The most asked question I get are “how to avoid being scammed by a supplier” or “how do I make sure this supplier is legit”? Especially on platforms like Alibaba – the biggest of its kind. This begs the question, is Alibaba safe?
The short answer would be, YES, Alibaba is safe. Alibaba has been around for 2 decades and when i first used it back in 2004 things were very different from now and it was easy to get scammed. However, things have certainly changed since then and Alibaba itself has done many improvements to the site and is making sure, the consumer is safe.
It is easy to get overwhelmed with the selection of suppliers on Alibaba and I can understand how you might have difficulties figuring out if it is safe to transfer your money to a supplier you’ve never met.
To be honest with you the easiest way to make 100% sure if a supplier on Alibaba is safe is to go visit the factory but I realise that most of you won’t be able to do so.
The goods news is there are ways to figure out if a supplier is legit or not without going to China. The bad news is that some of these options will cost you some money.
Many people will tell you just to go for a “Gold-supplier”. But that means NOTHING. Anyone can buy that “badge” from Alibaba. The questions shouldn’t be “is Alibaba safe”. Because yes, Alibaba as a platform is safe. There’s escrow payments, third party inspections on site etc.
The real question should be: is the supplier you found on Alibaba safe / legitimate? So I’ve come up with a different approach over the years.
Here are my four proven ways of researching a supplier on Alibaba. I will go into detail for each one of them and hopefully it will help you determine whether you can transact business with a chosen supplier.
1) Alibaba research
2) Certificates & reports
3) Skype call
4) Factory audits
Disclaimer: Some of the products may contain an affiliate link and we may make a commission if you click on it at no additional costs to you.
1) ALIBABA RESEARCH
I’ve made a video for you below for easier explanation, but lets look at some of the main points. Alibaba research is free of charge and these days it is quite safe to manoeuvre on Alibaba. Alibaba itself works constantly on improving buyer’s safety and trust. So here are a few things you’ll want to look out for:
How long have they been in business?
Have they been around for 2 years of 20 years? Would you buy something from someone who has specialised making hair dryers for 2 years or 20 years?
What are their main markets?
Under the section company profile, you can look up what their main markets are. Are they mainly delivering to Egypt, Vietnam? Or is their main market the US or the Western European area? Make sure to choose someone who has experience with your market. You don’t want to have a supplier who you’ll have to explain all the quality requirements for your country.
Does their assortment match up?
Meaning do they have many different categories that are suspicious or don’t make sense? Do they sell bathroom furniture, lawn mowers and kitchen appliances? Or are they specialised in 1 product assortment? Chose someone who makes 1 or maximum 2 product groups. You also won’t be going to the Greek restaurant around the corner and order Pizza from the just because they have it.
Is the address a small office address or an actual road address?
If a factory prides themselves with a turnover of 10MilUSD and their address is for example: Room B, XYZ Office building, something is off. Also see if you can find a website outside of Alibaba – just Google the company name. Is the address you find on there different? Make sure they match.
Third party assessment reports
You can get copies of the reports that Alibaba saves on its database and you can look into the reports. These could be a ISO or a BSCI audit report. That means the factory has been audited at some point for manufacturing compliance. If the factory doesn’t have any, its not a good sign.
Does the factory have product certifications such as FDA approvals, FCC, or for Europe things like GS, LFGB certification? Are they visible on the Alibaba profile? Does the product number or name match up with the product you are interested in? If a factory has no product certifications its a sign that they aren’t into safety and quality regulations. Hands off!
Gold suppliers/Pre-assesed suppliers/Onsite Check/ Trade assurance filters
While I initially said anyone can buy a Gold-supplier badge, these do help to make a decision. After all, a scamming factory wouldn’t spend money on getting a Gold supplier badge (it still happens however). Be weary of non or 1-year Gold suppliers. See if the supplier has been checked by Alibaba or if they offer Trade Assurance. If for example a factory does not have any of the above checks I would be very suspicious. Because why wouldn’t they want Alibaba or a Third-Party to inspect their facilities? Simple, they know they would be uncovered as either an expensive agent or a scammer.
Finally at the end of this blog post I’ve made a video for Alibaba hacks, tips and tricks, so keep on reading to make sure you find the best suppliers.
2) CERTIFICATES & REPORTS
Another free option is to look at certificates & reports from factories. If your factory is neither on Alibaba, Globalsources or any other supplier directory you can still check their reports.
Simply email the supplier to send you the following (or one of them) reports for your evaluation:
- Their latest factory audit report from any other customer.
If they haven’t had an audit yet ask why. If they can provide you a report scan trough it and look for anything unusual or critical.
