What is Alibaba?
Founded in 1999, Alibaba is an e-commerce platform allowing users to purchase and sell items wherever and whenever they choose. At first, Alibaba wasn’t very well known, it was mainly used in China, and generally in Asia. It was later in 2014 that Alibaba became more famous than the other platforms. Today, it is the leading trading company known worldwide with the highest numbers and dominates the tech and e-commerce world for sourcing from China.
Alibaba reviews
Alibaba has a remarking appreciation from its users, with a staggering rating of 4.3 stars over 5 resulting from a t
otal of 21,942 reviews. This clearly states that Alibaba has done a great job. In these reviews, consumers express their satisfaction with multiple tasks that Alibaba has shown expertise in, such as on-time delivery, good condition of products, fast delivery, and fast responses to client questions.
Be careful of these 6 common Alibaba scams
Alibaba is a great platform that can be very helpful for anyone looking to buy or sell goods. On one hand, it offers sellers global reach, low cost of entry to the market, better promotion with Alibaba’s marketing tools, better security for receiving payments, and gives them logistics support that leads to better customer experience.
On the other hand, buyers have a wider range of products to select from, various pricing options, the power of negotiation, feedback to rely on from reviews, and global sourcing.
However, it is known that many people have changed their opinions after getting scammed on Alibaba, which is why they tend to get disappointed and avoid using it. Therefore, to give these people their trust in Alibaba back and for people who are afraid of getting scammed, the next paragraph is dedicated to you.
While reading this, you might be asking yourself, is it possible to get scammed on Alibaba? What are the risks of buying from Alibaba?
Unfortunately, the answer is yes, you can get scammed on Alibaba if you are not informed or not cautious enough. But, there is a possibility to avoid such situations. Join us as we debunk the 6 most common scams that occur on the platform so that you are sure to escape them next time you come across one.
1- Get your payment, but don’t ship your products
In this scenario, the deceptive seller lures clients in with attractive and appealing product offers. When the buyer shows interest in buying the product, the seller demands upfront payment. After that, the seller either delays the shipment, provides false tracking details and numbers, or in some cases, completely vanishes and is nowhere to be found anymore.
2-Wholesale price to attract you but raise the market price before placing an order
In this scheme, sellers attract buyers with competitive quotes, this encourages the buyer to negotiate and show interest in buying in bulk. Then, when it is time to place the order, the seller unexpectedly increases the price, backing this with excuses such as a change in raw materials prices or production issues leading to additional costs.
3- Lower price to attract you but rip you off on shipping fees.
This occurs when the seller offers products at unbeatable prices, making them very cheap, and therefore attracting many clients willing to buy as they think the price is perfect and very fair. After the purchase is made, the seller increases the shipping fees and the buyer ends up paying way more than what the product is worth.
4-The sample is good, but send you a bulk order mixed with defective and low-quality products
In this case, the malicious seller sends a flawless sample to the buyer, that meets all expectations, in the goal of earning the buyer’s trust. Once a large order is done, the seller includes a bunch of damaged and low-quality items, hoping that the buyer doesn’t notice until it's too late.
5- Sell fake or intellectual property infringement products
In this practice, sellers offer products that are copies of very well-known brands, ignoring all patents, trademarks, and copyright regulations. The buyer might not notice, as these products are very well imitated and hard to differentiate from the real deal.
6-Agree on Trade Assurance initially, but refuse before placing an order
Alibaba’s Trade Assurance is a service built to secure payments between buyers and sellers, ensuring that both parties respect their obligations. However, in this scam, the seller agrees and promises the buyer to use the Trade Assurance service. Only to change his mind and back down on his promise when it is time to place the order, insisting on using other alternatives that do not provide the needed protection.
DocShipper tips: 5 steps to buy from Alibaba safely
Even though these scams can be tricky and worrying about a buyer, there are solutions that exist, that anyone can use once they have understood them. So how do you buy from Alibaba safely? Stick with us while we tell you all you need to know and what tips you should use to continue buying products on Alibaba stress-free.
Step 1: Using Alibaba trade assurance
As we mentioned previously, Alibaba has a Trade Assurance service designed so that both parties are accordingly in line with their obligations. This system is very beneficial for both buyers and sellers to use as it offers payment protection, meaning that money paid by the buyer is held in escrow until he receives and is satisfied with the product and avoids fraud and late deliveries.
Also, this offers clear communication as the platform allows messaging and sending papers and documents. Other benefits involve product quality assurance, guaranteeing on-time shipment, protection against IP infringement, inspection services that are provided by Alibaba, supplier credibility, and reimbursement for buyers in case the product is not as ordered or damaged.
Moreover, Alibaba Intellectual Property Protection Platform provides a robust and efficient system for safeguarding intellectual property rights on its e-commerce platform.
Step 2: Choosing Gold Suppliers
- Making use of Alibaba’s on-site verification process
As a buyer, you can request an on-site verification. If you do that, Alibaba will send someone to visit the seller’s physical location, check the quality, safety, and legitimacy, and also make sure he is obeying the standards and regulations.
