When it comes to buying cheap products for Amazon FBA business, Alibaba pops up at the top!
Not just Amazon sellers, but other e-commerce business owners also consider it as a great platform for buying products in big quantities.
Before you make a decision and start looking for Alibaba alternatives. It’s important to know if you can have a safe buying experience with Alibaba or not.
I’ve been ordering wholesale products from this B2B e-commerce platform for a long time now, and here’s what I think.
This post covers everything an Amazon seller needs to know before buying products from Alibaba.
Is Alibaba Safe? Let’s find out:
What Alibaba is all About and Why Sellers Prefer Sourcing Products from There?
Alibaba is a Chinese giant with a strong foothold in the online market. It’s a huge platform like eBay or Amazon, but the major difference is you can buy goods in bulk rather than single commodities.
Owned by the Alibaba Group, Alibaba.com operates in nearly 200 + countries, making it the first choice for Amazon sellers and other folks that are into B2B wholesale business.
Being the biggest business-to-business marketplace across Asia, Alibaba seems to be a lucrative option for generating a profit by selling products online using platforms like Amazon.
If you are looking to order products in bulk, Alibaba is the place for you.
Now let’s talk about why sellers prefer buying products from Alibaba. Well, there aren’t just one or two but hundreds of reasons why Alibaba is a great choice for buying products in bulk.
Not only there are umpteen sellers, but the prices are also low, so there is a good scope of profit margin.
Alibaba is a one-stop service that lets you buy products from several sellers using one portal. Navigating between products and sellers is easy, and that’s why FBA sellers consider Alibaba for buying products.
Smaller Quantities are Available
This is something that attracts small sellers which aren’t looking to buy products in bulk. You can even purchase items in smaller quantities with Alibaba.
Numerous Suppliers are There
Alibaba is a house to numerous suppliers, so there is a huge scope of negotiation. Interacting with the sellers is easy, so you can say Alibaba is fuss-free when it comes to finding a reliable supplier.
Is Alibaba Safe? Why Do Sellers Worry When Buying with Alibaba?
Now that you know the benefits of buying with Alibaba, it’s paramount to know if it’s really safe or not. You may come across several Amazon FBA sellers talking about how they got scammed when buying with Alibaba.
I have even heard people talking about the Alibaba scams, but fortunately, I haven’t experienced it so far! Maybe, the reason I am able to avert the scams is the strategy that I’ll be sharing with you guys in this post.
Scams are the only reason sellers worry when buying from Alibaba. Furthermore, their customer support cell isn’t that responsive, so getting your queries revolved can take a lot of time.
Alibaba claims that it has improved its help center, but there are millions of Amazon sellers out there buying from Alibaba, so it’s evident why it takes so much time to address the issues and complaints.
Common Risks Sellers Get Exposed to When Buying Products with Alibaba
There are many risks sellers get exposed to when ordering wholesale products from Alibaba, and this is the reason they often wonder, “is Alibaba safe.”
The Supplier Doesn’t Ship the Products
Most sellers worry if the supplier failed to ship the products after taking the payments. Well, this isn’t a common scam these days as the strict policies of Alibaba force the suppliers to meet the shipping deadlines.
If you are new to the supplier, then it is evident to worry. However, you can opt for Alibaba trade assurance to avert this scam. I haven’t come across anyone who hasn’t received the shipment even after paying the full amount.
Suppliers Raise the Price When Placing the Order
This is something that often happens with Alibaba suppliers. You ordered the samples, liked the products, but when you try to place an order, they increase the price giving reasons like higher production cost or more demand.
Avoid falling prey to suppliers advertising products at extremely cheap rates that are too good to be true.
Defected Products Get Delivered
This also happens a lot of times, as the suppliers show quality products as a sample, but the final shipment contains defective products. If 20 out of 100 products come defective, then it can be a big loss for your business.
You can avoid this risk by opting for trade assurance. Furthermore, select the verified suppliers’ box when shopping for anything on Alibaba.
Suppliers Ask to Trade Outside Alibaba
Some suppliers will agree to your price so that you place an order, but they don’t agree on trading on Alibaba as they have to comply with the Trade Assurance.
The Trade Assurance from Alibaba is there to protect the buyers, so you should always ask the supplier to trade through Alibaba only.
Higher Shipping Fee
New FBA sellers usually fall prey to this risk, and the suppliers charge them with higher shipping fees. Several cargo companies in China are way cheaper than DHL and FedEx. However, the transit time is longer due to the higher number of orders.
The only way to avoid this risk is to search for reliable transit companies that agree on reasonable rates. Don’t agree to the shipping fee the supplier is quoting before doing your research.
