Sourcing Nova previously provided you with an in-depth look at AliExpress and in that piece, mentioned its parent company Alibaba. It is now time to turn to Alibaba and make a determination about the site – Is Alibaba legit?
As a general rule, yes. It is very safe to use. Alibaba is both trusted and reputable as a source for products from China. This does not mean an unsuspecting buyer will skate by without issue. There are unscrupulous sellers on Alibaba like any site. Part of this article will go into details about what not to do, how to vet your suppliers and what products not to buy. The article will conclude with a comprehensive checklist that will help determine if your e-business partner is a decent one.
Alibaba links Chinese manufacturers with buyers across the world. There are plenty of rules and expectations for both parties designed to protect both. It is very easy to find a wholesaler of products you want to sell with a powerful search engine and other tools.
Advantages and disadvantages of Alibaba
Like all of our reviews and informative blogs, Sourcing Nova tries to provide you as much information as necessary for the best informed choice.
· Low wholesale prices
· Millions of products
· Trade assurance (details forthcoming)
· More control on packaging and shipping
· Alipay (details forthcoming)
· Monitor quality
· Order tracking
· Large MOQ’s are standard
· Legal issues with counterfeit products
· Product quality can vary widely
· Niche products have difficult issues to overcome
· Refunds and returns can be difficult
· Refunds for customers are difficult as well
· You cannot sell immediately
· Certain products take time to restock
Who should use Alibaba
There are two sorts of businesses that should use Alibaba for products. Sourcing Nova will discuss each.
Manufacturers come to Alibaba looking to find customers of their own. They often have high MOQ but manufacture for the individual order.
There will be little to no stock on hand since their customer base is looking for private label and custom packaging. Most of the manufacturers will be specialized and work with a targeted industry rather than a large base.
Trading companies are wholesalers who buy and resell. These are the unbranded products you are likely to see with regularity.
Again, there are likely to be high MOQ, but later, Sourcing Nova will share some information on how to lower that number slightly.
Some trading companies work independently, and some are owned by, or work closely with, a manufacturer.
What about non-Chinese suppliers on the site?
There are a few, less than four percent, of suppliers on the site who are not Chinese national manufacturers. It is not a wise decision to work with these manufacturers at all.
Very often these manufacturers will use some dirty tricks on unsuspecting buyers, who will have little recourse after the fact. Fortunately, the vast majority of these tricks are easily countered with the Trade Assurance program.
Another effective tool is a letter that outlines the requirements and standards of the goods. This can help reduce, not completely eliminate, issues.
The manufacturer and not the product
On Alibaba, you are not looking for specific products. You are looking for manufacturers for those products. You are looking for three characteristics: Trade Assurance, Gold and Verified. Sourcing Nova is going to go into detail about each, starting with the most important element of using Alibaba – Trade Assurance.
What is Trade Assurance, and how it can protect you 100 percent
Most who visit Alibaba and have not used their platform are not aware of Trade Assurance.
Trade Assurance is your insurance policy. Just like shopping at other locations like eBay and Amazon, you want to have purchase protection. If your products do not arrive, you want a refund. This is completely understandable and a part of the online shopping world.
Any time you buy products online, your funds used to make the purchase go into an escrow account. The seller does not get their money until after a set time period, or you confirm receipt of the products. This means if anything goes wrong – your money is sent back to you.
There are three ways this happens:
· On-time shipment protection – If your products do not ship by a set date, you get a refund.
· Product quality protection – If the products fail quality or quantity as laid out in the contract, you get a refund.
· Payment protection – If the manufacturer fails on either of these, Alibaba refunds your covered amount of payment.
Basically, if you do not get your order, Alibaba will take full responsibility and handle the disputes.
If you did get an unscrupulous supplier trying to scam you, you would get your money back. Manufacturers that offer Trade Assurance have no chance of scamming you as it will backfire – most of the time.
Why you cannot depend solely on Trade Assurance
There are situations where manufacturers will have Trade Assurance but the quality of the products may lack in some way. Be sure to use all three of the recommendations Sourcing Nova will share with you.
It is common for some manufacturers to have only a few customers but are anxious to improve their rankings on the site and with buyers. So, they fake orders.
Chinese nationals cannot buy on Alibaba. Only those who are buying from overseas can make purchases. Some suppliers establish a company outside of mainland China, open a line of credit and begin artificially inflating search results.