After this inspection, the people in charge will write a report noting everything they found, to which you will have access. Once you have access to the report and read it, it is up to you to choose whether you would like to continue engaging with the seller or not.
- Checking assessment of Suppliers
This tool provided by Alibaba is designed to help buyers be certain of the seller’s legitimacy and credibility. To do so, Alibaba’s team will review and examine the seller’s business profile (identity and legal status), by checking his company profile and business license. Moreover, they might contact the seller for further verifications such as the seller’s willingness to cooperate, production capacity, quality control, exporting precedents, management system, R&D capabilities, and other important factors.
- Finding Company Basic Information
During this process, they will usually research for the necessary information to identify the seller. These involve company name and year of establishment, business registration details, ownership and registration, and other important information.
- Checking Certification:
This is about gathering detailed information on the different accreditation, certification, or any quality assurance the company/seller holds.
- Using live Factory Video Footage
This method is when the seller shares real-life video footage of the production process in the factory, shedding light and clarifying the working conditions, quality, authenticity, and transparency. The buyer gains insight into the environment of the seller’s company and decides whether it suits him or not.
- Review Alibaba Supplier’s Product Catalog
The supplier’s product catalog gives the buyer a deeper look into the different options, prices, quantity, minimum order quantity (MOQ), images, ratings and reviews, and contact information. This is an important step to take as a buyer to be fully informed and confident before choosing to buy a certain product.
- Final Checklist to Buy from Alibaba when You Find a Supplier
To minimize risks, make sure to check the needed information to be satisfied with your purchase as a buyer. Check the product and supplier’s information, the catalog, the reviews and prices, payment methods, terms and agreements, reputation of the seller and security.
- Use the Alibaba Supplier Search to Identify Specialized Suppliers
Using this will allow you to choose the exact supplier you are looking for, that checks all of your expectations and requirements. After finding your potential exact supplier, it is important to monitor, frequently communicate, conduct all kinds of verifications and demand samples. Maintaining this process will build certainty and remove doubt when it is time to choose.
Step 3: Communicate with Your Suppliers on Alibaba to Stay Safe
- Initial Outreach
The goal here is to be able to approach the seller in a professional and polite way, expressing interest and building clear communication. The key to a successful experience involves preparing and researching, building a professional email, introducing yourself and your interests, asking questions, and giving contact information. It is also important to document the conversations, as it can be an easy fix if a conflict or disagreement happens.
- Requesting a quote - Questions to Ask Alibaba Suppliers
When requesting a quote, it is crucial to ask the right questions that will bring you relevant and efficient answers. This will help you make the right choice and save you time. This will also help avoid potential conflict or misunderstandings.
- Minimum Order Quantities (MOQ’s)
Minimum order quantity is the number of products the seller is willing to sell in a one-time order. These are solely set by suppliers and can vary depending on multiple factors. These factors are the type of product, whether the product is customized or not, initial price, duration and level of relationship between buyer and supplier, and negotiability.
- Pricing for Samples
The pricing of the sample can be different from one supplier to another. This also includes the type of product you are buying and the industry in which this product is classified. Accordingly, the quantity, value of the initial product, customization (if any), possibility of a future bulk order (whether you are looking to go wide on quantity or not), and negotiation process are all factors that may vary the sample price of the product you are looking to discover or purchase.
- Production Pricing
In order to determine a final product price, there are many factors to keep in mind that will usually end up increasing it. Apart from the additional costs that occur during the production, marketing and distribution. Factors such as the target audience, position in the market, competitive pricing, elasticity, discounts and promotions, currency and exchange rates, regulation, and profit margins will also play a role in setting a final price for the product.
- Payment Terms:
Payment terms decide when and how the buyer is going to pay the seller. There are many options to choose from that suit both the seller and the buyer. Apart from the typical credit card options and PayPal,or even Western Union and MoneyGram, you can find some interesting alternative payment propositions.
Starting with the safest and most used, the Cash In Advance (CIA) allows the buyer to pay before receiving the goods. Then we have the Cash On Delivery (COD), this is good when the buyer wants to examine the state and appearance of the goods before paying. Also, there is the Telegraphic Transfer (T/T), this is simply transferring the money from one bank account to another, possibly going for 30% of the price as a deposit and 70% before shipment is done.
Moreover, you have the Escrow Service that we mentioned previously, where your money is held until you receive and are satisfied with the product. Finally, we have a more complex transaction, which is the Letter Of Credit (L/C), in this situation the bank of the buyer issues a letter of credit expressing that the payment will be done once there is proof of shipment provided or upon delivery of the goods.
- Negotiating a Legit win-win Agreement with Alibaba suppliers:
Before even starting with the negotiation process, it is important to to have good intentions and come in with a polite and respectful spirit. This will help you make this experience beneficial for both you and the supplier, and will most importantly help you build a long-term professional relationship with this certain supplier, avoiding miscommunication that could lead to misunderstandings or unnecessary conflict.
