[PART 2] HOW TO SHOP SAFELY ON ALIBABA

What Is Alibaba?

     When you have finally decided and also ready to source your supplier from overseas, it's possible you end up being purchasing your products from Alibaba.
[Join Alibaba]

Alibaba is the largest ecommerce company in the world (even bigger than Ebay and Amazon combined) also, it's the most comprehensive directory site that connects suppliers (mostly from Asia) with buyers worldwide. There are millions of products from hundreds of thousands of suppliers so therefore, Alibaba has absolutely everything you might want to purchase :)

Start Your Search For Your Product Idea

     Note that you must create a new user account before you start transacting on Alibaba [Signup Now].
Using the directory while purchasing your products on Alibaba is usually straight forward to use and also similar to other marketplaces (like the auction websites). You can browse the product by their categories or you do a specific search for the product you are looking for.
Basically, there are 2 common approaches to carrying out a search on Alibaba, you either search for items based on the descriptions of the product for example: "wrist bands" which would bring forth so many results or you select "suppliers" rather than "products" from the drop-down menu so as to search for manufacturers that specialize in that particular product.

What You Should Look For On Product Pages

     The price of the product you are willing to buy is one of the most important things you should be aware of when starting your search on Alibaba, for example: "Dog collar" listings which has the price range of between $2 - $3 USD "FOB". FOB means free on board and it signifies that the supplier/seller will pay for shipping the products to a particular marine port and the buyer will pay for transporting the products across the seas to its final destination.
     Another thing you should look for is the "minimum order quantity" (MOQ) which signifies the smallest order the seller is ready to accept for shipment. (Note: the price is always negotiable). Now , let us assume our minimum order for dog collar is 150 units. Multiplying the 150units by the higher-end price of $3/unit, then our minimum order would be around $450 USD plus shipping from the seller's warehouse to a particular marine port. It is very important you understand this because it gives you a good starting point when it comes to negotiating with the seller.

Payment (Transaction) Options

     After you might have understood the price of products and MOQ, the next step is to know the methods at which you pay the supplier. There are many common methods of making payment on Alibaba, each have their pros and cons for both the buyer and the seller. Let's look at the most frequent payment options below and their risk level to you as the buyer.

 1.  Letter of Credit {Fairly Safe}. A letter of credit carries several complex procedures and it is usually recommended for larger purchases like $20, 000 USD and above. It is fairly safe for both the buyer and the seller.

2.  Bank Transfer {Risky for buyer}. With a bank transfer, the supplier will receive full payment before production begins. This payment method has the highest level of risk to the buyer and it is not just advisable to use it when you are dealing with an unknown supplier. There is a little chance of getting your money back in case something goes wrong.

3.  Western Union {Very risky payment method for the buyer}. This method is not recommended, only use it when you know the seller you are dealing with because, there is no recourse if something goes wrong.

4.  PayPal {Fairly safe for buyers}. Paypal is a superb payment method for buyers because it presents a much lower risks, easy to use and generally very nice buyer protection.

5.  Escrow {Fairly Safe}. By using escrow payment option, buyer's money is held safely by a third party and it is paid to the supplier right after the buyer confirms adequate and satisfactory delivery of their order.

Escrow is a fairly safe payment method for any online transactions because it protects both the buyer the supplier.
Note: when you're just starting with Alibaba, always negotiate with sellers to accept either PayPal or Escrow service in order to ensure maximum level of protection.