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.
Sellers on Alibaba allow retailers to brand label their purchased products and trade it at profitable rates.
To order from Alibaba, buyers need to follow the following steps:
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.
When buyers decide to make a purchase from Alibaba, they need to search for a reliable product manufacturer, which are available in two types:
Purchasers must know which manufacturer suits their business.
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.
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).
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.
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.
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:
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.
Suggested reading:China Sourcing Alternatives :Made in China VS 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.
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.
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.
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:
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.
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.
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.
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.
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.
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
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
Suggested reading:Alibaba RFQ ( Request for Quotation ) : Ultimate Guide 2020
While Alibaba greatly facilitates its users, it is also beset with some hitches about which buyers need to have an awareness. The details are:
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.
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.
Suggested reading:How to Avoid Alibaba Scams: Ultimate Guide 2020
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.
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.
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.
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.
Suggested reading:Alibaba Trade Assurance : Complete Guide 2020
To choose a good seller on Alibaba, there is a recommended selection criterion that can help buyers save their time and resources.
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.
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.
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.
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 or RFQ is generally a simple and easy process at Alibaba compared to writing emails to the sellers.
If a buyer wants to write an email to a wholesale supplier on Alibaba, here is a sample of an email template:
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:
80 LMN road,
City, State, Country
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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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?
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.
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.
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.
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.
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:
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.
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.
Suggested reading: Alibaba Shipping Costs From China to US : Super Guide 2020
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.
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.
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.
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 .
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 .
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.
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.
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.
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.