“Is Alibaba legit and safe?”, “Is Gold Supplier and Trade Assurance 100% secure for import buyers?”. Yes, many new importers have these concerns.
In today’s guide, I will expose some of the issues that exist within Alibaba to include how to avoid scams, which products not to buy, which types of suppliers to avoid, and more. At the end of the article, a checklist for identifying suppliers (8 tips) is included.
I wrote this guide based on my years of practical experience and I guarantee that by the time you finish reading this article, you will have a fairly comprehensive understanding of Alibaba. You can click on the links below, which will take you to the relevant content.
- Is Alibaba legit?
- Is Gold Supplier worthy of trust?
- Can Trade Assurance 100% protect you?
- 6 risks when ordering from Alibaba.
- Get extra suppliers for backup.
- Avoid 2 types of suppliers.
- Avoid these types of products.
- Checklist for selecting a reliable supplier.
1. Is Alibaba legit? Is it safe to purchase products in bulk from China?
Generally speaking, Alibaba is safe and legal because it is the largest wholesale marketplace online. You may have heard some importers say that a huge problem is the non-delivery of goods after purchase – which is almost non-existent. If this happens to you, all you need to do is complain to Alibaba and they will compensate you for the deposit you paid to the supplier.
However, there are some non-Chinese suppliers on Alibaba, accounting for 3.3% of Alibaba’s total suppliers (2019).
I would like to remind you that if you choose to work with non-Chinese suppliers, you have to be more careful.
You don’t have to worry about the overall environment of Alibaba. There are no huge concerns, but there are still some issues and a lot of risks, which is exactly what you might be worried about because there is a lot of controversy about it on Google.
- Attracting you with low prices, but then raising them after placing an order.
- Is there a guarantee about the security of the payment?
- Delays in shipping.
- Mass production does not correspond to the approved samples.
These serious problems can cause more headaches than not receiving the goods after you pay, because they can cause unexpected troubles.
Alibaba offers guaranteed services for fair transactions between buyers and sellers. Trade Guarantee. Often, choosing a supplier who accepts this letter can greatly reduce any problems related to the quality of the goods you receive. Note that I said “greatly reduced”. Yes, not a 100% guarantee, as the letter has its drawbacks in the real world.
Now let’s get back to the issue that probably concerns you most. If a supplier accepts both a trade guarantee and a gold or verified supplier, can they necessarily avoid the above problems and guarantee absolute security?
2. Is Alibaba Gold Supplier really worthy of trust?
Alibaba Gold Supplier is actually just a membership label of Alibaba. In all the articles we have written, we have never mentioned it as a criterion to judge whether an Alibaba supplier is reliable or not.
Because almost every supplier in Alibaba is a Gold Supplier. So when you see an article mentioning Gold Supplier as a criterion to judge supplier quality, please quit reading.
It only charges suppliers $4,500 to get the Gold Supplier label; Alibaba staff will verify the original business license, the original office/factory lease contract and the company’s official seal information.
In this case, they can become an Alibaba Gold Supplier as long as they continue to keep the annual fee the same, as the Gold Supplier term increases year by year. This is to assist you in the initial review of the supplier’s authenticity.
As you can see, Gold Supplier is a necessary and very simple requirement for suppliers to obtain. Almost 95% of Alibaba’s Chinese suppliers are Gold suppliers. Therefore, the easier it is to verify or purchase a qualification, the less reliable it is.
Also, with the premise of becoming a Gold Supplier, try to choose suppliers that have been around for many years. The longer a company has been there, the more established it is and able to continue to grow and evolve in the industry. Relatively speaking, there will be better guarantees in terms of service, price, delivery date, etc.
Here I point out the hallmarks of a verified supplier, which I’m sure you’ve probably seen.
Unlike Gold suppliers, in order to become a certified supplier, suppliers need to pay approximately $12,000 per year and undergo a factory audit conducted by a designated company from SGS, Bureau Veritas or TÜV SÜD. This is much more stringent than the on-site inspection by Alibaba.
After becoming a Verified Supplier, the following displays will exceed those of a Gold Supplier
- Corporate capability assessment report
- Major product certifications
- A 180-second factory audit video, etc.
- Therefore, suppliers who become “Verified Suppliers” undoubtedly need more comprehensive qualifications and more money, so they are stronger than Gold Suppliers.
3.Can Alibaba Trade Assurance 100% protect you?
Many people who have never bought anything from Alibaba will think that buying from Alibaba will have a third party guarantee system, just like at Amazon. Yes, the trade guarantee offers buyers a great deal of protection, so there is no need to worry about financial issues.
But that doesn’t mean that companies with Alibaba Trade Assurance are 100% reliable. Some companies show Trade Assurance under their product pages for very high transaction amounts, sometimes hundreds of thousands of dollars. I must warn you, please do not count this as a standard of security; the quality of the service or product may not be as good as the high amount suggests.