- Certificates of the product itself. For example :
FDA approvals (kitchenware, supplements, etc.)
REACH certification is necessary for most European countries & the Americas. It prohibits certain hazardous material within the product.
CE is a certification for Europe to meet general standards. Its good if a supplier has this.
FCC is a required certification on electrical products & also a standard for the US.
If they do not have any certification, approvals or even audit reports is its a VERY bad sign and you should stay away from this supplier.
1) Because they are not interested in developing any business with overseas clients and are only after quick and easy orders (most likely South East Asian customers who don’t care about certification).
2) Because paying for an audit or having your products certified costs time and money. Reliable & customer oriented factories do not shy away from making these investments. Scammers, un-reliable factories don’t even want to bother. They probably won’t even answer your email with your inquiry in the first place or they write something back that I received quite recently from a factory that i knew was up to no good: “We don’t do business with Hong Kong company”.
They realised I know my business, because I requested a couple of things in my first email to them. I am not saying overwhelm your supplier with questions and requests in your first email but find a fine line of what you want to have from your supplier in the beginning.
3) SKYPE/ZOOM CALL
Still not convinced of your supplier? Something off in your conversations?
This research option is free if your supplier has Skype/Zoom and most suppliers usually do. Request a video call with your supplier and prepare yourself with a few questions.
- Ask anything that would make you feel more comfortable in working with the supplier.
- Ask about the factory, how many workers, etc.
Basically anything that gets the supplier answering your questions so that you can develop “a gut feeling”.
- Ask them to show you the sample (of your interested product) in the video call.
If he doesn’t have a sample in hand, arrange another time for a Skype call. If he refuses or finds some excuses you will quickly see that something is off.
4) FACTORY AUDITS
Finally, you could conduct a factory audit. A factory audit is where you hire a Third-Party Inspection Company to conduct an audit at the factory’s facilities. I wouldn’t recommend this in the early stages of your communication. Check all off the above first and if for some reason you want to stay with the supplier but want to have him audited anyway, you could arrange a factory audit.
This way you can make 100% sure your supplier is legit.
Be aware that not all factories allow you to perform an audit at the location which is in turn already a huge red flag.
If they are willing to undergo an audit straight away it is a good sign already. You don’t necessarily need to perform an audit but announcing to a supplier before you order that you will conduct an audit already gives you some idea on what your supplier is up to.
There are many Third-Party Inspection companies out there and I mention them in a few posts (TUV, SGS, Bureau Veritas etc.) but I always use QIMA because they are efficient, cost effective and reliable. There are companies out there who charge half the price but you don’t have a convenient interface/dashboard online that lets you do the booking trough their system. Most of the cheaper Inspection Companies have only email/phone conversation bookings available.
You can create a free account anytime and book online at your convenience. What’s more, QIMA has many other services that come in handy. Such as product inspections, product testing etc. I’ve written on product inspections previously here. I never ship from China without an inspection! This is how their interface looks like:
I admit the price (629US$) is pretty steep and it only makes sense to perform an audit if you have larger orders and continuous business with a factory. Another reason could be that the factory you are planning to order from is the ONLY factory producing the item you are looking for but for some reason you have a feeling you would rather have the factory audited or inspected before placing an order.
Based on the audit report a factory actually also can benefit. The audit points out things to be improved from the factory’s side and it will help the factory to get more customers if they are audited by a Third-Party. You could even ask your factory to share half of the costs and pointing out to them that they will benefit from this audit in any way.
Even with many years on my back in this industry I can’t always know for sure that a factory is legit or not trying to scam me. Unless of course I send an inspection or go to see the factory myself.
A member of our Master Class told me a story recently about an absurd encounter via Skype with a supplier in China and I hope she don’t mind me telling the story here.
He looked like he was at a house rather than work. He looked like he had just woken up and recovering from a hangover. There was a child screaming and running around in the background…then a second guy came up to give him a cigarette, which he then proceeded to smoke during the Skype session….he then told me that the factory is “moving” so 100 pieces in a custom packaging would take about 2 months. It was a bit comical at times.
Now I would think twice ordering from this factory but apparently everything went well (this time).
It’s like in poker. You have a certain amount of “tells” available on your opponent and depending on how he makes his moves, you call (place an order) or fold a hand (eliminate the supplier).
Even when you know you did all you can do to protect your money sometimes there is no guarantee you can win, but having the above tools and research options available you can at least make a decision knowing you did your best.
Now, I do hope the above gives you some idea and help to safely select a supplier in China on Alibaba (or other platforms).
Last but not least, as promised – here’s the video I made a while ago on how to safely navigate Alibaba: