If you are considering a dropshipping business or reselling in the online marketplace, you probably have heard that Alibaba is one of the largest e-commerce solutions for business-to-business (B2B) companies.
However, it is common for people to ask, “Is Alibaba safe?” That’s mostly due to several reports of scams or untrustworthy suppliers on the platform.
In addition, problems with customer service, delayed shipping, product packaging, and other related issues are not uncommon on Alibaba.
But since businesses can buy wholesale and make a good profit from Alibaba, how can you shop safely on the website?
Read on to learn more.
What is Alibaba?
Alibaba was founded in 1999 by Jack Ma and several other co-founders. The goal was to create an e-commerce environment where Chinese manufacturers could do business with buyers from across the world.
Companies looking to make large-scale purchases can choose manufacturers from Alibaba’s website to make and ship products to them.
Alibaba.com is also an excellent e-commerce solution for vendors to buy inventory from manufacturers.
That means established merchants on platforms like Amazon, eBay, and others can get products at considerably lower costs from Alibaba and resell them on the various e-commerce marketplaces.
As a wholesale provider, most manufacturers on Alibaba require buyers to make large minimum order quantities (MOQs). This might pose a challenge for small companies that do not have the capacity for large purchases.
AliExpress to the Rescue
You may have come across AliExpress in your search for reliable online suppliers. AliExpress is Alibaba’s international retail platform.
With AliExpress, vendors don’t have to worry about a large MOQ requirement. In other words, the retail platform is an ideal choice if you want to buy products in smaller quantities from overseas.
The rest of this article will share tips on how to shop safely, whether you are transacting business on Alibaba or AliExpress.
How Does Alibaba Protect Buyers?
If you’ve ever asked, “is Alibaba safe?” here is something you should always keep in mind before you initiate a transaction on the company’s website.
Shop for suppliers and not just products!
You can indeed get products at great prices from manufacturers and traders. But it is equally foolhardy to assume that all suppliers on Alibaba are 100% trustworthy.
Thankfully, the e-commerce company has critical safety measures in place to protect buyers doing business on its platform.
Some of the ways the company does this include:
1. Trade Assurance
One of the very first things you should do when scanning for suppliers on Alibaba is to filter your search with the Trade Assurance service.
Alibaba offers the Trade Assurance service for free and covers buyers for the following issues:
- Shipping issues: Your order did not arrive because it wasn’t shipped at all or there is a significant delay in shipping.
- Quality-related disputes: The products are not in satisfactory condition when they arrive.
With Trade Assurance, Alibaba will provide a full refund if suppliers breach the buying agreement (i.e. supplier does not ship on the agreed date or the product quantity/quality differs from the terms of the contract).
Keep in mind that not all suppliers on Alibaba support Trade Assurance. So make sure to refine your search before you start transacting any business.
2. Trusted Suppliers
Another way Alibaba protects buyers is by grouping suppliers into two further categories, namely, Gold Suppliers and Assessed Suppliers.
Suppliers pay higher members fees to attain a Gold Supplier status. Although this doesn’t automatically translate to reliability, most Gold Suppliers are less likely to get involved in scams.
In most cases, scammers often hold free Alibaba accounts.
A quick way to determine a Supplier’s gold status is to look for the number on their profile. The number indicates how many years the supplier has maintained the Gold Supplier status.
Suppliers with the Assessed Supplier status are the most reliable. These have been verified by third-party inspection companies. You will find the verification status on the supplier’s profile on Alibaba.
In addition to all of this, you can also see ratings and reviews from other clients so you can get a feel of what buyers like you think about each supplier.
3. Secure Payment Methods
Another critical safety measure that Alibaba offers is the various secure payment methods. Buyers must stick with the recommended payment options if they want to safely order products from suppliers.
You can make payments using the following methods:
1. Secure Payment
As the name suggests, Secure Payment is one of the safest ways to make payments on Alibaba. Formerly known as escrow, the payment method prioritizes buyer satisfaction.
In other words, your payment is kept in an escrow account until you are satisfied with the products delivered before the money is released to the supplier or manufacturer.
If you are not happy with the products delivered or the products didn’t arrive at all, Alibaba will investigate and determine whether the supplier is at fault.
If that’s the case, Alibaba will refund your money in full.
2. Letter of Credit
A Letter of Credit is another safe way to pay for transactions for both buyers and suppliers. Consider this payment method if the order amount is considerably large.
Keep in mind that while this method is safe, it involves very complex and time-consuming procedures.
Alibaba doesn’t promote PayPal as a major payment method. That’s primarily because the e-commerce company runs a competing payment platform known as AliPay.
Many suppliers accept PayPal since it is a safer payment gateway recognized globally. However, using this payment method would mean asking suppliers to accept payment outside of Alibaba.
While Alibaba does not officially offer cover buyers who use this payment method, you are protected by PayPal’s buyer protection program when you send money through the “Goods and services” option.
