There is a good chance you will be buying products from Alibaba if you are determined and have decided to source your supplier from overseas. Bigger than eBay and Amazon combined, Alibaba is the largest ecommerce company on the planet. It is also the most comprehensive directory for connecting buyers from across the globe with suppliers.
There is not much that you will not find on their directory since Alibaba literally has millions of products from hundreds of thousands of manufacturers. Along with other sources, I have been using Alibaba to order some products that I offer in my store. Here is my honest review of my experience using Alibaba.com.
Alibaba.com is owned by and the first company of the Alibaba Group. They are a Chinese ecommerce company that provides business-to-consumer, business-to-business (which Alibaba.com is), and consumer-to-consumer sales services through web portals. They also provide a shopping search engine, data-centric cloud computing services, and electronic payment services.
Alibaba.com was founded by Jack Ma in 1999 in Hangzhou in eastern China. It has since become the largest online business-to-business trading platform in the world for small businesses. The site offers three main services.
The English language Alibaba.com portal handles sales between exporters and importers from over 240 regions and countries in more than 40 different categories, including machinery, apparel, and consumer electronics.
For domestic business-to-business trade in China, the Chinese portal 1688.com was developed. And, there is a transaction-based retail website offered by Alibaba.com called AliExpress.com. This site allows smaller buyers to get small quantities of products at a wholesale price. In 2007, Alibaba.com went public at the Hong Kong Stock Exchange, but it was delisted in 2012.
The mission of Alibaba.com is to make it easy to do business everywhere. They aim to do this by assisting buyers find suppliers and products efficiently and quickly and by giving suppliers the tools they need to reach a worldwide audience for their products.
The Alibaba.com platform continues to develop services to help companies discover new opportunities and do more. They have tools for users to contact suppliers in their local language. They also have an array of mobile applications.
Top Features of Alibaba.com
Using the directory and purchasing from Alibaba is similar to other marketplaces like Amazon and is fairly straightforward to use. You can do a search for a specific item you are looking for, or you can browse the product categories.
Performing a search on Alibaba can be done in two ways. You can select “Suppliers” from the drop-down menu and search by manufacturers who specialize in the product you are looking for. Or, you can simply search for the items based on their product descriptions. For instance, you could search “self-balancing scooter” and get thousands of results for self-balancing scooter products.
There are a few things you will want to pay attention to and look at on the product listing page when you begin your search for suppliers on Alibaba. The unit price is one of the first things you should consider. There is usually a sliding scale of how much a product will cost you depending on how many items you order.
You will also want to keep your eyes peeled to see if the seller lists “FOB.” FOB stands for Free on Board. This essentially means that the seller will pay for all of the costs associated with delivering the product, including getting the product to a marine port as well as transporting the goods across the ocean and to their final destination.
The minimum order quantity (MOQ) is another important consideration. This is the smallest order the manufacturer will accept. However, you can almost always negotiate this. Some products have an MOQ of one while others may be in the thousands. It is important to note how much an order will cost you before you begin haggling for a lower price.
Each of the product pages also lists where the item will be shipped from, payment options, and in-depth information about the products, including several full-color photos. Alibaba also offers a variety of protections, such as trade assurance, 100 percent product quality protection, 100 percent on-time shipment protection, and 100 percent payment protection.
There is a reason why Alibaba.com is the largest business-to-business selling/buying platform in the world. The prices cannot be beaten. Sure, it still pays to shop around because you may be able to find the odd item here or there that is more affordable elsewhere for the quantity you want to order. But, for the most part, Alibaba should be able to satisfy your needs.
In order to put Alibaba.com to the test, I took a sampling for about two dozen items for sale on the site and compared them to competitors. On average, the suppliers on Alibaba beat the competition. Sometimes, it was not even close. Alibaba simply has the best deals for most products.
There are numerous ways you can pay suppliers. They each have their pros and cons for the seller and buyer. Sellers are able to choose which payment options they offer, but many of them will give the buyer a choice. Here are the five alternatives in order of safest to riskiest:
PayPal – Since it is easy to use, has pretty good buyer protection, and has a lower risk, PayPal is a common payment method for buyers. However, due to high tax rates, possible chargebacks from dishonest buyers, and difficulties in withdrawing money, it is less popular for suppliers.
Escrow – The buyer’s money is held by a third party when an escrow service is used. This money is only paid to the supplier after the buyer confirms satisfactory delivery. This protects both parties.
Letter of Credit – A letter of credit is typically only recommended for purchases of $20,000 or more since it is complex. Yet, it is fairly safe for buyers and sellers.
Western Union – If the payment is not protected by escrow, it is not recommended that you use Western Union since it is risky for buyers. Usually, you only want to use Western Union when dealing with people you know well.
Upfront TT – This is a bank transfer where the suppliers will get full payment before production starts. Again, you should not use this when dealing with unknown suppliers due to the high risks.
Criticism of Alibaba.com
Overall, Alibaba is great, and I have not had any problems. However, I have done my research and have taken necessary precautions to protect myself when dealing with suppliers. When something seems fishy or a supplier wants me to do something I am not comfortable with, I simply pass on the purchase. There are three main problems when sourcing suppliers from Alibaba.
There are hundreds of thousands of manufacturers on Alibaba. But, there are also several middlemen in the mix that increase the level of miscommunication between you and the real manufacturer, provide little value, and mark up the prices.
Middlemen take your money by charging you higher fees. Yet, there are also scammers on Alibaba who will take all of your money. There is still a good share of dishonest suppliers on Alibaba that you need to watch out for even though the site has made great strides in removing and combatting spammers on their platform.
When ordering from overseas, quality also becomes a concern. Even items that are advertised as high quality or premium may not live up to your standards for those adjectives. It pays to do your research and take your time. Many suppliers will allow you to order samples before you commit to a larger order.
There is a seemingly endless supply of customer support options on Alibaba.com. First of all, there is a comprehensive buyer’s guide that walks you through the steps of safely buying what you need. If you still have questions, you can visit their Frequently Asked Questions page. Or, you can visit the active forums and get answers from experts and other users.
They do not provide a phone number for customer service, but they do have live chat which is available 24 hours a day, seven days a week. They are also active on social media, including YouTube, Facebook, LinkedIn, and Twitter.
To put Alibaba’s customer service to the test, I sent them a live chat message late on a Sunday night Hangzhou time. I was greeted by a service rep almost immediately. I could tell that English was not their first language, but that did not serve as much of a barrier in them helping me. They also pointed me to links that would give me even more information.
Though it may seem a little scary dealing with Alibaba at first, in the long run, it can be quite rewarding. It is also pretty safe once you are armed with common safeguards and basic knowledge. Be ready and willing to walk away from any deals that seem too good to be true. With the many suppliers at your fingertips, there is no need to take a risk. Enjoy shopping!