Alibaba.com is truly closing the gap when it comes to sourcing products directly from factories. For big box retailers, long-standing relationships and contracts that allow for direct-to-retailer supply are already in place. For smaller businesses, or even enterprises that are expanding into new markets, getting a foot in the supplier door has been nearly impossible until now.
Alibaba.com changes all of that, though. This Chinese company, which has been making waves across the globe long before its IPO in 2014, is a platform that connects buyers with suppliers –– now allowing the small guys to receive product shipments directly from the big manufacturers.
Of course, there is a benefit to being well-networked: trust. The idea of sourcing products from suppliers whom you haven’t met can be daunting and many business owners around the world looking to diversify their product offering or even launch online are all asking the right questions.
Below, we’ve rounded up the top six questions most concerning businesses owners when it comes to Alibaba.com, particularly on topics like security, taxes and verbiage. We also make sure to address Alibaba shipping costs and methods so you can accurately forecast the viability of tapping into this potentially fruitful opportunity.
Is Alibaba Safe? How can I avoid purchasing counterfeit goods?
Alibaba.com provides a very easy way for trademark owners to report and remove counterfeit listings. But, since not all brands know about the issue, nor do all brands monitor Alibaba.com frequently, there are still many counterfeit goods available.
To reduce your risk of importing and selling counterfeit goods unwittingly, try to avoid sourcing any branded goods on Alibaba.com. This is a particularly sensitive issue for luxury retailers. So, if you are looking to diversify within that space, it is recommended that you go through the luxury brand itself to ensure that you are acquiring the trademarked items in question.
Alibaba.com offers its own advice and best practices for avoiding fraudulent suppliers, below:
- Fraudulent suppliers will sometimes offer unbelievably low prices, then ask you to pay through untraceable methods such as a Western Union or wire transfer. If such a case happens, you are advised to be cautious.
- If a supplier places much attention on the payment process (they want to be paid quickly), please take extra care with all elements of the transaction. Generally, suppliers are just as careful as you are about fraud and they will take extra caution and time just to make sure they get your order correct before discussing payment.
- Call the supplier’s telephone and fax numbers to verify your negotiations with them verbally. Bigcommerce addition: Skype can also be a great facilitator for this.
- Be cautious if a supplier’s company name and personal name are identical, or if they use free email services such as Yahoo or Hotmail as their primary business email.
- If you are still unsure of the supplier’s legitimacy, ask to pay for a sample to ensure the supplier’s product is able to meet all your expectations.
To answer the original question: yes, Alibaba is safe — if you take the right precautions.
Why are there significant price discrepancies between Alibaba products that look the exact same?
On Alibaba.com, you will often find a huge range of pricing for a single product. Here’s why:
- The product was listed at a time when the cost for the item was higher. Now, the price has fallen and those listing the product are pricing it correctly as of current.
- The quality for one of the items is better than for the other.
- The company is a trading company rather than a manufacturer (more on this below).
- The company with the higher price wants to earn a higher profit via their margins.
Many businesses looking to source from Alibaba.com assume the price differentiation is due to the latter option, leading them to choose the cheapest item. However, most successful products on Alibaba.com are copied by multiple manufacturers and trading companies in order to pull in more business. To do so, some of these suppliers may lower the product quality in order to maintain margins, but present a cheaper price.
In all, do your due diligence when sourcing your products and request samples. Business that are successful when sourcing from Alibaba.com often reach out to more than 10 of the suppliers they are considering, and then go with the one that is the easiest to work with, taking into account pricing and quality.
What are Alibaba’s shipping costs, and why am I not receiving a response from the suppliers?
It is wise to contact a supplier before finalizing a transaction. Simply emailing them a letter of inquiry requesting a quote (yes, you can negotiate the posted price on the product page) and samples. Here are a few good things to be sure to inquire about within your email:
- Minimum Order Quantities
- Pricing for Samples
- Production Pricing
- Production Time
- Payment Terms
Of course, not all suppliers will reply. In order to increase your response rate, be sure to keep your inquiry short and sweet. The below sample email suffices for most situations:
I’m the ecommerce manager over at ABC company. I’m looking to place an order for Product A, but have a few questions for you before I do so. I’d appreciate your timely response on the following:
- What is your minimum order quantity?