In addition to being very secure, PayPal’s buyer protection program will ensure that you get your money back in full and as quickly as possible if anything goes wrong with the transaction.
Highly Insecure Payment Options
Whatever you do, avoid the following payment methods:
1. Western Union
Not only is Western Union payment the least secure payment method anywhere in the world, but it is also the worst type of payment any business should use when dealing with suppliers on Alibaba.
The main reason this payment method is a no-no is that there is no way you can recover your money if anything goes wrong.
Perhaps you should consider Western Union only when sending money to your loved ones overseas. But avoid it like a plague if you are doing business.
Even if you trust the supplier completely or they are a family member, a better way to pay for goods or products would be something like PayPal or one of the other recommended payment options.
2. T/T Upfront Bank Transfer
T/T or Telegraphic Transfer is another highly insecure payment method, especially if you are transacting business on Alibaba.
That’s because it involves making full payment to the supplier for your orders upfront using direct wire transfer.
Making full payment upfront even before a manufacturer starts production isn’t the best thing to do when dealing with suppliers on a platform with a high rate of scammers.
Avoid this payment method unless you trust the supplier 100%.
Bottom line: Western Union and T/T payment options may be available on Alibaba but they are not your best option. Steer clear of them unless you are ready to take full responsibility for whatever happens.
Transfer options via Wise or Revolut can save you on fees on your large Amazon orders.
How to Shop Safely on Alibaba
Understand the Difference between Manufacturers and Traders
Suppliers on Alibaba are either manufacturers or traders.
You will be better off with a manufacturer if you want to establish a long-term business relationship.
That’s because you will get very competitive prices since manufacturers make products in-house.
However, you will have to deal with higher MOQ when buying from manufacturers.
On the other hand, traders simply trade. That is, they buy products from manufacturers and resell them in smaller quantities.
You need to be extra vigilant when dealing with traders. Products from traders should be unbranded since they don’t manufacture the products.
Steer clear of traders who offer to sell you brand names. These are most likely scammers and the products are usually fake and illegal.
Finding potential suppliers is a good first start. The next step is to research a little further to verify their claims.
Here are some of the vital pieces of information to look for:
- Business license: This should show the company details including name, location, partnership type, and major product.
- Company certifications: Be sure that you see some sort of certification that assures quality.
- Business type: This will tell you whether you are dealing with a manufacturer or a trader. Some suppliers engage in both.
- Years on Alibaba: The number of years the company has been doing business on Alibaba may indicate its reliability and stability.
- Check for scam reports: In addition to client testimonials, you want to search online for the supplier’s name and terms like “bad review” or “scam.”
Order a Sample First
It is unwise to go all out and place a massive order just because you found a great deal from a supposedly legitimate or verified supplier.
You will likely lose a huge chunk of your revenue if you jump the gun and order a hundred thousand units of a product without first checking out a sample.
If the quality isn’t right, you will be stuck with 100,000 units of pure headache!
What You Shouldn’t Do on Alibaba
Is Alibaba safe? Indeed it is safe to a large extent.
But can you get scammed on Alibaba?
There are scammers on Alibaba but that’s not peculiar to the platform. You can get scammed on just about any e-commerce platform if you don’t know what to avoid.
If you are considering shopping on Alibaba, here are things you shouldn’t be doing:
- Forgo the use of Trade Assurance for any reason. Some suppliers may give excuses – convincing ones at that – for not using the Trade Assurance service. No matter how “sensible” the excuse may sound, you put your money at great risk if you choose to give up Trade Assurance. It is in your best interest to insist on paying through Alibaba or PayPal at the very least.
- Do not send money to a bank account different from what was originally agreed on with the supplier. You are probably dealing with a scammer if you get an email supposedly from the supplier providing a new bank account. The best way to stay safe is to contact the supplier directly and be sure that they authorize the change in the banking details.
- Do not send money to anyone’s personal account no matter what. It doesn’t matter whether they are authorized representatives of your supplier; only send money to the supplier’s official bank account. Scammers can sense if you are a business on a tight budget, and may explore that weak spot to offer you mouthwatering discounts in return for paying money into personal accounts. If you agree to pay money into a personal account, you forfeit Alibaba’s payment protection including the Trade Assurance service.
- Do not forfeit third-party inspection or a video call. Insist on a factory tour of some sorts if you plan to get goods from manufacturers.
Generally, Alibaba is considered safe and legit. But you need to stick to the suggestions and recommendations in this guide to avoid getting scammed.
While the B2B e-commerce platform is doing everything in its power to minimize scams and other related issues, you can’t rule out cases of fraudulent suppliers.
The best way to stay safe on Alibaba is to remember that you are shopping or screening for suppliers and not merely looking for the best-priced products.
In other words, it is in your best interest to use the Trade Assurance, Gold, and Assessed Suppliers features to find trustworthy suppliers.