Buying From Alibaba

How To Buy From Alibaba: Ultimate Guide 2020

Alibaba Group is a leading Chinese e-commerce business establishment that is signified by three businesses that include Alibaba, Taobao, and Tmall.

Alibaba is a B2B website that connects buyers with suppliers across the globe and accounts for more than 50% of e-commerce sales in China. Retailers can source millions of products in bulk or minimum order quantity from the suppliers at wholesale prices.

1.What is Alibaba

Sellers on Alibaba allow retailers to brand label their purchased products and trade it at profitable rates.

How Alibaba Works

To order from Alibaba, buyers need to follow the following steps:

a.Configure Alibaba Account

To configure the Alibaba account, buyers need to create a User ID and password. Being a global Chinese e-commerce company, the user interface of Alibaba is set up in English by default but can also be translated to other languages for convenient access.

b.Learning About Alibaba

When buyers decide to make a purchase from Alibaba, they need to search for a reliable product manufacturer, which are available in two types:

• Factory: This type of manufacturer is the real producer of the goods, and the factory sales team itself connects with the retailers on Alibaba.
• Trading Company: This type of supplier is the middleman that sources products from the factory and sells to the buyers at Alibaba.

Purchasers must know which manufacturer suits their business.

c.Search Smartly

To hunt smartly on Alibaba, buyers need to know specific terms that will help them carry out successful supplier searches. For this, buyers can look up for ‘Alibaba Cheat Sheet’ on the internet, and learn useful tactics. 

Is It Appropriate for Your Business?

If buyers are dealing with the local suppliers for their business but are not making attractive sales or handsome profits, they should consider other foreign sourcing options. At present, Alibaba is the most popular choice of majority businesses across the globe, as it caters to all chief business models (product only).

2.How to Find A Profitable Product Niche on Alibaba?

a.Carry out market research to find a profitable product niche

Make use of Google Trends to learn about search volume and people’s level of interest for various products, as this helps entrepreneurs establish a successful business.

b.Indorse the Business Idea

For a successful business, endorsing a business idea is essential. For this, conducting market research with focus groups from the target audiences is the most recommended approach. The people’s responses will help determine the success rate of the business idea.

c.How to find the best way to source the products for business?

The most important aspect to consider when starting off a sales business is where to source the products from. To sensibly make the product sourcing decision, the buyers must consider the following conditions:

• The product should be easy to ship
• The product sourcing should be convenient
• The product should be available at cost-effective rates for maximum profit margins
• The product quality should be excellent
• The manufacturer should have the potential to scale up the supply as the business grows

Entrepreneurs can choose either to buy products from online wholesale markets like Alibaba, drop shippers or local manufactures; whichever best fits the above-mentioned criteria.

d.What Makes a Successful Entrepreneur Choose Alibaba?

Alibaba is the leading global wholesale market to purchase goods from as it offers huge variety, competitive pricing, reliability, detailed product information, product sampling, buyer protection, easy sourcing and worthy rules and regulations for the buyers and suppliers.

3.What to look for on Alibaba product pages

a.Product Price and FOB

The first and foremost thing to consider while buying from Alibaba is the product price and the Free On Board (FOB) option. FOB implies that the seller will transport the shipment to the marine port free of cost and the buyer will only pay the transport cost from port to the final destination.

b.Minimum Order Quantity (MOQ)

Minimum Order Quantity (MOQ) means the least amount of order a supplier at Alibaba is willing to deliver. MOQ is usually negotiable and varies for every product available.

c.Payment options

After dealing with the product price and MOQ, the next most important thing is choosing the payment method to process the Alibaba order. Buyers must know all the details about the available payment methods and the levels of risk associated with them:

Upfront TT (Bank Transfer)

This is a risky payment option for the buyer and is done through making an advance payment to the supplier through a bank transfer. It is not obliged when dealing with a new or unknown supplier at Alibaba.

Letter of Credit (LOC)

This payment option is considered complex but is fairly safe. LOC can be used for both buyers and sellers and is suitable for orders that involve large payments such as more than $20,000.

 Western Union

This method of payment is quite risky especially for the buyers and is not recommended unless the payment is duly protected by escrow. Western Union should be used only for reliable dealers. 