- What is your cost per unit and do you offer quantity discounts?
- What are your payment terms for new customers?
- How long is typical production time for a minimum order quantity of Product A?
Once I know this, I’ll be requesting a sample and will pass along my mailing address. Thank you so much and looking forward to doing business together.
The cost per unit questions should provide an answer for the cost of their samples, at which point you can ask to have them shipped to your address. In all, if you do not receive a reply, don’t worry. Move on to the next supplier.
Alibaba.com also offers guidelines for increasing your supplier response rate, below. Keep in mind that Alibaba.com is merely the platform that connects suppliers and buyers worldwide. The company is not responsible for suppliers who do not respond to inquiries.
- Write inquiries that are detailed and specific. This is to help suppliers better understand your sourcing requirements.
- Check the “Sent Box” of your “Message Center” to confirm your inquiry has been sent. If your inquiry is not in the ‘Sent Box,’ we recommend re-sending your inquiry again.
- Chat with suppliers in real-time using our instant messenger service, TradeManager. Click here to download TradeManager
- Call or fax suppliers directly. Their contact information can be found in the ‘Contacts’ page of the Company Website.
What is the estimated shipping time for my products?
Shipping from Alibaba’s Chinese manufacturers can take a while depending on where you live. Expect in some cases to be waiting up to six weeks for your items.
For cost savings, many orders are shipped by boat to foreign buyers (which means if you are sourcing from an Asian manufacturer and you live in North America, your items will likely be shipped). Be sure to plan accordingly.
Also, if you are especially concerned with the timing issues related to shipping, you can always source your products from a closer manufacturer. Alibaba.com is akin to the Yellow Pages for manufacturers, and not all of their suppliers are Asia-based. As the platform grows and more international customers begin to use the platform, sourcing options near you will incrementally add up.
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?
A great way to handle customs when sourcing products internationally is to hire a customs broker like PCB. At the very least, you can start reading some of the information they have on their site and find a customs broker that services your country. Customs fees are a big variable that will depend on the product, the country of export and the country of import. A great solution to figure out customs is to use DutyCalculator.com.
Of course, many of the suppliers on Alibaba.com have U.S. warehouses, so if you choose such a supplier, the products themselves will be shipped directly to you and you can avoid import duties and customs clearance.
What’s the difference between a trading company and a manufacturer?
A trading company often acts as a middleman between the buyer and the supplier. For the most part, businesses prefer to buy straight from the manufacturer in order to cut costs. Trading companies often price their products a bit higher in order to produce revenue. The upside, however, is that trading companies can offer a larger variety of products, allowing a buyer to source from one supplier rather than multiple –– as may be the case if a buyer chooses to buy solely from manufacturers.
Here is a quick breakdown of how to tell trading companies from manufacturers:
- “Factory” means manufacturer on Alibaba.com. Trading companies buy from factories and then re-sell to profit from the price difference. Generally, buyers can get a better price buying from factories directly. Some trading companies unfortunately list themselves as factories, so, be aware. In general, if a company supplies an array of items, rather than a quality selection of a single category (i.e. if they supplied apparel versus if they supply sneakers –– the latter here is likely the actual factory).
- Ask to see a copy of a factory license. If you are unsure of whether or not your supplier is a trading company or a manufacturer, ask the manufacturer to supply the factory license. After all, you’re already requesting samples.
- Don’t be so quick to judge. If you find a quality trading company via which you source multiple products without any problems, that’s great! The convenience of finding a good supplier and sourcing all or multiple of your products from them can be worth the extra spend.
In all, sourcing products and receiving shipments from Alibaba.com can be a groundbreaking opportunity for your ecommerce business to expand its product offering and ultimately scale into additional categories. Its direct from supplier capabilities can also increase your margins and double your revenue, even if you don’t decide to source additional product categories.
As with all platform and technologies, however, you must do your due diligence. Find suppliers, talk to them, build a network, earn trust and take your online business to the next level and grow safely with Alibaba.
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