Most people aren’t aware, but buyers aren’t Alibaba’s customers. Alibaba make their money through selling memberships to sellers – so who do you think they need to keep on their side? With this in mind, you can understand why it’s so important to be vigilant when finding suppliers. Today, we’re talking about how to mitigate the risk of being scammed or running into low quality by finding quality suppliers on Alibaba.
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Manufacturers/Factories Vs. Agents/Middle-Men
There are two main types of businesses on Alibaba:
- Trading Companies.
- Manufacturers.
What Is A Trading Company?
A Trading Company is a third-party business that lists and sells products that they do not make. This can be useful as some factories may not have the skills to list and market products themselves or the resources to export them and a Trading Company can do that on their behalf. However, it can also be completely pointless and middlemen can just add a profit margin on for doing nothing.
What Is A Manufacturer?
Manufacturers are the ones that make the goods they’re selling. Due to the logistical problems of production (such as moulds, machinery, expertise, etc.), manufacturers will usually have a limited and more niche product range; however, manufacturers will also have the ability to customise products for you.
How To Tell The Difference Between A Factory and A Middleman?
Massive variety in products usually means that you’re dealing with a middleman. Factories will often specialise in one or two things; a factory that makes glasses typically won’t double up on lipstick. Suppliers that have a 58-page long product list from specialist glass panels to diapers are more often than not middle-men that are just reselling other products on (at a markup).
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Red Flags - Spotting Signs of Suppliers To Avoid On Alibaba
- If the price is too low. Often, there will be multiple suppliers offering similar products – if there’s one that’s offering the same thing for half the price that the rest of the herd is, that’s a red flag.
- They won’t accept Alibaba Trade Assurance. Alibaba Trade Assurance allows your transaction to be protected. If you’re covered under Alibaba Trade Assurance and something were to go wrong, you could very easily claim your money back. Suppliers that don’t offer Alibaba Trade Assurance aren’t necessarily scams . . . but it is a red flag.
- Wanting you to pay with Western Union. Western Union is a very low-safety payment portal; we’ve explained why it isn’t recommended to pay through Western Union on Alibaba before, but if your supplier is requesting that you do they could be a scam.
- Refusing to be paid with higher-security payment methods.
- Refusing to send samples. Suppliers of a decent quality will allow you to test out the product before committing to buying a bulk order; this is called a sample. You may have to pay a premium for a sample, due to the fact it’s usually pretty inefficient to only create one of a product. If a supplier won’t send samples, that could be a red flag.
- Branded products. Branded products (especially electronics) are usually fake. Most brands that have their goods manufactured in China will not give them permission to resell them (for obvious reasons) and those that do will have incredibly large minimum orders and certification to prove that the goods are legitimate.
- Free accounts. Free accounts on Alibaba don’t undergo any vetting; any person with an internet connection can sign up and start listing products. High-quality sellers will invest in a paid membership – which comes with vetting.
- Changing contact details. If your supplier often changes their contact details (usually there’ll be excuses such as “our old bank account was hacked” or “could you pay to my manager’s personal bank account instead?”) this is usually a red flag.
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Step-By-Step How To Find A Quality Supplier On Alibaba
- Filter your search results for only Gold Suppliers. When you search for a product using Alibaba, you can filter your search results. While Gold suppliers are just businesses that have purchased a Gold Supplier Membership, these are more professional factories that are willing to invest in their businesses. Plus, Gold suppliers have been vetted (although very, very basic vetting) to ensure that they have a legal business presence and a physical site.
- Filter results for Trade Assurance only. Trade Assurance means that Alibaba will protect your money in the event that something goes wrong with the transaction.
- Filter results for Assessed Suppliers. Assessed suppliers are suppliers that have been thoroughly vetted by a third party company; there will be a report into the quality and working conditions of the factory that you can review before deciding to buy with them.
- Once you’ve identified a supplier, check how long they’ve been trading. A longer-running factory is better (although anything over a few years is good) because they have experience – and, if a factory receives a lot of negative feedback or complaints of being a scam, they’ll be removed so scams only have a shelf life of a few months.
- Then review their transaction history. This just shows that they’re a legitimate company with regular orders. That being said, transaction quality only applies to purchases under Trade Assurance – so if they have a low transaction history that doesn’t necessarily mean that they don’t sell much.
If your supplier hits all of these requirements, then there’s a significantly lower risk associated with using them. The next step in the process will be checking that your product will be made to a good quality.
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- Filter your search results for only Gold Suppliers. When you search for a product using Alibaba, you can filter your search results. While Gold suppliers are just businesses that have purchased a Gold Supplier Membership, these are more professional factories that are willing to invest in their businesses. Plus, Gold suppliers have been vetted (although very, very basic vetting) to ensure that they have a legal business presence and a physical site.
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Shippo
Remember – if you do buy goods from Alibaba, you’ll need help with the shipping. We can get you a great, low price – and a simple, stress-free shipment process. Don’t hesitate to contact us or grab a free quote.
Great experience! I worked with Chris, from Shippo for my shipment. The communication was great, he helped me along the way with all documentation I had to get ready.Fabian Prosciuc -
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