It’s no secret that online shopping has become the default way to purchase most items. Clothing, toys, and even food can now be purchased and delivered with a click of a button.
In the United States, the undisputed king of online shopping is Amazon. However, in other countries, especially in Asia, Amazon has some serious competition with Alibaba.
Alibaba is another massive online marketplace, but unlike Amazon, it doesn’t actually sell any items. Instead, it acts as a go-between for buyers and vendors around the world. Because of this setup, scams can (and do) happen. So, that begs the question – is Alibaba legit? Let’s find out.
What is Alibaba?
Alibaba was founded in 1999 by a man named Jack Ma. He and other investors started an online marketplace for Chinese companies to do business and sell to customers via the internet. Although Amazon had been founded in 1994, it mostly focused on book sales and had yet to develop into the powerhouse we know today.
Because Alibaba is a Chinese company, it was allowed to thrive and expand in China while foreign sites were kept out. Because of this lack of competition, the site grew to become the largest e-commerce platform in the country. By 2015, the site accounted for roughly 75 percent of the country’s online sales.
In addition to e-commerce, Alibaba has been aggressively expanding into other industries and markets. The company has started investing in everything from fintech to entertainment (like Mission: Impossible – Rogue Nation) to artificial intelligence.
Is Alibaba Legit?
Because Alibaba is a global trading company, it’s hard to stamp out scammers and bad actors whenever they pop up. With millions of customers and Alibaba suppliers, the company can only do so much to protect both shoppers and vendors.
Overall, the marketplace is generally safe for everyone, but scammers do exist, so buyers need to watch out for potential fraud. While Alibaba does take steps to provide trade assurance (like verifying sellers), it can only do so much. Here are some of the top scams that can occur on the site:
Chinese companies and vendors have a notorious reputation for manufacturing and selling knockoff branded items. While this problem used to be relegated to live marketplaces and shopping centers, it has proliferated online, including on sites like Amazon.
This scam can work in a couple of different ways. First, vendors can put images of a branded product on their page, then when you order it, you receive a generic knockoff instead. Second, vendors may produce their own items and try to pass them off as genuine with identical branding elements.
While this scam used to be relegated to luxury brands and items, it has since expanded to include a wide array of products, including electronics, cookware, clothing, and more.
One way to avoid this scam is to look at the price, especially when trying to buy well-known products like Apple or Nike. Because of high taxes and fees, these items can actually be more expensive in China than the US. So, any Alibaba suppliers who are offering cheap items are likely scammers.
One of the biggest issues with online shopping is that you have to wait for your product to be delivered. While Amazon has a massive fleet of vehicles and delivery drivers, Alibaba has no such infrastructure. Also, if you’re buying from a Chinese vendor, you have to wait for it to travel across oceans and continents.
So, scammers can take advantage of this delay and simply not send you anything. In this case, you pay for the item they’re “selling,” and they don’t fulfill your order. Typically, this scam is focused on new products and items (i.e., the latest iPhone), but vendors can set up fake accounts for virtually anything.
What makes this scam even more frustrating is that you don’t even get anything for your money. With a knockoff product, you at least have a physical item. To prevent getting scammed by fake Alibaba suppliers, it’s best to look at reviews and comments from other buyers. Also, pay attention to how long the vendor has been on the site. Typically, these scammers can only operate for a few months before they get shut down.
Swapping Bank Accounts
As we mentioned, China imposes high taxes on foreign products and brands to make Chinese companies more competitive. So, some Alibaba suppliers may try to get around this problem by having you send money to a personal account, not a business one. In this scam, you’ll receive a message from the supplier asking to send the funds to a different account, maybe one owned by their “boss.”
Basically, if you receive this message, you should avoid working with the vendor at all.
Overall, many of these scams can be avoided by working with Alibaba Gold suppliers and vendors. Gold suppliers have been verified by the site, so it’s much harder for them to scam any customers. We’ll discuss how vendors earn Trade Assurance certification later on.
Even with these scams proliferating the site, the answer to the question “is Alibaba legit” is still yes. The vast majority of vendors on the platform are reputable, so you can’t let a few unsavory suppliers ruin the experience. Also, remember that the same problems can happen on Amazon, so they’re not unique to Alibaba.
