Alibaba – How to buy from Alibaba for your Business
One day, a former English teacher in China grew bored with his job and decided to do more. Together with 17 other people, they founded Alibaba, an online marketplace where buyers source for suppliers. That English teacher is now worth £37 billion (2021), and his name is Jack Ma.
Jack Ma created Alibaba to enable Chinese manufacturers connect with customers internationally. Since its humble beginnings, Alibaba empowers over 10 million businesses globally.
Despite making it easy for global customers to source for suppliers in China, many people get scammed on Alibaba. Recent figures from the Crime Survey of England and Wales reveal that 3.4 million incidents of fraud occurred in 2016/17. Since then, over 4 million people get scammed each year in the UK.
The truth is Alibaba is safe, and you can order goods from the comfort of your home. Want to know how to buy from Alibaba without getting scammed? Keep reading!
What is Alibaba?
Alibaba is a multinational technology company headquartered in Hangzhou, China. Founded in 1999 by Jack Ma and 17 other people, Alibaba is a B2B marketplace where buyers can find quality suppliers and wholesalers. As an award-winning international trading site, Alibaba has 758 million active users as of June 2020.
It also has more than 70,000 Chinese and international brands from over 50,000 merchants. Originally, Alibaba began as a peer to peer online platform similar to eBay and Amazon. It connected businesses to consumers, business to businesses and consumers to consumers. Today, these functions are available as three sites:
- Alibaba (business to business)
- Tmall (business to consumers)
- Taobao (consumer to consumer)
As of 2020, all three sites take up slots on the top 10 most popular websites globally.
Is It Safe to Buy From Alibaba?
Alibaba is perfectly safe. You can find trustworthy suppliers and wholesalers who will fulfil your orders as instructed. Trusted and reputable, Alibaba has strict rules and regulations for suppliers and wholesalers. This is how the online marketplace can keep most transactions secure.
Yes, there are a few scammers on Alibaba and just like any other online marketplace. But there are ways you can reduce the risks of getting scammed. One of those ways is trade assurance. Trade assurance is a free service that covers all orders placed and paid through Alibaba.
As built-in protection, trade assurance protects all buyers in the event of quality or shipping related disputes. It covers you if the wholesaler or suppliers does not ship your goods on time as per the contract.
If you’re not satisfied with the product quality, Alibaba will investigate, resolve and mediate your claim. This is thanks to trade assurance. If your claim is legit, the company will reimburse you.
How to Find Suppliers on Alibaba
Since Alibaba is a business to business marketplace, it has a different approach to eBay and Amazon. It focuses on connecting businesses and Chinese suppliers. Using its business to business approach, it gives buyers access to large scale purchases.
To find suppliers on Alibaba and negotiate with them, follow these steps.
#1. Find Your Niche
Before joining Alibaba, find your niche. To do so, start by identifying your passions and interests. This is very important for a first-time business owner. You don’t want to order goods or work in an area you don’t care about.
This is because your chances of quitting are high. Examples of niches include:
- Health and wellness
- Home décor
- Pets and accessories
Second, identify problems you can solve. To create a profitable business, narrow down your options. You need to find problems affecting your target customers then determine how to solve them. For example, you’ve identified that few or no businesses are selling products for left-handed people. By targeting this demographic, your business is specific and will appeal to people of all ages.
Third, research your competition. Find out what products they are selling and what they are not selling. Create a spreadsheet and start listing all competing stores and their products you can find online. It’s easy to outrank your competition in a niche where the business owners are not meeting the needs of their customers.
Lastly, check out how much your products sell on other popular marketplaces such as Amazon. Work backwards to determine your breakeven point. Experts recommend at least 60% to 70% margin on your goods.
#2. Join Alibaba
To join Alibaba, head over to Alibaba.com, click “Join Free” on the top right corner of the site. Select your country or region the enter the following details:
- Company Name (must be a legally registered company in the UK)
- Full Name
Check that you agree with Alibaba’s Membership Agreement, then click “Agree and Register.” Open your email’s inbox, find the welcome email from Alibaba and click on the link to verify your account. Besides signing up on the website, you can download the Alibaba app from Google Play Store and Apple App Store.
Once you sign-up, Alibaba will send tons of emails. You must open a new email separate from your official business email or personal email account.
#3. Search for Suppliers and Products to Buy
Alibaba has an intuitive and user-friendly platform that’s easy to use. To find products or suppliers on Alibaba, use the search function. Make sure you’re signed in. On the left of the search bar, click the drop-down and choose either”
Select “Suppliers,” then enter a keyword. Let’s assume I want to sell women handbags, elegant casual dresses, or 3D wallpaper for home decor. All I need to do is enter keywords such as:
- Women handbags
- Elegant casual dresses
- 3D wallpaper
Click “Search”, and Alibaba will list a bunch of suppliers. You can see examples of the supplier’s products, country or region, total revenue and the number of years the supplier has been on Alibaba. You can right-click on a supplier to open a new tab.
