hard drive.
A ‘factory representative’ contacted my colleague via email outside of Alibaba… and that’s where the scam started.
This ‘representative’ appeared to have full knowledge of the products we’d been enquiring about, as well as the prices we’d negotiated.
While I felt uneasy, I reassured myself that Alibaba would protect our purchase. I reasoned that I just needed to make a leap of faith. So I processed the payment without closer inspection.
Then, as many days went by with no evidence of the transaction reflected on our Alibaba account, and no response from the so-called “factory” over email, I became suspicious. Was I scammed?
My suspicions were confirmed when the real factory representative on Alibaba claimed to have no knowledge of our conversation over email, or any transaction that had taken place.
I tried to cancel the payment — but it was too late. I didn’t get my money back.
To be honest, I never got to the bottom of how our enquiries had been leaked to an outside source. But regardless, this entire situation — as well as many other similar scams — could have been prevented by following some simple guidelines. I blame myself.
So now I’m going to explain how to use Alibaba safely and avoid scammers.
Step 1: Sign Up To Alibaba
Before we begin, you need to sign up for a free account on Alibaba. Afterwards, complete your profile and fill out all of your company details accurately.
Once your business is successfully verified by Alibaba, it will boost your credentials on the platform. This significantly increases your chances of receiving responses from product enquiries you make. The following icon displays on your profile.
Step 2: Find A Reputable Supplier
Now that you’ve setup an Alibaba account you’ll need to turn your attention to what kind of goods you’d like to source.
Many of you will be looking to sell your products via the Amazon FBA program. That’s great, as I have tons of advice for selecting suitable products to sell on Amazon:
- What Kinds of Products Are Best For Amazon FBA?
- Should I Sell Private Label or Custom Products?
- How To Calculate The Amazon FBA Fees For An Item
If you’re clear on what you want, use the Alibaba search bar to search for products to source.
If your requirements are highly specific, then search for products with similar attributes (materials, design features, production skills) as this will be a good starting point.
But no matter what products you want to source, you need to have an idea of how reliable a supplier is before you commit to buy anything. Here’s what to look for.
Trade Assurance Status
Alibaba themselves recommend that buyers trade only with suppliers offering Trade Assurance — this is your lifeline should things go awry. So always look out for the following symbol in product listings.
Alibaba Trade Assurance is a buyer protection service which adds an extra layer of security when paying suppliers. Alibaba acts as a middleman between the buyer and the seller, where the buyer transfers funds to a designated Alibaba bank account. Alibaba only releases the funds once the goods have passed a quality check and been shipped on or before the set deadline.
Trade Assurance essentially eliminates the risk of sending money to an unknown account and/or not receiving any goods in return.
Gold Supplier Rating
Although not absolutely essential, aim to find a Gold Supplier displaying the following symbol next to their company name in product search results.
A Gold Supplier is a paid premium membership for companies on Alibaba. Members are granted with the ability to maximise product exposure, thereby increasing return-on-investment. The product listing states the number of years the supplier has been a member.
The Gold Supplier scheme does not guarantee a good service by any means. But it signals that a supplier is serious and committed to transacting through Alibaba. In fact, every Alibaba seller I’ve ever dealt with has been a Gold Supplier.
There’s one other icon you can look out for in product search results — Verified Suppliers. This is a levelled-up version of a Gold Supplier.
A Verified Supplier has been assessed, certified and/or inspected by a third party via online or offline means. It guarantees certain aspects of its company profile, management system, production capabilities, and product and process controls are as advertised.
I don’t specifically look out for Verified Suppliers — but it’s a nice bonus, nonetheless.
Lastly, I like to glance over a supplier’s Alibaba profile to check for incomplete or unclear information.
It’s difficult to verify the address of factories when the native name is so vastly different to the English translation. However, I’m always filled with confidence whenever I can see real images from the factory floor itself.
It’s not essential to check company profiles, but for peace of mind I recommend trying to get a feel for the company you’re dealing with before transacting with them.
Step 3: Make An Agreement
As a buyer you’ll need to get into the habit of ignoring the prices and minimum order quantities (MOQs) you see listed on Alibaba search results — everything’s negotiable. Factories tend to quote custom prices depending on buyers’ specific requirements.
Those new to Alibaba often overlook the fact that suppliers may not need their business. It’s common for factories to focus on bigger clients and to neglect those they perceive as “small fry”.
So you’ve got to let suppliers know that you’re a serious buyer, and valuable to them. You need to grab their attention from the outset.
I like to kick the conversation off with an opening message like:
Hello, I’m <Your Name> the purchasing manager of <Your Company Name>.
My company specialises in developing <Your Niche> products, and deals in large volumes. Some of my successful brands include <Brand Name and Website Link>.
I’m interested in adding a <Product Description> like yours to my product range, and anticipate many repeat purchases.
I’d like to purchase a customised sample from you to verify the quality of your product. Please could you let me know:
– What is your MOQ?
– What is your best unit price for the product?
– How much does it cost for a customised sample?
– How much is delivery to the UK? What is the most economical option?
– Will import duty be paid upfront, or will I be billed after receiving my goods?
At this stage I prefer not to bombard a supplier with too many questions. Ultimately, if their prices are too high then you won’t be carrying on the discussion with them anyway. So keep it simple. You should expect a response within a working day.
You’ll very quickly work out whether or not the factory is capable of producing what you want. It’s surprising how many times I’ve been told “we can’t make this” without any further explanation. If that happens to you, just enquire elsewhere.
At this point it’s important to remember that you’re only protected by what’s agreed in Alibaba correspondence. So stay on Alibaba for all main discussions about your product.
Talk Product Specifics
It’s important not to give away any valuable intellectual property, design work or product ideas to several factories. This increases the risk of your idea being copied and sold to other buyers.
Only once you’re confident in the capability of a supplier should you begin to discuss your specific plans for the product, what features you want, and your artwork/design files.
Ask relevant questions, such as:
- Does the item include any packaging as standard?
- Can I customise the packaging?
- How much does that cost?
- Can I customise the packaging?
- Do you have all the necessary certifications for this product?
- Which countries does it apply to?
- Are there any patents or trademarks attached to this product or any of its parts?
- What is the standard lead time for an order of X units to be manufactured and delivered to your destination?
- How do you package the items to ensure they aren’t damaged in transit?
- How long will it take for a sample to be made up?
- What are the setup charges for the sample?
Getting the sample made up should be your first major objective. So let’s talk about that in more detail.
Get A Sample Made
It’s vital that you obtain a sample of your product before placing an order with a supplier.
You should always expect to pay a substantial amount for a product sample. A sample of an item worth $30 at the retail end can cost anything upwards from $80, depending on how intricate the item is. Bare in mind that suppliers need to protect themselves against retail customers trying to obtain cheap items for personal use.
It’s common to agree that the sample costs are subtracted from your first order, or once you’ve purchased a certain number of units. Many suppliers are willing to accept this as part of the deal. Like with everything on Alibaba: if you don’t ask, you don’t get.
Always make payment for samples over Alibaba, as you would with any other kind of purchase on the site (which I’ll get onto later). Some suppliers will allow you to pay using PayPal — which is the recommended option for samples, as it comes with its own buyer protection outside of Alibaba.
Once you receive the sample, check it over thoroughly. Are you happy with the end product? You may need to have a second, or even third, sample of your product made up if you continue to significantly amend your requirements. It can be a time consuming and expensive process — so try to provide clear, concise instructions from the outset.
Negotiate Payment Terms
During the course of your discussion a with supplier, you should clarify the “payment terms” for your order.
Aim for 30% payment up front and 70% on completion — once photographic/video evidence proves the products are ready for shipping. This is a standard payment structure for many Alibaba transactions.
To strike this deal, simply say to your supplier “for my protection, I’d like the terms to be 30% upfront, and 70% on completion. This is what I feel comfortable with. Is that OK?”.
Decide On A Currency
Confirm the currency you’re going to pay in. Most suppliers assume USD, but often have a EUR and GBP accounts you can pay to as well.
I often pay for goods in USD, converting from GBP using Transferwise to avoid bank transaction fees. But on some occasions I’ve simply paid in GBP straight from my account. It all depends on what works out cheapest.
Take the time to check what’s most economical for you.