PayPal

This is a very popular payment option used by the majority of the international buyers at Alibaba as the level of risk is fairly safe. However, PayPal also has some downsides like high tax impositions, potential charges and is not applicable in all countries of the globe.

Escrow

The Escrow service is considered safe for Alibaba customers as it provides a high level of buyer protection. The payment made is withheld by the 3rd party and is transferred to the supplier after the buyer approves the final delivery.

4.Searching Good Suppliers For Buying From Alibaba (Direct Search vs RFQ)

4.1 Direct Search

Direct search allows the buyer to view the price range of each supplier of a particular product, and choose the best one. For this, certain steps need to be followed:

Step 1: Log on to the Alibaba website www.alibaba.com

Step 2: Choose the best suppliers and send product inquiries

Step 3: Contact the Supplier

Step 4: Gather and compare quotations from all the suppliers

Step 5: Choose the best suppliers (2 or 3) to proceed with further correspondence

4.2 Alibaba RFQ

What is Alibaba RFQ?

Alibaba RFQ is a swifter and more efficient method for supplier search. It takes just 10 minutes to obtain quotations from more than 10 suppliers at a time, after which the buyer can choose the best ones for further proceeding.

The procedure for RFQ is:

Step 1: Log on to Alibaba RFQ webpage: https://rfq.alibaba.com/

Step 2: Fill in the RFQ form

Step 3: Submit RFQ and wait for the suppliers to respond with quotations

Step 4: Verify and analyze quotations

Step 5: Choose the best suppliers (2-3) for further correspondence

5.Choosing the Best-Matched Supplier For Buying From Alibaba

5.1 Buyer beware

While Alibaba greatly facilitates its users, it is also beset with some hitches about which buyers need to have an awareness. The details are:

 A. Middlemen

Alibaba comprises of thousands of suppliers; one thing is a fact that all are not real manufacturers. Many are middlemen who coverup, mark high prices, and increase miscommunication between real manufacturers and buyers.

B. Scammers

When buyers come across middlemen, they only lose some amount of their money but there are scammers or dishonest buyers also on Alibaba which are a complete fraud. Although Alibaba has strived hard to eliminate scammers from their platform, still buyers need to be cautious.

C. Product Quality

Product Quality is also a great concern for the buyers while importing goods from china. It is very likely that the suppliers may not ship the product quality they market on the Alibaba website.

5.2 Types of Suppliers Available on Alibaba

Gold Suppliers

The Gold Supplier also is known as a verified seller and has paid a premium membership fee to Alibaba, hence it is authorized to use the company badge. A Gold Supplier is legally proven and is validated by an onsite check verification process.

Apart from this, there is an added level of Gold Suppliers regarded as ‘Assessed Supplier’ which is the highest-grade supplier and is authenticated by a mainstream company like Bureau Veritas.

Verified Suppliers

A supplier with a verification icon suggests that the seller has been authenticated by a third-party agency. These authentications are steered to ascertain that gold suppliers are genuine and operate existing businesses, however, this does not validate their market repute.

Sellers Supporting Trade Assurance on Alibaba

The seller settles to use trade assurance in order to protect their buyer’s interests on Alibaba in the case of quality discrepancy and deferred delivery. 

5.3 Top 3 Criteria for Choosing Good Suppliers When Buying From Alibaba

To choose a good seller on Alibaba, there is a recommended selection criterion that can help buyers save their time and resources.

Specialized product portfolios

If the buyer receives a competitive quote from a seller at Alibaba and decides to make a purchase, they must review the dealer’s product category before proceeding further.

If the desired product is not in their area of expertise, then order capacity fulfillment might become a great concern in the future.

Good communication reflects the supplier’s efficiency

A supplier that is efficient at communication is likely to demonstrate responsibility in their inquiry mail and address all product aspects like cost, packaging and shipping cost.

Expert knowledge in international trading

A professional seller at Alibaba can be a great resource while dealing with transnational shipments, especially for the buyers who are new to dealing with international trading. Such merchants always serve as a source of support for the buyers in solving issues like packaging, shipping, and other concerns.

6.Contacting Suppliers, Requesting Quotations and Ordering Product Samples

6.1 How to Communicate with the Suppliers When Buying from Alibaba

When buyers develop a good understanding of how to protect themselves while performing an international transaction, then they must contact the concerned suppliers for order processing.

