How to: Buying on Alibaba and NOT getting Scammed

So I have seen various posts/blogs/forums on this subject and through all of the reading I put together a helper document for myself that highlights some key points on finding suppliers on Alibaba.

Note that this would be something I reference once I already have one or more product ideas.

For reference purposes, I will assume the product I am trying to source is something random like soap dispenser pumps (note that did not pre-vet any of the suppliers that I mention in this, they are just an example).

Just a disclaimer, this is something that up until now I have just used myself and it is generally comprised of synthesized information that I found all over, I put the reference links at the bottom.

A) Search by Supplier

The first step in sourcing anything from overseas is identifying potential companies/manufacturers that actually make your product. I say companies because your initial search should be by suppliers rather than by product.

This means that if I was looking for soap dispenser pumps I would go to alibaba.com and type in (you guessed it) “Soap dispenser pumps” and then click the “Suppliers” tab just below the search bar (see here)

You know that you are searching by supplier when the link at the top says “/corporations/“ after alibaba.com rather than “/trade/“.

I search by suppliers for a couple of reasons:

  1. It significantly reduces the search pool. In my example there are 37,000 results for products but only 688 results for suppliers, and that’s without any filtering.

  2. It helps to identify actual manufactures instead of just middlemen. I get into this a little later, but when you search a supplier’s other product listings, if they are a manufacturer then most, if not all, of their products should be very closely related. If the supplier is selling plush toys, AKs and soap pumps, odds are they do not make any of those things.

TL;DR On alibaba.com, search by supplier, not by by product.

B) Narrow Results

Once you search by supplier, narrow the results by checking the following boxes:

  1. Gold Supplier

  2. Assessed Supplier

  3. Trade Assurance

This should lower the results significantly, in my example it took the results from 688 down to 59.

Once the supplier pool is narrowed to a manageable number begin to narrow the list of potential suppliers to 5-10. I would use the following criteria (up until the point that I have 5-10 identified :

  1. Scanning the example product pictures (the 3 thumbnails under the name) for what you are generally looking for

  2. Gold supplier for more than 5 years

  3. Revenues over $5 million

  4. Varied markets

  5. A name that starts with a Chinese province (only for Chinese companies)

    • A note on this, small to medium sized companies in China almost always start with the name of the city they are located in while the larger companies almost always start with the province they are in. For a list of Chinese provinces and the two-sentence description of what they specialize in click here (scroll down a little, it’s below the average wage chart”
  6. Response rate greater than 70%

  7. Main products that are all closely related and in the vein that I am searching for

After using this criteria you should be left with a working list of suppliers that you can potentially reach out to (but not yet).

TL;DR Narrow results by checking all but the “Online” box and then identify 5-10 suppliers that look promising.

C) Checking Out the Suppliers

Once you have your list of potential suppliers it’s time to get into the nitty gritty and look at each of their profiles for any red flags.

For my example I chose (on a whim) Yuyao Lucky Commodity Co.. While they do not meet all the criteria above (name is a city not a province and their revenues were just shy of $5 million). They have a high response rate, the product pictures are what I am (hypothetically) looking for and their main products are all related.

Click on whatever suppliers you chose and it takes you the company profile.

On the “Company Introduction” page (should be the default) there are a couple of things to look for:

  1. Just below the company name, you want to see “OEM orders accepted”, “ODM services available” and “OEM/ODM requests welcome”, see

    This basically means that the company says they will work with you on your own labeling, designs for their made products (OEM) and/or work with to design totally new products that are still within their industry (ODM). Whether you use this service or not, it is a good indicator that the supplier is actually a manufacturer.

  2. The assessment report(s)

  3. Manufacturer listed under the “Business Type”. If trading company is listed to, do not worry about it.

Next I would spend a few minutes clicking through looking for information about the company. I would look for the following:

  1. Under “Trade Capacity” just glance at the map to get an idea of the geographic locations (you can use this later when talking to a rep)

  2. Under “Production Capacity” look for a factory location (and briefly check it on maps to see what comes up). Also, look for production equipment that they list just to verify that they actually list some with reasonable quantities for their listed production capacities.

