Alibaba Review & Tutorial 2018
Alibaba is a name that you’d all be well acquainted with. What started off as a B2B business portal as early as 1999, has today become one of the biggest names in e-commerce, retail and other technologies.
This popular online directory that houses global manufacturers and suppliers is the leading business-to-business (B2B) and Customer to Customer (C2C) online marketplace for importing products/materials from China. Thousands, if not more, manufacturers and trading companies offer products at wholesale rates on the platform offering global businesses with a unique opportunity that wasn’t available earlier.
As expected, when you have a marketplace with millions of products and thousands of sellers, it does have a few pitfalls that newer buyers need to be aware of.
This is a complete guide to help you navigate through the complex and bustling online portal that Alibaba is. Irrespective of whether this is your first outing into the world of Chinese imports or whether you are looking for a reliable guide to help you maximize the potential of the portal, this guide will help you immensely in your journey.
Disclaimer：All the ratings & reviews have been made from personal perspective This article only represents the views of the author and is not endorsed by any company and/or service provider mentioned in this text.
As simple as the concept may seem, Alibaba is incredibly effective. The very fact that there are no limitations on the categories of products that can be listed, the sky is the limit here when it comes to sourcing products. If it can be found under the sun, Alibaba is the place to get it. Sourcing is made simpler by a beginner-friendly user interface that allows one to drop a request for any product which allows suppliers to bid with competitive quotes.
Most of the suppliers on Alibaba are fluent in Chinese and Mandarin. However, when it comes to English, they can only manage basic communications.
For a portal this size, Alibaba is a tad slow in communications and support. The customer service reps will respond to your queries but it is rarely swift. It does take a little time. Having said that, resolutions are always met and the portal has a good customer service rating among users.
There’s Trade Assurance service on the platform. This protects the buyers from fraudsters. But however, it’s not 100% as safe as you think.
Alibaba has a trade assurance service which is aimed to protect buyers from scam artists and fly by night fraudsters. However, despite the best attempts, it still isn’t foolproof. When dealing with a new seller on Alibaba, you must always cross your Ts and dot your Is.
The Pros and Cons of Alibaba
Having used Alibaba extensively over the past decade, we have had our hits and misses. We have seen deals fall through, we have seen sellers disappear, we have seen low quality products being shipped but more importantly, we have made money out of it.
Here are what we feel are some of the pros and cons of using Alibaba.
Having spoken about the pros and cons, it brings us to the biggest conundrum that buyers face.
Is Alibaba Safe? Is it Legit?
For a multitude of reasons, the Chinese marketplace has earned a somewhat dubious reputation among international businessmen.
For this reason, a lot of new businesses who discover Alibaba are wary of it and think of it is a scam. After all, a portal that offers ridiculously low prices and has poorly written English grammar don’t throw up a pretty picture.
In this section, we will speak about the safety and the authenticity of the Alibaba marketplace.
But first, a short and quick answer to the question “Is Alibaba Safe?” is Yes! Alibaba is completely safe.
It needs to be understood that Alibaba is a marketplace that hosts hundreds of thousands of different sellers and companies. Each of these sellers have different quality of products on offer. Thus, a bad experience with a seller does not represent the all the sellers on the platform.
Here are some of the things that you need to be aware of while dealing with Alibaba sellers:
Purchasing Branded Products: If the product you are planning to import has a logo on it or if it is an intellectual property that’s owned by someone else, ensure you ask your supplier to tender their letter of authorization from the brand owner. This ensures that the seller is not guilty of copyright infringement and protects you from a potential lawsuit in future.
You receive an inferior quality product: Occasionally, you might come across a supplier who offers products at extremely low rates and then promises to ship them using their own shipping company. This is a red flag to watch out for and you might end up with crappy products. Instead, use FOB shipping terms because sellers need to declare the goods and also pay charges to the Chinese government. If you are in doubt, use Alibaba’s Trade Assurance to shop.
There is disparity in the quality of the sample and that of the actual product: As much as we hate this, it does happen from time to time and it is extremely disappointing. To avoid such scenarios, always do your due diligence before shopping. Check the seller’s ratings. There are third party services which can verify the quality of the product before it is shipped from their factory.