Now you may want to ask me, as the photo above shows, the transaction amounts show high trade guarantees, are these transactions the real amounts accumulated in trade guarantees? Like Amazon, it shows many product reviews under popular items.
Don’t worry, let me explain why the credit amounts shown are so high, even though the products and services are not necessarily great.
The amount of trade guarantee orders is an important factor that affects Alibaba ranking. The higher the amount of trade guarantee orders, the more obvious the products posted by the supplier. Some companies do not have many customers placing guaranteed orders on their website, so they will definitely try to find ways to improve their ranking. How should they do that?
Well, they will make some fake orders. The problem is that local Chinese buyers can’t place orders with Alibaba, only overseas buyers can. So how to solve this problem? Some smart Chinese suppliers register an overseas company and build up their credit by issuing letters of credit to their stores in the name of this foreign company.
Therefore, do not simply rely on the label of Gold Supplier and Trade Guarantee to judge the quality of the supplier. In order to get rid of possible unpleasant problems during the transaction, we need to weigh the pros and cons of the supplier from all sides.
Due to my many years of experience, I strongly recommend that you communicate with your suppliers about product details and services so that you can make a comprehensive judgment and choose the right supplier at the early stages of sampling, proofing, and testing.
4. What types of risks you will usually run into when ordering from Alibaba.
1. getting your payment but not shipping.
As many internet users fear, the fraudulent practice of people paying but not receiving the goods has been mentioned in the first part of this article. I would like to remind you that this is almost impossible to happen among Chinese suppliers on Alibaba platform.
2. Attracting you with low prices, but raising them before placing an order.
If you ask for a quote at a price that is significantly lower than the market price, be aware of it. You will most likely be told that the confirmed price is not available to place an order (after you have already identified a sample and are ready to place an order), and instead, the amount increases. The way to avoid this scam is to avoid choosing suppliers who advertise very low prices.
3. The low price attracts you, but pulls you back on the shipping cost.
Do you want to know the truth? There are many low cost freight forwarders in China that have transit points comparable to companies like DHL, and they usually take longer to ship. Many Chinese suppliers can get very low shipping prices from such agencies and then quote you a higher price.
4. The samples are great, but the bulk orders you are given are mixed with defective products.
The samples provided to you are very good, but sometimes there are defective products mixed in with the bulk products. The appearance of these defective products does not seem to be a big problem, but the final performance is much worse.
5. Sell fake or infringement products
Alibaba has many suppliers selling branded products such as DJI drones, cell phones and other electronic devices at very low prices. Such products are involved in infringement issues and are difficult to clear through customs. Without special channels, please do not hope for luck and be confused by the price.
6. Agree on Trade Assurance at the beginning, but refuse before you place an order.
Some suppliers initially just agree to receive payment through Trade Assurance. However, when you place an order, they will ask you to make an offline payment and use the excuse that they have not received the payment or handling fee. If this happens, do not make an offline payment because this type of operation is not covered by Alibaba’s Trade Assurance.
5. Always get an extra one or two suppliers for backup
When you search for suppliers on Alibaba, you will generally encounter the following two situations.
Situation 1: The price range you see is not the real price. The exact price is only available based on the quantity you are purchasing. This is unlike the retail platform Amazon where the prices marked up are actually real. The low prices you see in the search section are set by the supplier to entice you to make an inquiry.
Scenario 2: The supplier quotes you a very low price at the beginning, talks about the details of the product, and sends you samples. Two weeks to a month later, when you decide to place an order, the supplier tells you that the original price is no longer available and that they will temporarily increase your price.
You may find yourself in the following dilemma: Spend another month looking for a supplier or continue to work with this particular supplier?
You may find yourself in this situation being very reactive in order to avoid the ripple effect. For example, if you spend a few more weeks looking for a new supplier, you may miss out on awesome marketing sales (special seasonal products) or make less profit due to higher prices.
Here’s my advice.
Always choose another supplier or two as a backup. Don’t put all your eggs in one basket! If you have an unexpected conflict with one of your suppliers, such as a temporary price increase from them, poor quality in mass production, regular delays in delivery or any other dispute that affects the supply of insufficient goods, you may consider changing suppliers to avoid staying in a less than ideal place.
6. Avoid these two types of suppliers
1. Hot-selling-type trading company
Such suppliers are usually small trading companies in China. When they see a popular product, they will upload the product image information to their Alibaba store, but will not have any inventory.
If you send them an inquiry, they will ask for a quote from the factory that originally produced the item and then add some profit for themselves before offering it to you.
There will be a pretty good chance that you will run into the following problems. Samples come from factory A and mass production comes from factory B. This type of small trading company will certainly choose the factory that offers cheaper production prices, which will result in quality being compromised.
2. Grocery-type trading company
The disadvantage of this type of supplier is that they offer a wide range of products. For example, the supplier below sells both cell phone accessories and cosmetic lines. If you plan to make a niche product, find a supplier that specializes in that individual product category.