Once you are about to enter the negotiating process, there are a few things you have to keep in mind. You have to be prepared, this can be done by researching the market, the industry as well as the competitors, to have a clear understanding on the different prices and requirements. This will also be useful as it is important to define the price you are looking to pay, the payment terms you are willing to use, as well as quality and delivery terms. Moreover, you should enter with realistic goals and know the needs of the supplier, this is crucial for the result of the negotiation as it can help you find common grounds if you understand what the supplier is looking for.
Plus, if you are entering a negotiation trying to convince the supplier to directly come your way and accept your first offer, you are most likely prone to losing this negotiation and wasting both your time and his as both of you will stand your ground and you will end up with no negotiating of any sort. Hence, you have to be able to sacrifice and be flexible so that the result satisfies both you and your supplier. Finally, it is important to secure the deal once the price is set and negotiation is done.
To do so, keep Alibaba’s tools in mind as they could come in handy, document the agreement, whether by a written agreement or contract, and review it. This will not only allow you and your supplier to make sure you are one the same page, it will also allow you to make adjustments or review what you have said. Using these methods will really help with your negotiations and will allow you to get the best prices while also creating long-term solid relationships with the suppliers.
Step 4: Do Production Inspection Before Shipment
As the supplier is about to ship your products, realizing a production inspection on Alibaba is a great way to make sure that what you will be receiving is in coordination with what you ordered. For this, you have two options. Alibaba provides a third-party service like Bureau Veritas, which specializes in certification and inspection, you can ask them to conduct the inspection or you can choose to hire one of your choice.
After you have chosen which inspection company you would like to go with, you must schedule the inspection (based on the supplier’s availability), choose the sample size you would like to be inspected and explain what you are looking to check, whether it be the quality, design, authenticity, or other. Once the inspection team gathers the detailed information and examines the products, you will have a report and feedback on what they found. In case of any defects detected, or any issues identified, you can share the report with the supplier to solve the problem or take further action.
Therefore, choosing to conduct a product inspection is almost essential, especially when your order is in bulk or customized, as it will lower risk and possible disappointment, and can also save you as you can take necessary action soon before it is too late.
Step 5: Choose the Right Shipping Methods
- Determine the Alibaba Incoterms and Shipping Methods:
Choosing the right Alibaba Incoterms, and shipping methods is an important decision to make as it will determine how your transaction will unfold. Both of these will set the prices and responsibilities of both the buyer and the seller in each transaction that happens. The first step for this is choosing the Incoterms that suits best your situation and preferences, and the shipping method will follow as it will be based on the Incoterm you choose.
To select the right Incoterm, it is important to familiarize yourself with them, as there are various options with different characteristics. To guide you in this choice, consider your needs, and clearly understand the proposed responsibilities. The common Incoterms used are usually ExWorks (EXW), Free On Board (FOB), Cost Insurance and Freight (CIF), and Delivery Duty Paid (DDP).
After you have your chosen Incoterm, review the shipping method and costs that align with it. Once your choice is thoroughly done, discuss with your supplier to mutually agree and plan the process, this can involve taking care of insurance, additional fees, or other logistic-related tasks. Finally, keep the documents and records of all agreements between you and your supplier in case of conflict or misunderstandings.
Use safe payment methods to pay on Alibaba
Whether it be on Alibaba or any other type of business, it is essential to wisely choose a secure payment method, to protect yourself from any financial fraud or scams. As we have previously mentioned, there are common secure payment methods that are used on Alibaba. These include Alibaba Trade Assurance, PayPal, Credit cards, Letters of credit, bank transfers, escrow services, and Western Union or Money Gram. However, to make sure that you are not falling into the trap of potentially being scammed or robbed, we advise you to research your supplier and its legitimacy beforehand, communicate on secure systems, such as Alibaba’s messaging system, and document all information. Finally, always be cautious of suspicious deals and report suspicious or fraudulent activity to Alibaba customer support.
Pay with Alibaba Trade Assurance
Now that you have all the tips to successfully buy on Alibaba, avoiding scams and additional costs, your last step is to secure your payment methods. This will really help in avoiding any chaos and overall risk. Using Alibaba Trade Assurance is a great initiative provided by e-commerce to help you with that, and it is user-friendly and generally easy to navigate. Firstly, start by selecting the desired supplier you would like to buy from, then negotiate the order details.
After that, all you have to do is initiate the order, review its details, and confirm that everything is according to what you expect. The next step will be making the payment, where you will be directed to a payment page with multiple options to pay with (Credit card, bank transfers, etc). Once you have paid, your money will be held in escrow until certain conditions are met by the supplier, this generally includes confirming the order (product quality, quantity, or shipping process), and until you receive the goods. The supplier will then ship your goods where you will have to inspect them once received, just to make sure everything is right, and confirm the receipt. Once the receipt is confirmed, your payment will be released by Alibaba to the supplier and the transaction will be complete.