Supplier Asking You To Pay Into A Personal Bank Account: If a supplier asks you to pay to his personal account instead of Alibaba Trade Assurance, it need not necessarily be a scam. But it is best avoided because you will not have buyer protection in case the seller disappears after receiving the payment or if the quality is poor. Always avoid risky financial transactions on Alibaba.
The supplier refuses to send samples: One of the rule of thumbs while shopping on Alibaba is to ask for a sample. If the supplier demands that you pay a small shipping fee for a sample, its only reasonable. However, if a supplier refuses outright to send you a sample, then look for another seller. Refusal to send a sample can be considered a red flag.
Safe shopping on Alibaba and Scam Protection
If you do your due diligence, you can easily spot the fraudsters and a potential scam. Here are some guidelines to help you shop safe on Alibaba.
Gold Suppliers: Some sellers have a ‘Gold Supplier’ badge against their name on the website. This is a paid service that Alibaba offers and buyers who choose from buy from Gold Sellers do get some amount of protection from certain types of scams. However, please be aware that a ‘Gold Supplier’ rating is not an indication of a seller’s trustworthiness. To be doubly sure, always buy from Sellers who have been doing business for a certain amount of time on the website. For example a ‘Gold Supplier’ with a three to four year history will be a much better choice than a new ‘Gold Supplier’. This is indicated in numbers next to the Gold Supplier badge.
On-Site Verification: Alibaba offers an on-site verification service where the manufacturing facility is verified by Alibaba. This helps weed out potential scamsters. Look for the on-site verified suppliers who have a small blue and yellow icon next to their business name. Since 2011, Alibaba has made it mandatory for all Chinese suppliers to undergo on-site verification.
Assessment of Suppliers: Two third party verification and assessment companies, (Bureau Veritas and TUV Rheinland) offer supplier assessment on Alibaba. This allows you to buy from suppliers whose production capabilities, trade capabilities and finances have been verified and recorded on video. That’s an added measure to deal with verified, licensed and legal suppliers on Alibaba.
Trade Assurance: Trade Assurance is one of the most widely used services on Alibaba and one that offers you the added assurance that your funds will be held in escrow until you confirm receipt of the products in acceptable quality. However, it does have an inherent flaw. The final decision rests with Alibaba. In simple terms, if you refuse to accept that the product quality is good enough but Alibaba decides otherwise, your money can still be handed over to the supplier. That does make it sound a little harsh and it rarely happens that way without a detailed investigation and talks with both parties. But, this is an issue and it must be mentioned here.
Certification: Certain countries, like the UK for example, requires certification of the products when it is imported from Alibaba. Ask your seller for due certificates, licenses and other necessary documentation at the time of purchase.
Live Factory Video: Much like third party verification or supplier assessment, some suppliers also offer Live Factory video which allows buyers to gain a fair idea about the manufacturing conditions in the factory.
Alibaba from a buyer's perspective
The user interface is designed for easy use. You can straight away start browsing through the various categories or use product description keywords to search for the products that you are looking for. For example, if you search for LED lights in the search bar on the top of the website homepage, you will get thousands of suppliers for LED lights.
When you get the listings for a particular product, keep an eye on the following details to understand the pricing and other dynamics associated with it.
Unit Price: One of the first things that you need to watch out for is the unit price. Sometimes, it is denoted in FOB which stands for ‘Free on Board’ or ‘Freight on Board’. FOB is typically used for sea transportation or inland waterway transportation. It indicates that the seller will deliver the product to the ship after which the cost of transportation and insurance is to be borne by the buyer. So, if you find a product for $3-5 USD FOB, it may not indicate the final price of the product as additional charges may apply.
Minimum Order Quantity (MOQ): Being a wholesale seller’s portal, most sellers will not accept an order if it does not meet a minimum quantity. This is denoted as MOQ next to the product listing. However, most sellers are willing to negotiate and you must be aware of the MOQ to be able to negotiate a good deal.