Requesting a quote

Requesting a quote or RFQ is generally a simple and easy process at Alibaba compared to writing emails to the sellers.

1. Minimum Order Quantities (MOQ’s): Some sellers list their MOQs, but it is always recommended to double-check with them. Buyers can also negotiate with the sellers if their MOQs does not match their requirement.
2. Pricing for Samples: When making a bulk purchase for trade purposes, buyers must inspect product quality beforehand. Sellers on Alibaba readily provide either paid or free samples to the sellers for quality inspection.
3. Production Pricing: A very important aspect while buying from Alibaba is the product price for the quantity buyer wish to order. A huge order may reduce the per-unit price even further, so it is important to discuss all details with the seller.
4. Production Time: Buyers must clearly discuss the production time with the sellers on Alibaba, as time can be a critical aspect.
5. Payment Terms: The majority of the sellers on Alibaba will ask new business setups to make full payment upfront. This is a much important aspect as inventory is a chief cost for e-commerce startups. It is suggested for the buyers to discuss payment terms with the seller on future orders also.
6. Email template

If a buyer wants to write an email to a wholesale supplier on Alibaba, here is a sample of an email template: 

Hi,

My name is ABC and I represent XYZ company based in xxxxxx (city and country).

I am interested in placing an order for a xxxxxx product. Before that I have a few queries if you can address:

1. Kindly state your MOQ.
2. Kindly mention the cost per unit.
3. Kindly mention at what quantity levels do you offer bulk discounts?
4. Kindly state the payment terms for new customers.
5. Will you be willing to provide a sample of xxxxxx product, before I place my final order? If yes, please share the cost of the sample for shipping to the following address:

ABC

80 LMN road,

City, State, Country

Postcode

Thank you.

ABC,

XYZ Company

Website

Contact Number

6.2 Receiving Quotations

When buyers send inquiries to 20-25 sellers on Alibaba, they can expect to receive a quotation from almost 10-15 wholesale traders. On the contrary, if the buyer does not clearly mention the product specifications, then the ‘conversion rate’ might be much less than anticipated.

A proper quotation received from a professional seller will consist of the following info: 

• Images of the Product
• Website links to Alibaba’s product page
• Item Details and Specifications
• MOQs
• Price Per Unit with Quantity
• Incoterms
• Export Packaging Details

6.3 Private Labelling Products Purchased from Alibaba

What is ODM on Alibaba?

ODM is an abbreviation of Original Design Manufacturing and refers to a finished product that is developed by the manufacturer itself.

ODM products are usually denoted as ‘private label products’ and are ready to sell items after brand labeling.

What is OEM on Alibaba?

OEM is an abbreviation of Original Equipment Manufacturing and denotes a condition when buyers want products to be manufactured with their specific requirements.

For instance, a buyer wants to sell a t-shirt of their own brand and can share artwork and specifications with the seller at Alibaba, who will manufacture the product for them.

6.4 How to Order Product Samples and Ensure Quality From Alibaba?

After narrowing down the research of vendors, the next step is to ask for product samples from them. Buyers must inspect the product quality before placing a bulk order.

It is likely that the cost of the product sample will be much higher than the product cost itself, and it is suggested that buyers should not negotiate the price of the sample.

After obtaining the product sample, buyers should develop a ‘quality control checklist’ which can be used for inspecting the actual shipment and informing the seller of any defect or discrepancy.

7. Choose Alibaba Trade Assurance for Placing an Order

What is Alibaba Trade Assurance?

Trade assurance is a free-of-cost order protection service offered by Alibaba to the buyers where a 3rd party ‘Escrow Company’ gets involved.

While the seller prepares goods for shipment, the buyer is required to deposit the payment in the account nominated by Alibaba.

When the order is approved by the buyer, the money is successfully transferred to the seller’s account.

So, Alibaba provides trade assurance to its clients by offering a money-back guarantee in case of a scam, deferred shipment, quality discrepancies and order processing issues.

How to Pay for Your Order?

To avail the trade assurance, buyers are required to make a payment via Alibaba.com through five available methods: payment via credit card (Visa or Master Card), Online Bank Transfers (for bulk orders), Western Union, Telegraphic Transfer (T/T), and Letter of Credit.