This is why depending strictly on Trade Assurance is not recommended. There are other things you will need to do in addition, and Sourcing Nova will cover them for you.
Alibaba wants your business. This is why they take so many steps to protect you as a customer. For the manufacturers, Trade Assurance helps their credit-rating and incentivizes fast shipping and safe product arrival.
Gold Suppliers – Are they trustworthy?
A Gold Supplier is simply a manufacturer on Alibaba, and 95 percent of the manufacturers on Alibaba are Gold Suppliers. It does not mean anything in terms of quality or standards, only that the manufacturer has paid for their membership. Those articles that talk about Gold Supplier as a standard for quality is nothing but smoke and mirrors. Ignore it.
There is only a $4,500.00 fee for the right to be a Gold Seller, so it is not an earned title. Staff on Alibaba checks their license, lease contract and official seal before bestowing the Gold Seller label. Alibaba members cannot add Gold Seller icons on their own but only after the entire manufacturer is checked will Alibaba add the label.
A Gold Seller rating is not for product quality but the “take your money, and run” scammers. These scams are often free account shells of a fake profile. Their goal is to list as many products as possible and earn as much money as possible before Alibaba closes them down. Most scammers will not invest in a Gold Seller rank just to get kicked off.
You cannot be protected from poor quality products by using Gold Suppliers. You can, however, vet the Gold Suppliers with a simple check of the manufacturer’s age on Alibaba. Look for accounts of over three years old. These are likely well established and legit – precisely what you are looking for.
Verified Suppliers – Are they trustworthy?
Sourcing Nova has covered two of the three characteristics you need to consider when looking for legit manufacturers. The last is the Verified Supplier, and this is the most difficult because it must be earned. These are the manufacturers from China, Hong Kong and Taiwan and have been checked out by a third party inspection service.
The Verified Supplier hands over around $12,000.00 annually, has an audit completed by SGS, Bureau Veritas or TÜV SÜD. These are considerably more strict on standards that the Alibaba check.
A Verified Supplier will have additional display information on their page. Information including:
· Enterprise competency assessment report
· Main product certification
· Factory audit video
How you can verify suppliers
You should shortlist your suppliers based on the three pieces of information Sourcing Nova has provided for you. Each of these should represent the absolute basic information, but you are not completely done vetting your suppliers. There is still a little more you will need to do. Here are the other pieces of information you need to consider:
· Business license – A Chinese company will have a license with the location, name, product and partnership.
· Business type – Suppliers may be manufacturers or traders. Some may have both or concentrate on a single element.
· Years on Alibaba – Again, this is a good metric to determine if the manufacturer is valid.
· Certifications – Sourcing Nova has covered these previously.
· Production capabilities – Can the manufacturer meet your demands for your products?
· R&D – Does the manufacturer have an R&D department?
· Quality control – This will be checked previously as part of the manufacturer’s verification from Alibaba.
· Markets – Does the manufacturer export to your specific country?
· On time percentage – Some deliveries that are late happen, but this should not be a regular occurance.
· Images – Does the manufacturer have recent, high definition images of the factory?
This is another verification that is provided by an independent, arbitrary third party. This is an extra detail that provides you with information to make the best decision.
These are not easy for manufacturers to earn since the verification process has no ties to Alibaba or the manufacturer.
“Legal status checked” insufficient
Suppliers with “legal status checked” may have simply rented a location. Alibaba will not check for a lease agreement as part of their inspection.
Finding a legit manufacturer
You have seen the three important checks that you will need to find manufacturers. However, you will also need to shorten your list down to a few potential manufacturers. The why of this is coming.
You should have checked for Trade Assurance, Gold and Verified Supplier.
The professionalism of the product line matters if you are looking for a manufacturer for a long term business relationship.
You want to find manufacturers whose business deals with the specific products you want.
It can be argued that manufacturers with products, office shots, exhibitors, certification and other images are Photoshopped. This is certainly possible but highly unlikely. Look for the picture and video in particular.
You are looking for manufacturers who will respond to you within an hour. Yes; an hour. This shows the manufacturer has a full customer support team to work with you. You may find manufacturers have messaging systems: WhatsApp, WeChat, Skype and the like.
This is a subset of communication. You want to know about their business and be satisfied with the answers. It is your responsibility to make sure the manufacturer on Alibaba is legit.
You should number your questions, speak clearly and slowly. Any email need to be short and simple to read. Both of these will help bridge communication gaps between you and the manufacturer.