Alibaba From a Seller's perspective
If you are a manufacturer looking to tap into the tremendous potential that the international market has on offer, then you need to register on Alibaba.
The best part is that you can register as a seller for free. But that’s like a base membership that allows you to test the waters. Make no mistake, the market is fiercely competitive and add-on services like ‘Gold Supplier’ ‘Trade Assessment’ and ‘Third party assessment’ allows you to gain credentials that helps you immensely when dealing with buyers. Not to mention that it (Gold Supplier) gives you access to a whole new set of features and tools that improve your exposure and visibility. Services like automatically matching your products with buyer requirements allows you to send quotes to any buyer who’s looking for products that you offer.
Creating your own Company Page at Alibaba
If you have ever sold on eBay, you’d know the difference between listing products and having your own store to sell them. The latter, makes a huge difference in the way you do business and the sales that you are eventually able to generate.
Similarly, you can make your own company page on Alibaba. Here are a few steps to help you get started.
- Your product catalog must include each and every product that you offer. The more it is the better exposure you get with Alibaba search. However, ensure that there are no duplicates.
- Make a detailed company profile that lists out your past experience, your current capabilities, expertise, USP, plans for expansion and also the details about your manufacturing facility. If you are unable to create a good quality company profile yourself, hire a freelancer or an experienced writer to help you. You can even translate it into multiple languages to help your buyers from different parts of the world.
- Your company page is the perfect place to showcase additional certificates or test reports that help instil confidence in your buyers about your product quality. For example, there are only a handful of companies on Alibaba that are EU certified for production standards. If you are one of them, it automatically gives you a huge advantage over your competition.
How to Buy on Alibaba
Alibaba makes it incredibly easy for anybody to find the products they need. In the below mentioned guide, I have used the example of ‘leather jackets’ and ‘Tableware’. However, please be informed that I have no relationship whatsoever with any of the companies that turn up when you search for these terms.
The right keywords and related keyword phrases: The entire premise of search engines is built around keywords. If you know the right keywords to search for, you will be able to narrow down on the precise product. On the contrary, if you are searching with the wrong keywords, you will be wasting crucial time and effort. Let’s say you search for ‘leather jackets’ on Alibaba, the webpage that loads will reveal all the products that are related to ‘leather jackets’ on Alibaba. You will have bomber jackets, faux leather jackets, baseball jackets, biker jackets and even baseball jackets made from different types of leather.
Now you can narrow down further by selecting the exact type of jacket you need in the material of your choosing. This helps you to further break down the keyword selection and use precise keywords. When you use the search box in Alibaba, it will automatically show you keywords that are closely related to the search term that you are using.
Decide the Supplier Types to Work With: Your search results page for ‘Leather jackets’ will show a whole array icons next to the supplier name and information. There will be the number of transactions done by the seller, the transaction level indicated by a diamond icon, the trade assurance icon, the response rate of the seller and last but not the least, the Gold Supplier icon.
Most notably, there are three different types of sellers that you can choose to do business with.
- Gold Supplier indicates any legitimate company that has paid an annual fee of 2900 Yuan and registered as a Gold Supplier. Keep an eye out for the transaction history or the number of years that the seller has been a Gold Supplier. However, Gold Suppliers can also be traders or a combination of traders and manufacturers. They need not be manufacturers with a factory.
- An ‘Assessed Supplier’ on the other hand indicates that the supplier has a factory that has been assessed by Alibaba. Assessed suppliers have to pay triple the price that Gold Suppliers do and is one of the most trusted badges on Alibaba.
- You can also choose to do business with suppliers that have the trade assurance logo next to their name.
How to know where your product was manufactured
A lot of people don’t attribute too much importance to the destination where the product was manufactured. However, identifying and selecting the right manufacturing area helps you immensely in more ways than one.
However, with names that sound and spell similar, trying to identify the manufacturing location in China can be tricky. This section gives you some insight into the basic geographical structure of China along with helping you understand the top manufacturing and export hubs in the country.
This article covers the ten main Chinese export product categories that are fast gaining repute around the world along with the manufacturing locations for each one.
How to use the company’s name as keyword phrases
While registering my company Sourcingbro in Shenzhen, I was offered 3 different company titles to choose from.