Payment via offline methods does not involve trade assurance from Alibaba. Although PayPal offers 180-days refund protection in case of fraud, this method cannot be used for bulk orders.

8. How to find a Freight Forwarder to Ship Cargo from Alibaba Seller?

After performing the challenging task of making a purchase on Alibaba, the next vital step is to choose the best alibaba shipping method. Now, what procedures need to be followed for the customs clearance? The good news is that it is handled by the freight forwarder. 

8.1 What is a Freight Forwarder?

A freight forwarder acts on behalf of its transporters and provides specialized storage and shipment services.

Buyers can avail of a full range of services offered by the freight forwarder that includes freight preparation and export documentation, warehouse storage arrangement, cargo space reservations, freight costs negotiations, cargo protection and much more.

A competent freight forwarder certainly saves time, money and hassle of the buyer.

8.2 How to find and choose a alibaba freight forwarder?

There are two main ways to search for a alibaba freight forwarder, either a buyer can find one for themselves or request their seller on Alibaba to arrange it. Among thousands of freight forwarders, selecting a reliable one is not an easy task. The main problems associated with such service providers are that they attract clients with low prices but later charge extra fees for unwanted things.

1. Find on Google: The most recommended way to hunt for a freight forwarder is to simply search on Google by typing ‘Freight Forwarder in XYZ country’ and choose one from the list (after thorough research).
2. Involve Your Social Links to Find a Freight Forwarder: The other suggested method is to use your social network links to find a reliable freight forwarder.When a buyer decides to hire their own freight forwarder, they must ask the seller a quotation for FOB.

Finding a competent freight forwarder:

A competent freight forwarder has experience handling various challenging situations of custom clearance, warehousing matters, freight redirection, and dock halts. 

A.Look for a freight forwarder who has an extensive network in the destination country: It is highly recommended that buyers should select a freight forwarder who has an extensive network in their destination country.

B.Look for a freight forwarder who offers good customer service: When dealing with shipment issues on Alibaba, buyers must consider how efficiently the freight forwarder communicates and its ability to offer personalized services. Customers who are new to transnational shipping should deal with freight forwarders who patiently deal with their clients for all shipment procedures.

C.Request the seller to find a freight forwarder: The buyers who wish to save their efforts of finding a freight forwarder can also request their sellers at Alibaba to recommend or arrange one for them. After this, the buyer will just have to ascertain that the quoted shipping cost is the CIF price.

LeelineSourcing: The buyers who find difficulty in hiring a reliable and reasonable freight forwarder for their shipment can search on LeelineSourcing as well.

9.Hire 3rd Party to Inspect the Quality

The last step to follow before finalizing the order is to ensure that shipment quality is inspected before the final delivery is accepted. After dealing with the challenging purchasing and shipping procedures, buyers must get the product quality checked in order to avoid any further hassle.

The international buyers who import goods from China or foreign countries cannot personally get the shipment inspected, so they have the option to hire a 3rd party for the purpose.

9.1 Three Best Ways to Find a 3rd Party QC

Alibaba Inspection Service

The buyers who choose sellers at Alibaba under trade insurance have already opted for the inspection service before making the initial payment. Now, buyers have the option to choose from two quality inspection services offered by Alibaba: BV and China & Inspection Group. Alibaba is distinguished for offering these services at a much affordable rate than the market price; there is only one downside that Alibaba’s inspection team deals in limited quantities.

A professional third-party inspection company

Buyers also have the choice to opt for professional inspection services offered by Asia Inspection, V-trust, and many others. These companies usually charge a high inspection fee of almost $300 per person for a day.

Other companies such as SGS, Intertek, TUV also offer inspection services but are very expensive. The reason is that these companies are more professional and adopt leading-edge inspection approaches that very well comply with the international standards of AQL, and also submit detailed inspection reports to their clients.

Sourcing company

Buyers also have the option to find a alibaba sourcing agent to perform the shipment inspection job, but the alibaba agent should be reliable. Some leading alibaba agent like LeelineSourcing offer excellent examination services.

If buyers decide to use quality inspection services of a sourcing company, they can enjoy some exclusive benefits that include detailed shipment examinations, and negotiation with the suppliers if the shipment quality contradicts with the sample, at an economical rate.