7. Avoid these types of products
Stay away from these three types of products on Alibaba:
- Replicas/counterfeits/fakes (such as various fake women’s bags, fake brand watches, fake toys from popular brands like Disney, etc.)
- Branded electronic devices (PlayStation, Xiaomi, Huawei, DJI, etc.)
- Other products that may cause property rights disputes (imitation of appearance and performance)
Especially from Europe and the United States, you need to be more careful. In fact, the risk of reporting these three types of products off the shelves on Alibaba is also too great and very unstable.
What’s more, when you try to clear customs in your country, you will incur trouble because your goods are likely to be detained. The important point is that when you sell in your home market, you can also run into infringement or claim problems.
Therefore, if you are just buying some of the products mentioned above, you don’t need to worry too much. If you rely on this (importing from China) to make money, you should consider it carefully.
8. A checklist of selecting a reliable supplier on Alibaba
Finally, I made a checklist to teach you how to identify and select suppliers step by step.
1. Is the company profile complete?
Check for Gold/Certified Suppliers, Trade Assurance and other Ali certifications. This is the initial screening for Chinese suppliers.
2. Professionalism of the in-store product line
Check the professionalism of the in-store product line to determine if the supplier is suitable as a long-term partner.
Take for example the paper straw machine that became popular abroad last year and many small manufacturers started selling this product. For example, in the store below, you can tell from the store name that this is only a supplier of printing machinery.
When you search for “drinking paper straw dispensers” you will also find many stores with names ending in technology or machinery, so you can go in and check out their product categories to make a snap judgement.
You can see the paper tube machine shown in the catalog. The drinking paper tube machine is based on the paper tube machine, which means that this is a supplier that specializes in this kind of machine (obviously) and is the kind of supplier you are looking for.
3. The company’s showcase page
Many sellers show relevant photos about their office, photos of exhibitors, photos of certifications, and so on. You might say that these photos are probably done by Photoshop. I have to say that very few people cheat with these types of photos. Suppliers are considered more reliable if they can provide photos showing themselves in the factory, on the production line, or in a small video.
4. Is there a timely response to Alibaba’s communication?
You can check the response rate on the right side of the page.
After your initial screening based on the information displayed in the supplier store, you can communicate with the supplier to learn more.
Usually, you are communicating with the vendor’s salesperson. Most salesmen have applications that allow them to communicate in real time, such as WhatsApp, Skype, WeChat, etc. A responsive supplier can sensibly report the status of your order and can also resolve issues quickly and give you peace of mind.
5. Professionalism about their products
You can judge the professionalism of a supplier by asking about the materials and features of the product. If the seller can complement your questions, you can also assume they have extensive experience in this product category.
6. Is there an updated catalog or product brochure?
Many suppliers have product categories that are out of date (or not updated) on Alibaba. You can ask the supplier if they have updated catalogs and product brochures. Especially for those highly specialized products (like large machines), you need more parameters and details.
For example, a slitter with a speed of only 120 m/min and a slitter with a speed of 300 m/min can range in price from a few thousand dollars to even tens of thousands of dollars. You need detailed product brochures to understand them.
7. Is it possible to provide contact information of their customers?
Some Ali suppliers are happy to show their customers, but not all of them are. Generally, when you ask for their customers’ contact information directly, suppliers will refuse you to keep their customers’ privacy.
You can also ask for the customer’s company name or their company website so you can also get an idea of the strength of their customer base and the strength of the supplier itself.
8. Do they attend any fairs?
Ask suppliers if they participate in any large trade shows, such as Canton Fair. Smaller suppliers will not invest a lot of money in a large show like Canton Fair. Suppliers who can participate in various large or professional exhibitions are generally large and regulated.
The above aspects are your initial judgment in Ali screening suppliers, but you must choose suppliers you can work with according to your product category and business model. These specific details need to be carefully grasped in your communication process with suppliers.
Grab the last two points.
- Find a relatively cheap price for the same product quality.
- The supplier’s attitude towards solving the problem.
In fact, most of the time, there will not be a problem of no delivery after payment, (don’t be scared by some blogs on Google about this issue), because most of them are uncontrollable problems. For example, during peak season, factories may have a two to three week delay, and logistics can be delayed during holidays.
Suppliers can’t guarantee 100% smoothness on these force majeure events either. What is important is that they take responsibility when their own business is unexpected or negligent, communicate with the importer in a timely manner, and actively seek solutions to problems. After all, no one can guarantee that no mistakes will ever occur.
Therefore, when communicating with suppliers (before placing an order), pay close attention to their attitude, including their familiarity with the product, whether they get back to you in a timely manner, and whether they are patient in answering you when you are confused.
Many people on Google like to summarize some criteria for judging suppliers. In fact, in addition to what Alibaba suppliers present, the most important thing is to trust your instincts when communicating with suppliers.
Now it’s Your Turn
I hope you can benefit a lot from my guide. I will keep it updated. I ama leading manufacturer of memory foam products in China. If you haveany questions about import from China, please feel free to contact us, we are always here.