- Shenzhen Sourcingbro Technology Co. Ltd.
- Sourcingbro Shenzhen Technology Co. Ltd.
- Sourcingbro Technology Shenzhen Co., Ltd.
See how similar most of them seem? Most of the Chinese suppliers that you come across on Alibaba will use the location in the first few characters of their company name. So, if you are looking for Automobile Accessories which is mainly manufactured in ‘Zhejiang’, then you can search for Zhejiang + auto parts or any similar keyword. Another example would be Shenzhen + glasses or Shenzen + electronics.
Now let’s choose an example of “tableware” on Alibaba.
After searching for ‘Tableware’ and doing your research you would know the biggest manufacturing area of hardware and plastic products are located in Jieyang, Chaozhou, Shantou ,Guangdong Provinces.
Now, let’s set a filter for suppliers for tableware. If you apply this, you get 2230 suppliers in total.
Now use the area name with the keyword, for example “Jieyang tableware”, and the list narrows down to 105 suppliers and all suppliers are from Jieyang city.
See how easy it is to narrow down on the manufacturing location if you know how to use the search tool and keywords?
Search for“Chaozhou tableware” and you get 203 suppliers
Search for Shantou Tableware” and you get 265 suppliers
In all, we got 105+203+265=573 suppliers in one area. That’s 1/4 amount of suppliers on Alibaba.
Contacting your suppliers the right way
Once you find, say fifty suppliers for your product, you’d want to speak to them all to find the best quotes, right? However, that’s not practical for various reasons. You’d have to spend hours messaging each supplier one by one.
If you check the top right corner of the seller listings, you can find a tiny compare button that allows you to select up to 20 sellers and send them enquiries together.
Once you select the twenty suppliers, Alibaba redirects you to an Inquiry page where all details of the sellers are listed in one table. Just add your message, queries and potential order details to the white message box and hit send.
All of the 20 suppliers that you selected will get the message at the same time.
Instead, if you wish to contact just one or two suppliers, use the Orange ‘Contact Supplier’ button or the Blue ‘Chat Now’ button next to it, which will only be active if the seller is online.
Making Payments on Alibaba
There are multiple ways to make a payment for an order on Alibaba. The commonest ones are as below:
- Secure Payment (also known as Escrow on Alibaba): We’ll start with the safest of the lot. When you use Escrow, your funds are held safe by a third party until you receive the products in satisfactory condition. When you are starting off or making the first deal with a seller, strictly use Escrow and nothing else because of the protection it offers to you as a first time buyer.
- PayPal: In terms of ease of use and buyer protection, PayPal rates right up along with Escrow. However, it isn’t the most popular payment mode by sellers because of the difficulties they encounter while withdrawing their funds. Not to mention that the conversion rates for PayPal withdrawals are pathetic and there are high tax rates and a high potential for charge backs.
- Letter of Credit: A letter of credit is a guaranteeing document issued by banks that assures sellers of the ability of the buyer to pay for the goods in due time. Due to the multiple cumbersome procedures involved with it, a letter of credit is only used as a last resort by buyers and sellers. Most sellers wouldn’t agree to it unless the order amount exceeds $20000.
- Western Union: You should only use Western Union if you trust the seller and have made multiple business deals with them earlier. As you would be aware, there is no buyer protection in Western Union. If you receive a low quality product or even worse, if you don’t receive your product at all, you lose your money. Period.
- Upfront Bank Transfer or TT: Once again, zero buyer protection makes upfront bank transfer the riskiest mode of payment on Alibaba.
In your best interests, always ask the seller to opt for payment methods that offer some amount of buyer protection.
Inspection and Logistics
Inspection: Alibaba extends a whole gamut of services that allow you to ensure that the products you buy meet your expectations when it comes to quality. One of these services is called the ‘Inspection Service’
You can get your products inspected by professional third-party independent inspectors who will visit the manufacturing company anywhere in China. They will then provide detailed reports that include photos and videos to prove that the goods that were produced and shipped, meet your quality standards.