9.2 What to Do with Unsatisfactory Quality of Shipment?

Even after rigorous efforts to choose the best seller and ascertain the best product quality, the quality problem may still arise. Now, how to deal with it?

How to Deal with A Quality Issue Before Accepting Final Delivery?

A.Orders Without Trade Assurance

If the buyer hires a 3rd party inspection company and it reports a significant quality defect in the shipment, then the problem can be discussed with the seller on Alibaba. In this case, buyers can either request for a replacement or refund. Dealing with the seller directly in such circumstances might be a complicated and challenging task.

However, buyers who choose reliable alibaba sourcing agents can entrust them to negotiate with the seller in quality discrepancy issues.

B.Orders Under Alibaba Trade Assurance

When the buyers choose a seller on Alibaba with a trade assurance and pre-shipment coverage, they can open a dispute for the order if the shipment quality is unsatisfactory. However, this process entails the necessary documentation submission to the Alibaba staff for review. Buyers are eligible for a refund once their request has been approved by the Alibaba team.

How to Deal with Shipment Quality Issue After Delivery?

A.Orders Without Trade Assurance

The orders which are processed without trade assurance on Alibaba, buyers can open a dispute and claim for a refund or compensation via PayPal (if it has been used as payment method).

PayPal works as a middleman in order to negotiate a deal between the buyer and seller. And if other offline payment methods have been used for the order payment, then buyers will have to directly negotiate with the seller in case of quality issue.

B.Orders Under Trade Assurance

When buyers opt for sellers under trade assurance at Alibaba and chose the post-delivery coverage option along, then they can relax even if the shipment quality does not match their expectations.

In this case, buyers can open a dispute before they confirm that they have received the final delivery, and submit valid evidence to the Alibaba team for approval, which is followed by a refund. 

10. Buying from Alibaba: FAQs

Is Alibaba Safe and Will You Get Ripped Off?

Alibaba is totally safe for sourcing products and just requires the customers to possess complete knowledge about choosing the right supplier, safe payment methods, quality inspection, and shipping actions.

The most important thing while buying from Alibaba is that customers should validate the legitimacy of the suppliers before proceeding towards the final purchase, and should also be cautious of the scammers. Thorough supplier researches and choosing sellers who use Alibaba Trade Assurance is the best way to purchase safely on Alibaba.

A person who is sensible at trading, thoroughly reviews company profile, rationally communicates with the supplier and religiously follows Alibaba purchasing guidelines will never get ripped off.

How does Alibaba handle control?

Alibaba works steadily to track and eliminates middlemen and scammers from its network of suppliers. Buyers are provided full support and guidelines to protect themselves from any fraud or scam. Some recommended ways by Alibaba for its customers to ensure buyer protection include using for the Escrow Payment method, RFQs, and verification system for suppliers.

Is it safe for Buying From Alibaba? How can I avoid purchasing counterfeit goods?

Alibaba supports its customers by providing a suitable method for trademark owners to report and eliminate counterfeit programs. Neither all brands are aware of this issue nor do they frequently monitor Alibaba’s website, so there are many counterfeit items available.

Hence, to avoid the trade of forged products, buyers should avoid buying branded items from Alibaba. If the purchasers are seeking to diversify their business, it is advised that they should validate the products from the brand itself before purchasing from any Alibaba seller.

Some pieces of advice for Alibaba customers to avoid fake products are:

• Fraudulent sellers usually offer low prices and prefer risky payment methods.
• Fake suppliers are more concerned about payment processes rather than delivering products
• Verify the suppliers by contacting them through telephone or skype
• Be cautious if the seller’s company name is identical to any other, or they use free email servers like Yahoo or Hotmail for business correspondence
• If there is any uncertainty of supplier’s legitimacy, then its better to ask for a sample to ensure that supplier’s products match the purchaser’s expectation.

Why are there significant price discrepancies between Alibaba products that look the exact same?

Buyers can find a great price range for one product because at times products are listed when item cost was high, and eventually, the price has dropped and the sellers modify the prices. And, in some cases, the seller at Alibaba is a middleman rather than the actual manufacturer. Sometimes, the quality of a particular product varies with different suppliers.

The best selling products available on Alibaba are widely replicated by many manufacturers and companies in order to gain more business.

Considering all scenarios, buyers must request a product sample before proceeding towards the final order. Also, successful businesses adopt a practice of tapping more than 10 suppliers and proceeding with the one that offers the best price and quality.