  3. Under “R&D Capacity” see what they say (not what is listed). This will be something you can talk to a company rep about to verify, especially if they listed OEM or ODM.

  4. Lastly I would click on “Buyer Interactions” and then click on the “Products” link beside “Online Postings”.
    See .

    I would then briefly scroll through their product listings, looking for 2-4 that are similar to what I am looking for and make a note of the name as well as the product link (just right click and copy link address to a note.

Rinse and repeat for each of your suppliers, it’s a little tedious and time consuming but will (hopefully) save you a world of hurt and pay ample dividends in a solid supplier. This process will probably further eliminate up to half of the suppliers you identified but it should still leave you with 3-5 potentials.

Once you have your suppliers and associated product links it’s time to send the dreaded first email.

TL;DR Look for OEM/ODM on company profile, review various company links to look for red flags, look through product offerings and find 2-4 that are similar to what you want, copy those links.

D) Sending the Initial Contact Email

You could do everything prior to this without ever needing to sign in or create an account on Alibaba, but in order to actually contact suppliers you need to have an account (it’s free).

When you create an account, it will require an email address, it’s important that you use one that you do not mind getting lots of junk in. Once you actually have a working relationship with a supplier you can give them a more convenient one.

After you have an account and are signed in, click the “Contact Supplier” button that is all over the company profile

.

It will bring you to a message page where you enter in the info you are requesting. In some form or fashion I would send a message that looks something like this:

“Subject: I am interested in purchasing various products that you have listed

Message: Dear XYZ person,

I am very interested in the following products [insert product links that you copied earlier].

For each of these can you specify the following:

  1. Minimum Order Quantity (MOQ)

  2. Sample availability and cost

  3. The wholesale FOB price for various quantities

  4. The estimated shipping cost to [place near your location]

  5. The expected lead time from time of purchase

  6. The forms of payment that you accept and the payment terms

[if applicable] I am also interested in private branding and labeling, could you please identify what your factory is able to do as well as the added costs (if any).

Thank your timely reply, I look forward to potentially doing business with your company.

[Mr/Ms/Mrs. Last name or First name]”

Make a note of their response (I would copy all communications into a document or email that is timestamped) as well as the time taken between responses.

At some point after your initial contact you also want to do the following (if you are serious about buying):

  1. Ask for references (from the country you are in) with contact information and then contact the references and ask about their experience with the company

  2. Set up a Skype call with the rep (if they speak your language) or find a way to get a short video tour of the factory

  3. Get a picture of the person on the factory floor with the product you are interested in and a recent newspaper (this is a little overkill, but a great way to see if they are really legit and want to do business)

Lengthy discussion and clarification is perfectly fine and a good practice when vetting potential business partners (not just suppliers). Take your time with it and always be willing to walk away.

TL;DR Set up an account with dummy email, contact supplier, be specific and clear and do not pull the trigger until you feel comfortable.

E) General Stuff to Be Aware of

  1. While organizations that are trading companies are not necessarily bad, from what I have read you have a much better chance of getting taken by them over a manufacturer. Also, the benefit of not going through a middleman is realized through cost savings.

  2. The cheapest item is not always the best item, in fact I would lean more toward the pricier options because the odds are that they competing on quality and not trying to cut corners

  3. If it is name branded, IT IS FAKE. Sorry, that’s just the truth of it. Also, for the US (and probably other countries) you can and will get into a lot of legal trouble for essentially stealing from major corporations (they frown upon this).

  4. If it is too good to be true, it is. Trust your instincts.

  5. If they are unwilling to provide samples, a flag should go up.

  6. If the only payment they accept is Western Union, a flag should go up.

  7. Electronics are ripe for scams, be cautious.

  8. Before doing any significant business with a company, verify their domain using something like WhoIs

This post first appeared on Reddit at [Alibaba] How to not get screwed/scammed/taken on Alibaba (probably). (self.Entrepreneur)

submitted by ImportGuy