Alibaba.com’s Inspection Service gives you access to hundreds of verified inspectors. You can find these inspectors by following these steps:
- Find inspectors related to the supplier’s location
- Select the appropriate type of inspection that aligns with your price and quality expectations (e.g. factory Audit, Container Loading Check, Inspection during production and so on)
- Check inspection ratings from previous Alibaba buyers as well as their completed transactions.
- Order your inspection service. Pay using Alibaba’s Secure Payment Service.
The inspector that you’ve chosen will visit your supplier, create a report in line with your request and then upload the report to Alibaba.com for your review. Your payment will then be released to the inspector after you confirm that you’ve received the report.
For a new business transaction or for a large order, an inspection service is one of the surest ways to ensure a hassle free experience.
Global shipping is made simple and easy by Alibaba. The company partners with global shipping companies like FedEx, UPS, DHL, TNT, EMS and other shipping companies. This partnership enables them to provide a wide range of shipping options as well as global transportation lines. All you need to do is to select the shipping method that meets your speed, needs and budget.
Alibaba.com also provides the convenience of an all-in-one solution that aids doorstep shipping via their ‘Warehouse to Door’ Service that comprises sea freight and Import/ Export custom clearance.
Disputes and Fraud
Here’s one thing you need to know: don’t think you will get a refund if the goods are in line with your specification, but still not matching your expectations. There’s no universal definition for ‘good quality.’ It’s as subjective as it can get.
However, in the advent of a dispute over quality, here are the things that you need to submit to Alibaba.
Always save a copy of the description of the product provided to you before placing your order so that you can have a quality reference in case things go south.
How To Win A Dispute
All you need to do win a dispute is to prove the supplier wrong. However, that’s easier said than done.
Some open and shut cases include when the goods are damaged, severely defective or not shipped at all.
In case of a defect, you need to prove that the products received are either defective, damaged or not in line with the product description so that you can win a refund claim.
As we mentioned earlier, according to Alibaba, disputes that have to do with product not meeting the buyer’s perceived quality standard are tricky. This is because the company cannot act on this. If Alibaba has to issue refunds every time a buyer raises a dispute that has to do with the quality standard (without the need to return the goods), the sellers will be at risk of systematic fraud and they will go bankrupt within weeks.
So, be as diligent as possible, collect and record all possible details before the transaction and get recorded evidence the moment you receive your shipments and you suspect that they are not in line with the description or your expectation.
Sourcing Directory Alternatives
Owing to the popularity of Alibaba, several online sourcing platforms have sprung up in recent times. Here are some of them.
www.made-in-China.com: Made-in-China(MIC) is one of the new sourcing websites that has a thorough audit system in place to screen sellers and transactions. As buyers, you can download their audit reports which provide extensive details on manufacturers. These are generally performed by SGS or Bureau Veritas, both of which, are highly reputable inspection companies.
www.globalsources.com: Global Sources (GS) is very similar to Alibaba, but it is lesser known to Westerners and has a smaller marketplace. It has a lot of free information on their website you can check to verify the authenticity of the sellers and the transactions.
www.HKTDC.com: The suppliers verified by the HKTDC (HongKong Trade Development are generally more reputable and of a “higher quality’ than suppliers found from other sourcing directories as they have been audited and inspected thoroughly. Everything from the factory’s manufacturing capability to social compliance standards are checked and audited. Also, HKTDC displays detailed information about supplier certification on their website which makes it easy for you to select one.
Alibaba houses hundreds of millions of products that can be found in more than 40 categories. Some of these categories include consumer electronics, machinery and apparel.
Buyers for these products can be found in over 190 countries and regions. Hundreds of thousands of messages are exchanged between supplier and buyers on a daily basis on the platform.
It is an ideal platform that will meet your global sourcing needs whether you are sourcing from your mobile phone or contacting suppliers in their local languages.
But again, you are dealing with the suppliers on Alibaba not with Alibaba itself. So, to safeguard your own interests, you need to be a discerning shopper. We hope that this guide helps you understand how to make your first purchase on Alibaba, how to screen and negotiate with sellers and how to ensure that your transaction is a hassle free one.