What are Alibaba shipping costs?

It is highly recommended that buyers contact the seller on Alibaba before placing the final order. To contact, buyers should email a letter of inquiry, and request for a quote along with a product sample. A few important things to include in the letter of inquiry include MOQ, sample pricing, cost per unit, production time and payment procedures.

Not all suppliers respond, so to ensure a good response rate customers must ensure that the inquiry is specific and precise.

What is the estimated shipping time for my products?

The shipping time from Alibaba’s Chinese sellers is determined by the distance of the destination country. Purchasers should expect a maximum shipping time for almost six weeks. To save costs, Alibaba orders to distant destination countries are shipped through the sea route. If timing is an issue for the buyer, it is suggested to place an order with a closer manufacturer.

As the Alibaba platform escalates and more international clients join, the sourcing options automatically enhances.

What do I need to know when it comes to import duties and taxes, as well as customs clearance for the items I’m buying from alibaba?

The best way to manage customs issues while buying products from other nations is to recruit a broker like PCB. Customers can search online for custom brokers in the destination country and review the information available on their website to make a decision. The custom fee usually varies depending on the product type, weight and destination country, and to estimate it consumers should use DutyCalculator.com.

Some sellers may also have warehouses in destination countries which may save import duties and custom clearance issues, so it is better to discuss all aspects beforehand with the supplier.

What’s the difference between a trading company and a manufacturer?

A trading company usually acts as a middleman between the purchaser and seller at Alibaba. Mostly, businesses prefer to purchase directly from the manufacturer in order to reduce costs. Trading companies prefer to price products higher than the manufacturer in order to generate attractive revenues.

On the contrary, trading companies offer a large product variation, letting buyers purchase products from one supplier rather than many.

Can I buy from alibaba and sell on Amazon?

People can buy from Alibaba and sell products on Amazon, but it’s important to work with a manufacturer that ensures the right kind of product packaging. Many suppliers on Alibaba are competent professionals and support customers to sell on Amazon successfully .

Can I buy from alibaba and sell on Ebay?

Of Course,You can buy from Alibaba and sell on eaby to earn money, but it’s important to find a best supplier who can provide the quality products. Most Alibaba seller can customize products by your brand and help customers to sell on ebay successfully .

Does Alibaba necessitate a registered business name for a purchase?

Alibaba does not necessitate its customers to have a registered business name or show license while purchasing. However, a business license and resale certificate help in removing the problem of high sales tax impositions by the state government.

How long does it usually take to get a response?

Alibaba’s suppliers usually respond within one to two days. Buyers should consider some important aspects before finalizing the supplier such as the manufacturer’s communication, the ability to answer all queries and meet all elementary requirements.

Alibaba’s seller receives thousands of emails daily and it is important that the sender’s email reflects that he is a legitimate customer. Also, it is essential to respond to Alibaba’s correspondence timely and follow up with them regularly.

Does Alibaba’s supplier support more languages?

Machine translation tools such as Google Translate, Bing and Microsoft Translator are commonly used today. However, Alibaba has its own machine translation software, which allows its website to be decoded into various international languages.

Conclusion

Alibaba is a great platform for entrepreneurs who wish to source valuable products for their businesses. Alibaba offers highly competitive pricing and allows traders to generate handsome profit margins.

Alibaba is distinguished as a one-stop shopping solution that offers a great variety of suppliers, products and niches, allow customers to purchase products directly from the manufacturers, order custom products and ensure excellent product packaging.

Business persons can successfully buy goods from Alibaba, private label the products and further sell at good rates.

Certainly, Alibaba can serve as great support for entrepreneurial minds and help them reach the next level in their ventures. If buyers act carefully while choosing the supplier, payment methods and freight services they can certainly be safe and enjoy unlimited benefits.

Though, in some cases Alibaba customers may have to pay a high upfront cost, may encounter quality issues, frauds and are required to make bulk purchases to avail discounts. However, this can be easily avoided by taking the necessary actions and precautions.

Hence, Alibaba readily supports leading entrepreneurs of the globe, provides them a competitive advantage and regulates trade risks. In addition to this, Alibaba supports the nation’s economy by ensuring greater goods variety and encouraging easy international trade.