Professionalim in product
Asking about the quality of materials and function and getting supplements to issues you may have mean your manufacturer is legit.
Get a few samples from each of your manufacturers after you make your initial determination.
Catalogs and manuals
Some manufacturers may have catalogs on their Alibaba page but these may be old. Ask for a new product catalog or manual. Products like large machines need this information for you to make decisions on parameters and details, particularly since these products can rise into the tens of thousands of dollars.
A legit manufacturer will want to share their happy customers. Some may not because of privacy and contract clauses. It does not hurt to ask.
The feedback on your manufacturer is important because it cannot be changed or removed by the manufacturer.
Look up their information
‘Whois lookup’ and Google can help you find more information about the manufacturer. You can type:
scam:<company name> without the < >. You will get search results. Scan them for the manufacturer you have selected.
Read the forums about those manufacturers.
Check the email address. Disposable accounts like Gmail are a red flag as a scammer.
Do they go to exhibition fairs?
Legit manufacturers on Alibaba will network across fairs like the Canton Fair. These are not cheap, and smaller manufacturers or scammers will not elect to participate.
Risks associated with Alibaba
There are always risks associated with purchases online from any location. Alibaba is no different. However you can minimize those risks with the following recommendations.
Too good to be true
The saying, “If it’s too good to be true, it probably is” reigns true when shopping on Alibaba. Some products are bait for unsuspecting buyers looking to import products. Counterfeits (more on this later) is a common target.
If you are offered luxury items at a fraction of the regular cost, you are being taken advantage of and are at risk with your country’s customs office.
No company is going to sell products at a loss under any circumstances, and no reputable company will sell licensed products.
Branded and licensed products
When Sourcing Nova mentions branded and licensed products, this means well-known companies. The most common companies are:
· Sporting brands – Nike and Under Armour
· Electronics – Apple, Samsung and the like
· Licensed – Disney products and characters, luxury automobile logos
· DVDs – Branded DVDs are popular but losing to streaming services
· Replicas – Luxury handbags, watches and the like
· Any product that you know has a trademark name and logo
Some of these products and brands are made in China. You, however, cannot buy them through Alibaba or any Chinese company – period.
Companies who do work with major brands have tight policies on products. A Foxconn employee cannot walk out of the factory with a quantity of iPhones, iPads and Apple products to sell on Alibaba.
A Chinese manufacturer will have specific licensing to make branded products.
Alibaba is legit because it keeps its website and listings accurate. Counterfeits and unlicensed products are removed and offenders suspended with regularity.
Alibaba also has a special warning message on these very searches. You are warned about looking for these products and attempting to source them for sale.
Problems you can encounter
Importing counterfeit products is illegal in most countries, and you will face stiff fines and penalties for doing so. Ordering samples quite possibly is safe. Ordering an MOQ for resale is certainly not.
Your plans – making a profit
You need to find the best manufacturer for your product to put your name on it. There is a very small profit margin for branded goods for the online seller. If you want to turn a profit, branded products is not the solution.
Keep this from happening: You can eliminate branded goods from your search options. Check if the specific product is branded or licensed. You can request the letter of authorization from the manufacturer detailing their ability to create licensed products.
The best protection – Trade Assurance
(Expect that Trade Assurance is a continuous suggestion to protect your investment.)
Take your money, but not ship your products
There has been an issue with sending funds and not receiving products since the first days of selling online. On Alibaba, this is almost impossible to do.
It is common to have scammers send worthless products from their own shipping companies. They will declare the goods with official ways and paiy their Chinese fees and duties.
Keep this from happening: Always use Trade Assurance for your transaction.
Low price initially and raise it after ordering
A low market price will attract you and your money really quickly. You will go through the normal steps: confirm details, work out the MOQ, prices and send a deposit.
Now, the supplier has you. You have an investment in this, and the supplier knows this. Now, raw materials are more expensive, increased shipping costs, workers on strike – there are plenty of potential reasons to hold you and your products hostage.
Keep this from happening: Have a variety of suppliers on hand. You have a backup in the case of this trick.
Great samples, defective products in the order
Your samples are always going to be of the best quality. Scammers do not mind this, as their plan is to recoup losses on the order.
Keep this from happening: Pay attention. Hire an pre-shipment inspection company to check your order. Again, use Trade Assurance.
