Alibaba is a well-known B2B shopping platform (a transaction between two or more businesses). It is different from transactions between enterprises and individual clients, referred to as B2C. Alibaba.com belongs to the Alibaba Group, founded in 1999 in Hangzhou by Jack Ma. The group is one of the largest companies globally, and the platform is a top-rated sourcing site. The article below will explain how to buy on Alibaba and what is worth paying attention to.
What is Alibaba.com?
Alibaba.com is a leading global e-commerce platform that serves suppliers and buyers around the world. It is a B2B platform, meaning that the transaction is concluded between businesses, in this case, a manufacturer/supplier and a wholesaler. The primary purpose of the site is to simplify doing business anywhere in the world. Alibaba offers hundreds of millions of products in forty different categories. Everybody will surely find something that meets one’s requirements. The platform provides consumer electronics, machinery, clothing, and much more.
Alibaba.com is a platform that every importer should be familiar with, as it offers various goods. Most suppliers want you to purchase a Minimum Order Quantity (MOQ) of at least 500 pieces. Thus, Alibaba is not very suitable for drop shippers. For this purpose, use Alibaba’s sister site, Aliexpress.
How to use Alibaba?
You can log in to the website via Facebook, Google, Twitter, or LinkedIn. You can also create a new account in a matter of minutes.
The site is available in many languages, such as English, German, and Spanish. The default currency is USD. The website often offers discounts for larger purchases. The more goods you decide to buy, the higher the discount you can get.
Step 1. Searching a product
To find a specific product, you can enter its name in the search bar – the offers of various sellers will appear on the screen. You can also search in categories to find goods that interest you in particular. Alibaba also offers the ability to view products from specific regions, as well as according to top sellers that have the best reviews on the site.
Recently, Alibaba also introduced an option to search for suppliers with specific certificates. However, it should be remembered that the platform does not guarantee the authenticity of the certificates. Some companies advertise having certificates on the website when in fact, they do not have them, or the documents are false. Every Chinese supplier should always be verified in terms of the certificates they provide.
All the necessary information is provided with each product. You can notice that the more towels you order, the cheaper the price is of a single item. The seller offers to sell 100 to 999 towels for $ 9.99 apiece. If you decide to buy more than 1000 towels, the price per piece will be only $0.99.
On the right side is information about the seller. You can immediately check its business performance, such as how many transactions the company carried out and the rating based on previous customers.
By clicking Onesite Check, you can get access to verified company information and data such as the registered company’s name, registration number, financial assets, as well as address.
In the company overview, you can easily find out that the above company is located in Hebei Province and check what type of business it conducts. You can find out when it was created, how many employees it has, and its total annual revenues. You can also check what the company’s main export markets are. Often, companies also add a brief description of themselves. Contact information is also provided.
It may turn out that the information about the company is false. To know for sure that your Chinese supplier is reliable, have the due diligence conducted.
There is a free-of-charge service that protects ordered products from payment to delivery (Trade Assurance, a crown-shaped symbol). Picking a supplier with the service is the safest way to buy products on Alibaba. This protection service is designed to ensure that suppliers follow the details of a commercial contract with a foreign buyer. On condition that the supplier has the symbol, the ordering party will receive a refund if the goods have not been shipped within the time limit specified in the contract, as well as if the manufactured components do not comply with the established quality requirements.
Gold Supplier is a premium membership for suppliers on Alibaba.com. The members are provided with comprehensive ways to promote their products, maximizing product exposure and increasing return on investment. Gold suppliers pay a premium for increased ranking, marketing services, etc. It does not mean that a company with the membership is verified.
The last of the mysterious symbols on the products are diamonds, symbolizing the number of transactions made.
Below are the products of various companies: the first one has only the Gold Supplier symbol, and the second one has both Gold Supplier and Trade Assurance. The other two also differ in symbols, and only one of the four has the blue Verified Supplier mark. However, no combination can guarantee us a smooth purchase.
Step 2. Ordering samples
Some manufacturers offer samples of products on the site. Ordering samples is a good option when you are not entirely convinced to buy the goods and want to check the actual quality of the product.
Some sellers set the MOQ (minimum order quantity) of one or two pieces, and in that case, there is no problem ordering samples. Many sellers do not offer such a low MOQ. In that case, you need to contact them directly, asking if they offer samples.
As it is shown in the picture above, the price of the samples is slightly lower than the one of the original products. In this case, however, you will pay the same amount for the shipment as when you order ordinary goods. Some suppliers may promise to pay you back for samples and freight costs on your first real order.
Step 3. Selecting the type of shipment and payment
You must have an account to order goods. As a buyer, you can try to negotiate the shipping terms as well as the price. Some suppliers do not send goods to every country. If your country of choice is excluded, you should either arrange delivery to another country or look for similar products from other manufacturers. Shipping costs usually depend on the seller, but remember that you can negotiate. If you get the seller’s approval, you can hire a freight forwarding company on your own.
In the picture above, you can see Poland as an example of a destination country for shipment. In this case, there are as many as five shipping methods, and they differ in price and estimated delivery time. Please note that by placing an order and communicating with the supplier, you can also negotiate Incoterms, as well as arrange transport. You do not have to place an order indirectly through the portal, but you can discuss all issues directly with the seller and sign the appropriate commercial contract. In this case, the shipping methods available on the website can only be used as a reference.
In the picture below, you can see what the payment options for ordered goods look like. You can conveniently pay with VISA or Mastercard. You can also pay the supplier by T/T payment (Telegraphic Transfer). In other words, by an international wire of funds from the buyer’s bank to the seller’s bank. Buyers can also pay by e-Checking. However, this is only possible for people with accounts based in the US, Germany, and France. There is also an option to pick the Pay Later method. Choosing this method allows you to apply for a loan for further purchases. You can also choose the L/C payment (letter of credit).
Usually, the ordering party pays 30% of the price before production and pays the remaining 70% before sending the goods to the destination. We do not recommend paying 100% of the price in advance. If you pay only 30% of the cost and any problems that occur during production, it will be much easier to deal with the issue. Once the seller has received the full amount, solving it may be more difficult.
Alibaba and customs duties
When ordering large quantities of goods from Alibaba, it is worth checking the customs rates for the products in advance. Remember that some suppliers can have warehouses in the EU or the US.
If you import to the EU, you can use the TARIC system or the one dedicated to your country of choice. If the shipping value exceeds 150 euros, the buyer must take into account customs fees. You should also remember the VAT (value-added tax) that differs from country to country and the type of goods. In some cases, you can split a larger order into several smaller ones. However, you should consider that shipping costs will increase.
If you import to the US, check the import tax on the Harmonized Tariff Schedule website. Remember that the tariff has gone up to 25% extra on some imported Chinese products to the US. Goods that are under $800 are free from customs duty.
When ordering on Alibaba, receiving inferior quality products in China is a major concern. The website is not responsible for the quality of the products; it is only a sort of catalog of B2B suppliers. It is in the interest of the buyer to check the quality beforehand. Alibaba.com is not required to check the ordered goods. However, the customer has the right to conduct inspections during the production phase. It is possible to order this type of quality checking through Alibaba.com. There are several types of inspections. After selecting the one that meets your requirements, you can contact the inspector of your choice and discuss the conditions of the service. It is a part of the free Trade Assurance.
Is it worth buying products on Alibaba.com?
Even though Alibaba does not ship some products to all countries, the platform enjoys increasing popularity. It turns out to be a convenient way to import goods without planning a business trip to Asia. Placing an order is not as complicated as it seems to be. If you worry that you will get inferior quality products, you can always order samples from the seller and then decide to order larger quantities.