You can’t start an online business without a product right?
Well… Alibaba is the world’s biggest supplier marketplace.
But is Alibaba safe?
The short answer is yes, Alibaba is absolutely safe.
…the longer answer is that Alibaba is completely safe only if you know the signs to look for.
Truthfully, the hard part is choosing the right supplier.
And the most dangerous obstacles to finding the perfect supplier are the scammers and middle-men.
Luckily, it’s not difficult to avoid these low lives.
Below, you’ll find a step-by-step guide on how to safely buy products on Alibaba.
Step 1 – Review the Company Profile
The Company Profile has information that is both verified and unverified by Alibaba.
However, you can get a good idea about whether the supplier is legit or not by looking at the following sections:
Looking at the image above the first thing that stands out as a positive sign is that the supplier accepts “Trade Assurance”. Trade assurance protects your payment until you verify that you received the products you ordered and they arrived in good condition.
Another way to be safe on Alibaba is to make sure the supplier accept secure payments.
Legit suppliers on Alibaba will accept these payment methods:
AliPay (Fairly Safe)
PayPal (Most Safe)
Credit Cards (Fairly Safe)
Truthfully you’re 95% safe on Alibaba by making sure the payment terms are protected until the products are in your home. If you never receive the products then they will credit you back your money and open a dispute with the supplier on your behalf.
Another way to quickly check if your Alibaba supplier is safe to work with is by seeing if they have onsite checks and are gold suppliers.
Suppliers cannot put these icons on their listings. Alibaba has to send third party inspection companies to their factories and verify everything they claim is true and there is an actual business in the registered address.
Legit suppliers make sure that their businesses are verified by multiple inspection companies so you feel completely safe and comfortable to with them.
The supplier below went a step beyond Alibaba onsite checks and paid for their own verification from a company in France (Bureau Veritas) to come in and inspect their factory.
(Note – Applies to companies registered in Mainland China only)
City: Small and medium-sized companies have the city they are located in as part of their company name. For example, “Ningbo Trading Co., Limited”.
Province: Larger companies can be named after the province where they are located. For example “Zhejiang Trading Co., Limited”.
Manufacturer: This means the supplier is only selling products it manufactures. A manufacturer is limited by its production line, set-up and tooling. Because of this, manufacturers tend to be highly specialized in their field of products.
Trading Company: Some Trading Companies are independent while others own, or are owned by, a manufacturing company. So while everybody wants to cut out the middleman, keep in mind that many factories in Asia don’t have the knowledge or experience for exporting what they produce. On the other hand, some Trading Companies offer no added value and will only raise your costs.
Manufacturer & Trading Company: Many factories have expanded their operation by not only selling and marketing products made in their own facilities, but also by trading similar products manufactured by other factories. While this Business Type indicates that the company is indeed a manufacturer, you cannot be sure whether they are manufacturing or subcontracting your products. So it’s tough to be sure if this supplier is a safe choice or not.
Quality is a serious risk when importing from China. In fact, quality issues are a bigger reason to lose money than getting scammed. Quality issues can never be completely eliminated, but they can be minimized if the supplier applies a Quality Management System (QMS) such as ISO9001.
A “good manufacturer” is continuously monitoring quality. You know it’s time to walk away from a Chinese supplier when they claim to be completely free of defective and damaged products.
ISO compliance is more than having a quick check up before the products are packed and shipped. The supplier must inspect incoming raw materials and components before production, set up inspection stations during productions and do final inspections after production.
City, Province: Many cities in China are highly specialized in one or more industries. A manufacturer is dependent on the surrounding support industries such as logistics, component suppliers, raw material suppliers and labor. For this reason, a supplier that is based in an industrial cluster is likely to be more competitive than a supplier that is not.
What are the exact things you need to do to protect yourself from middlemen, scams and low quality products and be safe on Alibaba?
Focus on this next step.
Step 2 – Safely Order from Alibaba by Properly Communicating with Your Suppliers
First, why this is important…
It’s always the buyer’s responsibility to make sure your Alibaba supplier is legit and that the products are high quality. Because if you’re thinking about buying a product in bulk, you might want to do deeper research and make sure.