Confirm What’s Been Agreed
During your negotiations you may have been contacted by suppliers outside of Alibaba, or asked to provide more information over email, WhatsApp or Skype.
(To be honest, the messenger in Alibaba is pretty basic and has several limitations for attaching and sending files — sometimes makes sense to talk outside of it).
But you have to cover yourself.
Everything that you’ve agreed in or out of Alibaba needs to be clearly stated in writing in the Alibaba messenger before any payment is made. With evidence of your agreement, Trade Assurance is watertight.
So get everything in writing on Alibaba no matter what — even if it feels like you’re being awkward.
Step 4. Make Payment
When you’re making the payment for an order you have to take a little care. Don’t rush it!
Check All Details
Open up the ‘Orders’ section of your account to find your order. If it’s not there, ask the supplier to create it.
Click ‘View More’ in the top right hand corner of the order. This brings up more information about the order you’re placing. Check the following:
- Supplier: does the supplier name and address correspond to who you’ve been negotiating with?
- Buyer: is your name and address correctly stated?
- Product name, image & description: does the product in the order correspond to what you’ve been discussing?
- Units & pricing: is the number of units and price as per your negotiations?
- Shipping terms: do you agree to the cost of the shipping, method and delivery time?
- Total order amount: is the total order amount precisely what you agreed with the supplier?
- Trade Assurance: is Trade Assurance stated as part of the deal? (important)
Now click on ‘View Contract’ to ensure that nothing in the document contradicts your order summary and negotiations. If you have any issue with any details, ask the supplier to make an amendment before proceeding.
Some suppliers are pretty sloppy on the trade admin side. On more than one occasion I’ve had to request that my order was updated to more accurately describe my products.
Pay A Designated Account
Now, finally, you’re ready to make payment. Simply click on the orange button in your order to display the available payment options for the order.
Some payment methods will accept your transfer right there and then without leaving the page, while others require that you pay via a bank transfer using your online banking. Both options are perfectly safe — but keep in mind that in the latter case your payment will not be reflected in your Alibaba account until the money as been received by the supplier.
So make the payment, you’re done!
Rest assured that payments made via Trade Assurance go into a designated Alibaba account, meaning that you’re not simply paying a supplier without any backup in the event of a dispute.
Alibaba’s Unorthodox Etiquette
During your Alibaba negotiations you’ll encounter some unusual business practices. At first it can be alarming — but my advice is to forget what you deem as “professional”, and to embrace the Alibaba etiquette (while following all precautions, of course).
You’ll rarely engage with native English speakers over Alibaba. So misspellings, and miscommunications are inevitable. Always use simple language: you’re not trying to look clever.
However, at times you might find it a little off-putting when a supplier uses colloquial teenage-style-texting language, such as replacing ‘you’ with ‘u’, or “why” for “Y”. But that’s not always the sign of a bad supplier, believe it or not.
In my experience, the best English speakers on Alibaba are often employed in a secretarial role, and do not fully understand all technical aspects from the factory floor.
It’s about striking a balance — where you can easily communicate with a supplier, but also trust their ability to understand your requirements and deliver on the specification you provide.
“Out Of The Blue” Contact
It’s not unusual for Alibaba suppliers to contact you over several lines of communication.
I’m regularly contacted via WhatsApp, email, LinkedIn — even Facebook or Instagram! From time to time, I get friend requests from factory workers.
At first this felt very odd, but I’ve gotten used to it. Nowadays I usually roll with it and simply divert all conversations about my products back onto Alibaba.
Lack of Transparency
I’ve touched on transparency in this post already: prices and minimum order quantities listed on Alibaba search results aren’t accurate. This doesn’t mean suppliers are scammers. It just means that you’ve got to get used to negotiating your requirements.
You also need to make a habit of discussing the unit price separately from delivery charges. Many suppliers ‘lower’ their unit price for you, and then over-charge the shipping afterwards in order to obtain more money for the units. In the past I’ve paid $500 for delivery, only to find out that another supplier charged me $350 for the same weight/size.
And that’s just about everything you need to know to safely place your first order with an Alibaba supplier. Hopefully it’ll help you in sourcing products to sell via your online shop, or through the Amazon FBA program.
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