Time-tested Tips for Buying Wholesale Products Safely on Alibaba
Being a B2B marketplace giant, Alibaba has innumerable suppliers, and who knows some of them may be there to scam. With the below-mentioned tips, you can fend off dealing with these sellers, and that is what I am also doing when buying products from Alibaba.
Note down these tips and implement them every time you open Alibaba.com to shop for anything for your Amazon FBA business.
Going with Gold Suppliers is a Good Idea
The easiest way to determine the reliability of an Alibaba supplier is by checking if it’s a gold supplier or not. Suppliers can purchase the Gold Supplier Status from Alibaba to validate their authenticity.
I am not saying that Gold Suppliers are the best, as anyone can buy the status from Alibaba for US $1,899. However, sellers holding this status are usually genuine, as anyone spending this amount is there to do some real business.
Your first step should be checking if the supplier you are going to work with has the Gold Supplier Status or not.
Refine the Search
When searching products on Alibaba, it is essential to refine the search. Searching for anything like t-shirts or sports shoes will land thousands of results from different suppliers. But you can funnel down the options by ticking those three little boxes.
These boxes include Assessed Suppliers, Trade Assurance, Gold Suppliers.
You already know what gold suppliers are, let me introduce you to assessed suppliers and trade assurance.
Assessed suppliers achieve a certificate from the third-party audit companies. Alibaba has a seller assessment program as well, but some suppliers go one step ahead to prove their authenticity, and Alibaba calls them assessed suppliers.
Trade assurance is something important when buying products from Alibaba. You can even say that it makes Alibaba safe for sellers. It’s a service that the Alibaba group offers to help establish trust between suppliers and sellers.
In other words, trade assurance is an extra layer of protection that covers every step of the process, including quality and shipping-related issues.
There is a set of rules that every supplier has to follow to adhere to the trade assurance. If the supplier doesn’t obey any of the following rules, then it is a breach of contract, and things will be in your (seller’s) favor.
- Product Quality Protection
Alibaba claims that it may refund the amount to the seller if the quality or quantity of the products doesn’t meet the terms set in the contract.
- On-time Shipment Protection
This is something sellers usually worry about, but Alibaba ensures that the suppliers don’t miss the shipping deadlines. If the supplier doesn’t ship the products on the agreed date, you are eligible to claim a refund.
No matter if it’s a regular supplier or a Gold Supplier, you can request a refund if the supplier fails to ship the products within the promised time.
As per Alibaba, if a supplier fails to adhere to the rules described in the Trade Assurance policy, then the buyer (you) will get the refund mentioned in the contract. Read Alibaba’s trade assurance policies here to know more.
Look for Verified Suppliers
The Verified Supplier is another filter you can use to funnel down the list of products you see. Verified suppliers have third-party background verification from companies like Bureau Veritas, SGS, and others that make them more reliable than other suppliers.
Just make sure to tick mark the verified supplier box when searching anything on Alibaba. You’ll also find the verified logo on the seller’s profile.
Don’t Hesitate in Asking for References
If you are an Amazon FBA seller in the USA, ask the supplier to provide some US-based references. Reliable suppliers don’t mind providing references of the customers they have worked with or are currently working with.
If the supplier denies providing any references, it would be great to explore some other options. You can even call the suppliers to ask some specific questions if required.
However, it may sometimes be challenging as most suppliers in China struggle with speaking English.
Look at the Company’s History
Checking out the company’s history will help you shop safely on Alibaba by averting any types of scams. When you search for products on Alibaba, you see small diamonds. These diamonds show the transaction level achieved by the supplier company.
Here’s what these diamonds look like; check out the image.
Alibaba has formed a transaction hierarchy where they have explained everything for the ease of trading. Here in this image, you can see what the number of diamonds means. More diamonds denote higher sales in a year.
When buying stuff from Alibaba, I make sure to go with suppliers with at least four diamonds, as they are in business for a while now, which curtails the chances of getting scammed.
Ask for Samples
Even if a supplier shows you that everything is good, there can be something fishy behind the curtain. It would be great to ask for samples before handling a big deal to the supplier.
Reliable suppliers don’t hesitate in sending samples to their customers. Furthermore, by checking the sample, you can determine the product quality.
Ask several suppliers to get multiple samples and then evaluate their quality. Sometimes suppliers don’t agree to send samples for free, pay for the samples but don’t involve in a deal before checking their product quality.
Ask for Documents
Asking for documents is important to reveal the hidden facts. When working with a Chinese supplier, you should ask for documents of the company, as it’s an essential step to validate the supplier.