Top 3 Tips to Stay Safe on Alibaba
Reach out to them and begin a relationship. Ask for photos of their business license. Contact the phone number in the company listing on Alibaba and ask them what their procedure is for sampling products.
Get samples. There is no way that you can confidently invest in a product without samples or “small test orders”. That’s the only way to verify the quality. Be wary of suppliers that only allow you to place large orders.
Think abundantly. There are plenty of suppliers out there. If one doesn’t work out then you can move on to the next one.
It Gets Better:
Communicating with the companies on Alibaba is a quick way to sift through the safe ones to work with and the fakes.
You want to keep your emails numbered, short, and minimal errors (if any). Doing so will give the representative the best chance to properly communicate with you.
Alibaba Communication Tip: Number your questions. The representative will see and answer your questions easily.
Requesting a Quote
Here are a few important questions to consider for your email:
Minimum Order Quantities (MOQ’s) – If you notice in the picture above the minimum order is 50 pieces. You can negotiate MOQ and suppliers can send one or two items for free if you ask.
Pricing For Samples – Make sure that you ask what their price per unit is when they are sending samples. Because sometimes it’s much higher than their production pricing.
Production Pricing – Above you see that the production price is anywhere between $3.5 to $5 dollars. It depends on the large order that you place if you get the lower price.
Payment Terms – You want to make sure that the supplier accepts the payment terms you’re most comfortable with. If they don’t then you should move on to another supplier.
This final step is icing on the cake when looking to be safe on Alibaba.
An Alibaba suppliers product catalog can give you a lot of information.
And it’s the most important factor when selecting a supplier. Product specialization comes with a number of benefits that will have a large impact on your business.
Is your product mentioned in the supplier’s company name?
Does your product making up the majority of the supplier’s product catalog on Alibaba?
Is the supplier listing products that are completely different from the type you’re looking for?
Example: (E.G. Shenzhen Golden Watch Factory Co., Ltd) shows me the factory mostly makes watches.
Legit suppliers that are highly specialized in a certain product are better at managing quality. Pricing can also be cheaper since they buy large volumes of materials, components and tooling that is used only for the manufacturing of your product.
You can’t use the same workforce or tooling for the manufacturing “a little bit of this and a little bit of that”.
An “opportunistic” supplier is also more likely to discontinue products than a professional manufacturer.
How to use the Alibaba supplier search to identify specialized suppliers
Alibaba introduced the suppliers search, a useful feature for finding specialized manufacturers. In the beginning, all it did was presenting a list of suppliers with the product in the company name. Now, it also searches the suppliers product catalog and shows the number of matching products each supplier have!
Go to Alibaba.com
Change the search box from “Products” to Suppliers
Enter the product name and search
Now you will get a long list of all suppliers selling the product you just searched for. This can save time when sourcing suppliers since you can skip the manual review of the product catalog.
Guangzhou Guanghao Watch Co., Ltd is manufacturing and exporting LED watches. That’s in fact the only thing they do since they have listed 900 different models. When you work with this company, you can be sure about the following:
This supplier only cares about wristwatches, and certainly LED watches. They will develop new models and your company can grow your product selection together with them.
900 different models equals hundreds of thousands of different components. This supplier certainly know how these things work, and more importantly – what doesn’t work. Perhaps not today, but in the future you might want to create your own product with its own unique design and features.
This other supplier offers only 6 different LED watches.
So how can they be competitive?
Thousands of first time sellers fall for the trick of low prices and positive answers to every question. Don’t be one of these people that think they’ve are smarter than everybody else – until they realize they just got what they paid for.
Alibaba itself is not the problem. There are people that use the platform to scam people out of their hard earned money. If you take these tips and put them to good use then there is not reason that Alibaba can’t be a safe place to find a profitable product to sell.
Any other questions?
Feel free to comment if I’ve left anything unanswered!
Will Mitchell is a serial entrepreneur and Founder of StartupBros. You can learn more about him at the StartupBros About Page. If you have any questions or comments for him, just send an email or leave a comment!