Pay attention to the following details:
- Minimum Order Quantity
- Reviews and Ratings
- Volume of transactions
- On-time delivery rate
- Length of time on Alibaba
#4. Narrow Down Your Suppliers
Alibaba allows you to refine your research. There are two ways for narrowing down your suppliers. In the first method, you can sort by “Best Match or “Response Rate.” The other method is by suppliers.
Just check “Trade Assurance” and “Verified.” Always make sure that the supplier has the Trade Assurance, Verified and Gold Supplier icons.
Before messaging a supplier, do your due diligence. Alibaba allows buyers to leave reviews after making an order. To check the reviews of a specific supplier, click on the supplier name and check on the left of the webpage.
You should see the response rate and response time of the supplier. Trusted suppliers must have a 100% response rate and a response time of fewer than 2 hours. Ask for UK based references. Since you’re about to spend thousands of your hard-earned money on a supplier you’ve never met before, perform a background check.
The simplest way to build trust with suppliers is to ask for UK based references. If the supplier point blank refuses to do so, cross them off your list. If the supplier confirms a few UK based references, ask them specific questions. Remember, be mindful as English is not the first language for most suppliers.
To ensure the supplier is not a scammer, use available search engines to your advantage. For example, you can search on Google as follows: scam:[company name]. Once you do so, you’ll receive results that may tell you if the supplier scammed anyone before.
You can also check if the supplier has a website and a company email address. A reputable supplier will have invested in a business website but if the supplier has a free email account like Gmail, move on.
Once you narrow down your suppliers, click “Contact Supplier” or “Chat Now.”
Here is a template you can use to contact suppliers on Alibaba. One advantage of having a template is the ability to modify the message to suit any situation.
Hello [Supplier’s name],
I’m (your name), the store owner procurement manager at XYZ and I’m interested in product A and B. If you manufacture Product A and B, kindly email me more information. In your response, include:
- Photos of Product A and B
- Minimum Order Quantity
- Price per unit
- Sample pricing
- Production time
- Packaging Requirements
- Acceptable Payment options
- Cost of shipping to the UK
- Your shipping terms
If I order samples for Product A and B, how much will it cost me if you ship by air and/or by sea?
Looking forward to hearing from you.
Sincerely[Your name] [Company Name]
Include more questions in your message. Asking all questions upfront will save you time due to the time difference. As such, you don’t have to spend 12 to 24 hours waiting for a single question to get answered. Do not be disheartened by large minimum order quantities. You can negotiate, but you must order a sample first. If happy with the sample, contact the supplier and inform them you’re interested in buying in bulk.
#5. Make Your First Order
Now that you’ve established a relationship with the supplier, it’s time to order your sample. Samples are necessary for the following reasons:
- It gives you the approximate production and shipping time
- Enables you to verify the quality of the product
- Allows you to observe the supplier’s communication abilities
When you receive the sample, make sure it meets your specifications. Inspect the sample for any issues and if you like it, communicate with the supplier to make your first order. To make your order, you’ve two choices:
- Order online
- Upload a PI
Head to the supplier’s minisite/store, and select the product and click “Start Order.” If the product is available in multiple colours and different sizes, Alibaba allows you to choose the quantity for colour or size. Just click “+” to select the number of pieces to order.
Add your shipping address and arrange shipment with your supplier. Available shipping methods include express/air shipping and by sea. If you choose to ship by air, the supplier will arrange it for you, but you need to hire a logistics coordinator if you decide to ship by sea. As a professional, the logistics coordinator will handle:
- Trucking and more
They charge a small fee and save you time and money.
Since you chose a Trade Assurance supplier, you’ve the option of deciding whether to use a Product inspection service. This is a new service that ensures better product quality control before shipping. We recommend asking your supplier to include inspection service as part of your Trade Assurance order.
Alternatively, you can hire a third party inspection service like QIMA. They offer smart solutions to check and certify your product quality as well as supplier compliance. After all, sending your goods back to the supplier in China is expensive in the event of product issues.
After checking your order is correct, send payment to the supplier. Alibaba supports multiple payment options, including VISA, Mastercard, Wire Transfer, T/T, Apple Pay, G Pay and PayPal. Using the latest technology, Alibaba secures all your payments and ensures it gets to the supplier safely. To help you track and even reconcile your funds, check Alibaba’s transaction centre.