A legit manufacturer on Alibaba will want you to have samples. They want your business after all. Expect to pay well for the sample and the necessary shipping. This is standard practice with all Chinese manufacturers.
Keep this from happening: Order samples; pay the shipping.
Promised certifications; non compliance
Products like toys and electronics must meet your country’s standards, regulations and certifications. Some manufacturers will state they have done independent testing to save you the money.
Keep this from happening: Order your own inspections and laboratory testing
Agree to Trade Assurance; balk at the first order
Some manufacturers will agree to Trade Assurance but request an offline or direct payment. Then, the manufacturer will deny any payments, and you have no recourse since you chose to go outside of the Alibaba system.
Keeping safe on Alibaba
Alibaba is completely legit, provided you do your own diligence and are careful with your decisions and money. Here are a brief list of suggestions to keep you, your money and your products safe during your transactions:
· Trade Assurance – Sourcing Nova continues to return to this, but it is your absolute best protection.
· Document and save – Be specific with your products and design
· Inspections – Have them
· Get more than one manufacturer – Always have a backup
· Trust no one – Do the research, request the certifications, ask the right questions
What not to do on Alibaba
If you do any of these on Alibaba, you have no recourse for recouping your losses.
· Send money directly to a bank account of any sort – Never do this under any circumstances!
· Not use Trade Assurance – You will get excuses
· Pass on opportunities – Visit the manufacturer, make video calls, hire inspectors
How to file a Trade Assurance Dispute
Alibaba is legit. There is no one who will deny this fact. However, there is always a chance of your products not making it to you on time, damaged products or no products at all. You will need to file a cliam. Here is what you will need to do.
File in the claim period
You are allowed a limited window of time to file your claim and only once the order is fully paid. Once you click ‘Confirm’ for your order, you will have 30 days to file a claim. If you do not confirm the order, based on shipping method, you can file a claim within a certain time frame:
· Sea/Land/Post – 60 days
· Air – 30 days
· Express – 15 days
Go to Order List Page > Open a dispute > Apply for refund
You are getting there and almost ready for the evidence.
Fill in the form, upload your evidence
It is vital for you to have 100 percent of the documents, emails and information for your order. Alibaba’s team will investigate the entire dispute and make a decision based on that evidence. Here is a list of the documents you should have:
· Purchase contract or invoice
· Documents on product specifications
· Documents on design and files
· An inspection reported
· Emails, texts, videos and messages
· Signed transaction receipt
· Pictures/videos of defective products
Wait for the manufacturer
There is a five day period for the manufacturer to answer the dispute. The manufacturer has to provide their evidence of the order as correct and delivered.
In the end, if the manufacturer is in the wrong, Alibaba will give you a refund. If you are in the wrong, you will have to eat the costs.
The decision of Alibaba is final.
Use Trade Assurance – this is your number one defense and protection against lost and damaged products.
Companies to avoid
There are two companies you need to stay away from when looking for someone who is legit on Alibaba.
These are frequently small trading companies. These companies see popular products, steal the pictures and post them for their own company.
You will send an inquiry and get a response for quotes from other factories. They will take this information and build profit.
This is what will likely happen: The same is from one manufacturer, production another. The company will look for cheap raw materials and production pricing.
These are not companies that sell physical groceries. They have a variety of different products. You may have a manufacturer that sells straws and wigs. If you want a niche product, find a manufacturer for that niche.
You need to be comfortable with the payment options. Remember – Alibaba is legit when you use Trade Assurance. Here are the options for payment from best to worst.
Alibaba takes your money and moves it to an escrow account until you get your products.
Letter of credit
Letters of credit are great if both parties agree. These are best for orders over $20,000.00.
Sourcing Nova is only mentioning PayPal because it is safe. However, many manufacturers will not accept it because of the ease of refund disputes. Alibaba does not use PayPal for their transactions and is not covered under Trade Assurance.
T/T Bank Transfer
This is not wise unless you have 100 percent faith in the manufacturer. These are common for large companies with exceptionally large orders.
Under no circumstances should you use Western Union. Once you send the money, it is gone and you have no recourse to recover it. Western Union is great for family and close friends. Keep it that way.
MOQ and Samples
You can find a complete blog on MOQ from Sourcing Nova as well as a piece on how to order samples.
Alibaba is legit and safe for shopping for products. However, Sourcing Nova still notes you will need services of a freight forwarder and other elements to get your products to your location. We are full service from manufacturer to your door.
How can we help you today?