If the supplier denies sharing the documents, steer clear from it, and start looking for some other options. The key documents to ask from the suppliers are business licenses.
You should even ask for the bank account license to validate the account the supplier is asking you to pay through. Most of my seller friends use China Checkup to validate the documents provided by the suppliers.
Look for the Payment Options Suppliers Accept
If the supplier you are going to partner with forces you to make payments via MoneyGram or Western Union, it’s a sign that you should run away right now. I don’t suggest working with such suppliers that only take payments through these channels.
Not all suppliers accept payments through PayPal, but there are some other reliable payment channels as well. The sellers I have worked with accept payments through a letter of credit or PayPal.
When buying products from Alibaba, it is crucial to choose reliable payment platforms. The motive behind this post is to help you buy safely from Alibaba, so I have listed the best payment methods that I’ve used so far.
Secure Payment (I recommend using this one)
Secure Payment or formerly known as Escrow, is the safest way to pay on Alibaba. When you choose Secure Payment, Alibaba keeps the amount in the escrow, and the payment only gets released to the supplier once you receive the products and are happy with them.
If you don’t receive the products on time or there is something wrong with the product, you can raise a payment concern.
If the supplier isn’t accepting payments through Secure Payment, you can use PayPal, which is another safe method for paying on Alibaba. Make sure to choose PayPal’s buyer protection program to get added security when making payments overseas.
If there’s anything wrong with the order, then you can ask PayPal to halt the payment and refund it.
Letter of Credit
If the value of the order is more than $20,000, a Letter of Credit is the safest way to make a transaction on Alibaba. However, it involves several formalities, and that’s why some suppliers deter from accepting LOC.
There are several payment methods that I don’t recommend using. These methods include:
If you choose Western Union, you are choosing your money to go away. This is the most insecure method to make a transaction on Alibaba. Even if you are dealing with the seller for quite some time, I don’t recommend using WU.
Here’s How to Approach the Suppliers when Buying on Alibaba
Now that you know how to buy safely from Alibaba along with the most suitable payment options, it is important to understand how to approach the suppliers.
I used this method to approach suppliers, and it has helped me buy safely from Alibaba.
Discuss the MOQ
The MOQ or the minimum order quantity should be your first preference when interacting with suppliers on Alibaba. Most suppliers have listed the MOQ with the products, but it would be great if you ask about it personally.
Usually, suppliers agree to lower MOQ if they find the buyer really interested in dealing with them. There are many benefits of getting low MOQ as you get a good deal while your inventory has a lot of space for other products.
Know the Price
Knowing the product pricing is essential to calculate the profit margins before placing an order. Suppliers on Alibaba usually give a range of prices like $5-6, but it is hard to calculate the profit margin when you aren’t sure about the cost of the product.
Talk about the Production Time
After knowing the exact price per product, it is important to know the production time. As an FBA seller, you should know the estimated production time so that you can plan your business or how you will be shipping these products to your customers.
After you know about the price and the production time, you can start negotiating with the supplier. Negotiation has nothing to do with safety, but it is essential when you buy products wholesale from Alibaba.
Frequently Asked Questions: Is Alibaba Safe?
Q: Can you get scammed on Alibaba?
A: Yes, just like other online platforms, Alibaba is also a place where you can get scammed. The best way to avoid any scams is by following the tips listed in this article.
Always deal with trusted suppliers that have gold supplier status and agree to the trade assurance.
Q: Why is Alibaba so cheap?
A: Alibaba is a B2B marketplace that lets buyers shop for products wholesale. Furthermore, most of the products available on Alibaba are China-manufactured which is another reason why they are so cheap.
Q: What’s the best payment method when shopping on Alibaba?
A: The best payment method is Escrow or Secure Payment. Furthermore, when you opt for trade assurance, you can rest assured that your payment is safe. Don’t use payment methods like Western Union or Direct Bank Transfer if you want your payment to stay secure.
Q: Can I deal with the supplier outside of Alibaba?
A: When you deal with a supplier outside of Alibaba, then Alibaba won’t be liable for anything. If the supplier scams you or there is something wrong with the shipment, then you cannot contact Alibaba for help.
I suggest dealing through Alibaba only, as you can get the trade assurance for added safety.
If you are on the fence about buying something from Alibaba, then this post will surely help clear the doubts. All the tips listed in this article are what I use as well when buying products from Alibaba.
I recommend conducting due diligence before choosing a supplier. Make sure to check out the supplier’s website as well because most of the trusted suppliers on Alibaba have their own sites.
Lastly, taking trade assurance is paramount and always deal with gold suppliers to get genuine products delivered to you.