We recommend using PayPal because they’ll cover you through their Purchase Protection Program. Avoid using your debit or credit card. Some of the suppliers accept an initial payment equivalent to 30% of the total cost. This deposit acts as a commitment fee and prompts the manufacturer to begin making your products.
Before shipping, pay the balance. When the supplier ships your order, your order status will change to “Waiting for Delivery Confirmation.” Click “Confirm” and leave feedback for your supplier.
When your order arrives, count the items, then examine them for issues. If you discover any damage to your products, reach out to your supplier. Thanks to Trade Assurance, Alibaba can refund you if the supplier ships damaged goods or fails to ship them on time.
Tips for Buying Safely on Alibaba
The following are tips to help you buy safely on Alibaba.
Always Tick Those Three Little Boxes
When searching for suppliers on Alibaba, it’s good practice to tick those three little boxes:
- Assessed Supplier
- Trade Assurance
- Gold Supplier
An Assessed Supplier is a verified trader or manufacturer. Basically, the supplier paid a third-party service to verify their business. Trade Assurance is a free service offered by Alibaba to protect buyers. It acts as extra protection in the event of quality and shipping related issues.
A Gold Supplier is a trader or manufacturer certified for providing quality products and reliable services. Gold Suppliers are usually provided with comprehensive ways to promote their products. This maximizes their exposure and increases their return on investment.
To become a Gold Supplier, a business pays Alibaba every month to have and maintain this status. The cost is very steep – £600. This helps to weed out scammers from the platform.
Check how long the supplier held the gold status. The more years a supplier has held Gold Supplier status, the more trustworthy and reliable they’re. When searching for suppliers, ticking these boxes offers protection against low-quality goods.
Check the Merchant’s Credentials
Another way to verify if a supplier is genuine or not is to check the merchant’s credentials. If viewing a particular product, you should see the supplier’s name on the right side of the page. Below the supplier’s name, you will have several credentials such as:
- Supplier’s location
- Length of time on Alibaba
- Volume of Transactions
- Transaction score
- On-time delivery rate
- Response Rate
Before deciding on a supplier, make sure you check these credentials. Ensure the on-time delivery and response rates are 99% and above.
Research the name of the supplier online. You can search online on Google or Supplier Blacklist. The latter has a database of user-generated lists of unsafe suppliers. To get a full listing of all bad suppliers and case notes from 2021, sign up for a free Supplier Blacklist account. Click the search button and enter the supplier name or keyword.
Watch out for these red flags when researching a supplier:
- Complaints about broken products or defective parts
- Complaints about fake products
- Complaints about poor working conditions in factories
Check the Ratings and Reviews
Since Alibaba is an online eCommerce platform, they allow buyers to post reviews and rate the suppliers. To check a supplier’s reviews and ratings, visit the supplier’s minisite on Alibaba. Click Profile>Company Overview>Ratings and Reviews.
Alibaba will redirect you to the Ratings and Reviews page. You should see the supplier’s overall ratings and reviews. A reputable supplier should have a rating of 4.8 and above out of 5 with 95% positive reviews.
Why Buy from Alibaba?
There are several reasons why you should buy from Alibaba.
There are millions of products from all niches on Alibaba – from handbags, clothing and shoes to electronics and car accessories. The wide variety of products give you the flexibility to choose what suits your customers’ needs.
Easy to Use
Alibaba has an intuitive and user-friendly platform. It’s easy to use and navigate – from signing up to sourcing for products and placing orders.
Millions of buyers globally use Alibaba to source products because the B2B marketplace is trustworthy. They offer trade assurance and secure payment options. This way, buyers don’t have to worry about losing their hard-earned capital.
Offers a Variety of Payment Options
On Alibaba, you can make payment via PayPal, VISA, Mastercard, T/T, and Wire transfer. We recommend using PayPal because it’s a secure and trusted payment system.
Ability to Customise Products and Packaging
You can have your products and packaging customised with your brand name and logo. To ensure this happens, you must place a bulk order.
There are a few reasons why some buyers may keep away from Alibaba.
Minimum Order Quantities Can Be High
A majority of suppliers and wholesalers set a large minimum order quantity. This can be expensive, especially for first-time buyers. The good news is you can still source products from Alibaba. Just look for “Ready to Ship” products.
Products May Be Broken or Damaged
During shipping, products may get damaged or broken. You might also discover faulty products or items of lower quality.
Buying goods from Alibaba is easy, but it’s only safe if you follow these tips. Make sure the supplier has a Gold Supplier status, Trade Assurance and Verified icons. Check the ratings and reviews of the supplier. If the ratings are below 4.8 out of 5 and negative reviews are more than positive reviews, cross the supplier from your list. Always trust your gut. Trusting your feelings of intuition will help you make good choices.