Is Alibaba legit? Alibaba.com is one of the biggest online stores in the world, and it specializes in selling wholesale Chinese goods. Not to be confused with AliExpress, a sister company started by the same founder, Jack Ma, but aimed at retail.
Even though Alibaba.com has grown in popularity over the years, many people still don’t trust it.
At the end of the 1990s and beginning of the 2000s, it was easy for Chinese companies to send a container full of trash or commit payment fraud. Today, this kind of scam is much less common, and there are more checks.
But today, there are new risks that come with buying things online. So is Alibaba Legit? In this article, we’ll talk about the biggest problems that come up when you buy from Alibaba and how to avoid them.
Is Alibaba Legit? The advantages and disadvantages
Alibaba is a site for wholesalers. Chinese companies that make goods can choose to open their own store on this platform and start doing business with buyers from all over the world.
Since Alibaba is just a market place, the goods that are sold do not belong to Alibaba. Instead, they belong to the suppliers, who are therefore responsible for the orders and the quality of the goods.
Payments for things that can be bought on Alibaba are made outside of the platform, in a private conversation between the seller and the buyer. They can do this via e-mail, chat, or the phone.
In fact, Alibaba does not take a cut of these sales. Instead, it makes money through a program called “Gold Supplier,” which is only available to suppliers who have shown they are real businesses with the right certifications, share capital, and registered office.
Buy on Alibaba for your business: the advantages
On Alibaba, there are a lot of Chinese suppliers who sell goods in bulk.
There are many good things about it:
Lots of products to choose from, lots of suppliers to choose from, and the ability to make private deals;
Alibaba doesn’t raise prices; prices on items are low;
Having the ability to make custom goods.
The biggest problems customers face
Surely while it is true that choosing to buy on Alibaba is advantageous, you have to be careful if you don’t want to run into scams.
In fact, if you talk to customers who have used this service, the main problems encountered were the following:
Quality or certification issues
Before they can be brought into Europe, the US, or other countries with strict quality controls, goods from China must have certain certifications that show they meet the rules of those countries.
The following are some of the most-requested documents:
Labeling a product (such as CE marking)
Electrical safety components for beauty products’ packaging (e.g. ROAS)
how well prohibited or dangerous substances are kept out of electrical parts and products (for example AZO colors, lead, or formaldehyde)
There aren’t many companies on Alibaba that can sell products that follow these rules and have the right paperwork to prove it.
Because of this, it’s important not to choose a supplier based on price alone, since the importer, which is you, is responsible for making sure the goods are in compliance.
When you buy goods in bulk from Alibaba, you should check with the supplier to make sure you have all the paperwork you need to get through customs.
Or, even before you buy anything on Alibaba, choose suppliers who put online scans of the certificates for their products, their production facilities, and their business as a whole.
Most of the time, this proves that they are real suppliers. But be careful, because some suppliers may use fake certificates. If this happens, contact the company or organization listed on the documents and ask them to verify the certificates.
Unknowing purchase of copyrighted products
You can find all kinds of goods on Alibaba.com, so you might end up buying something that is protected by intellectual property.
For the manufacturer to buy these items, they will need to make a special deal with the license holder and pay the fixed or ongoing fees for each item.
Most suppliers in China don’t have this kind of deal, but they still use these products without the owner’s permission.
Take a shirt with Mickey Mouse on it as an example. We all know that Mickey Mouse is a Disney character, so his image is protected by intellectual property laws and cannot be used without the company’s permission.
But sometimes the limit is much more subtle. For example, if we’re talking about kitchen faucets or small appliances like WIFI headphones, are you sure you can tell on your own which ones you can bring in and which ones you can’t?
Buying items with intellectual property is against the law, and you are to blame because you are the importer.
When these items are stopped at customs, they are taken away and the importer is given a fine. There could also be more serious criminal consequences.
The advice is to stay away from these kinds of products and check with patent directories to see if the ones you want to sell are actually legal to sell.
Before you buy anything on Alibaba, you should know that you can’t find original brand-name items there, just like you can’t find them from any other Chinese wholesaler.
Branded products, like iPhones, can only be sold by the company’s official resellers, so if you find similar products on Alibaba, they are probably fakes.
Even in this case, it is illegal to buy fake goods, and once they reach customs, the importer is responsible and risks fines and other penalties.
If you want to avoid scams, the only way to do so is to avoid buying products that are obviously fake and to stay away from online sellers who try to sell products with well-known brands but are not 100% real.
Delays in shipments
A common problem for people who buy things on Alibaba is that the goods take a long time to ship.
Even though the order says that the goods should be sent by a certain date, that date is often not kept.
Fixing this problem is hard because most payments happen before the quote proposal is accepted and at the end of production.
The only thing that can be done to be safe is to pay with a letter of credit. This way, the Bank will handle the money and only give it out when the goods are sent.
But the letter of credit is not an easy banking tool to get and use.
Before choosing one supplier over another, you should read customer reviews and look out for any bad experiences, like shipping delays. If most people have had the same problem, you should avoid that supplier.
Reliability of the supplier
Even though it happens less often than it used to, a supplier could take an order and then disappear without finishing it.
Suppliers sometimes take orders they know they won’t be able to finish before the holidays, especially before Chinese New Year. They take the money for the pre-order and don’t come back for 15 days or more (the length of the holidays).
To avoid meeting these kinds of suppliers, it’s best to check the supplier’s registration date on Alibaba, read customer reviews, and make sure they’re a gold supplier.
So that customers can find the most reliable suppliers, Alibaba has made a status called “Gold Supplier,” which is called “Gold Supplier” in the Italian version of the site.
These are the vendors who have never had a complaint filed against them. Right now, there aren’t that many of them: only about 10% of the vendors on the site.
Alibaba then checks the companies that are part of this program to make sure they are legal businesses with an address, a legal representative, and a share capital.
By looking at the main problems that customers have when using Alibaba.com, we can see that the main complaint is that Alibaba is only a point of contact between sellers and buyers, but it doesn’t offer many guarantees.
In fact, you can find suppliers who aren’t serious, goods that don’t follow EU rules, or goods that don’t have the right paperwork to get through customs. In other words, there is no middleman between you and China, so you’ll have to figure out how to handle problems with payments, defects in goods, transport, logistics, customs clearance, or shipping, because the supplier could back out and leave you in a bind.
Is Alibaba Legit? How to shop safely
By adding the “Golder Supplier” label, Alibaba has, in a way, made it easier for people to buy from more trustworthy sellers.
From this point of view, people who shop online tend to feel safer if other people who have bought from the same seller say he is trustworthy.
Customer reviews are a good way to form an opinion, and companies know this. It’s not a coincidence that many suppliers offer their buyers refunds or discounts if they leave a good review with a high rating, which is a real online scam.
If you want to make a purchase on Alibaba, it’s best to only look at the Gold Suppliers, who have probably been in business for a few years.
But this doesn’t protect you 100%. If an Alibaba customer reports a gold supplier, he is taken off the list of reliable suppliers. However, it is not impossible that he could get back on the list by just changing the name of his company.