How to Buy From Alibaba
Setting up an account on Alibaba.com is fast and easy, and you can start buying products immediately. As a customer, you only need an account and a payment method, and you can find products from vendors around the world. Alibaba will simply ask you for basic information like contact details and your country of origin.
When shopping for products, you can either buy them outright or submit a Request for Quotation. In this case, you’re telling the marketplace what kinds of products you want and allowing Alibaba suppliers to reach out with offers. This option is a bit trickier because scammers can take advantage.
No matter how you choose to buy products on Alibaba, make sure to look for Trade Assurance, Verified, and Gold suppliers. This way, you can avoid scammers and ensure you’re getting the product you’re paying for the first time. We’ll break down what these terms mean in the next section.
Tips on How to Buy From Alibaba Safely
In addition to looking for Trade Assurance badges on Alibaba suppliers, there are a few other ways to ensure you don’t get scammed while shopping on the site, such as:
Look at the Price
Many people assume that because Alibaba works with Chinese companies, they can get high-quality goods at lower prices. After all, since many factories and manufacturing hubs are located in China, they don’t have to worry about high markups. However, that’s actually pretty rare, and products may be more expensive when purchasing from a legitimate business.
So, if the price of an item seems too good to be true, it probably is.
Another element to point out is that an Alibaba supplier may have minimum order quantities. This happens because many verified gold suppliers are wholesalers, not standard retailers. So, you can get a lower price per item if you purchase these minimum order quantities.
Avoid Branded Items
Alibaba itself mentions that brand-name items are likely knock-offs. Because companies like Adidas, Apple, or Nike have strict protocols about who can sell their items, most vendors on Alibaba are not licensed to sell them. Unless you can be sure that the vendor is permitted by the brand to sell its products, it’s best to avoid them altogether.
That said, many Chinese companies and manufacturers can offer identical products at similar prices. Also, these items are not subject to the same fees and taxes since they’re sold by a Chinese brand.
Use Verified Payment Methods
As we mentioned, some scammers will try to have you send money to a separate personal account to avoid high taxes and fees. One way to prevent this scam is to only use verified payment methods, such as PayPal or Stripe. Also, making purchases with a major credit card (like Visa) allows you to dispute purchases if they turn out to be scams.
Pay Attention to Ratings and Reviews
One way to answer “is Alibaba legit” is to look at user reviews and ratings. Many Gold suppliers have tons of verified reviews that prove they’re legitimate and trustworthy. Although some scammers can fake these reviews, you want to pay attention to how old they are. If most of the positive ratings are within the last few months, they could be fake. However, if there are reviews from different time periods, they’re more likely to be genuine.
How Suppliers Get Verified Status on Alibaba
So, if buying from a Gold supplier is legitimate, how do vendors earn the Gold supplier status? Here’s a breakdown of how verification happens so you can trust these suppliers on the Alibaba website.
Step One: Submit a Verification Request
To become a gold supplier, a vendor has to submit a request with Alibaba directly. This process comes with a fee, which the online business must pay to move forward.
Step Two: Prepare for an Inspection
To avoid any conflict of interest, Alibaba uses a third-party inspection company to verify legit suppliers. This inspector will visit the vendor’s office and warehouse to make sure they’re running things smoothly and making products safely and legitimately. Inspectors will also look at individual items to verify product quality.
If the vendor is solely an online store, Alibaba can still inspect them to verify that they’re a reliable supplier. Dropshipping is a common online business method, so the inspector will look at the dropshipper to ensure it uses legitimate materials and products.
After the inspection, Alibaba will generate an assessment report, which will also be available to buyers. So, if there are any red flags in the report, buyers will be aware of them.
Step Three: Build a Mini Site
Once you have received Gold supplier status, you can build your own online store on the Alibaba website. This digital storefront allows you to control how you sell to buyers by adding various elements like images, videos, and reviews. This mini-site looks like a separate website, but it doesn’t take users out of Alibaba.
What is Alibaba Trade Assurance?
When conducting an Alibaba supplier search, you can filter results by using Alibaba Trade Assurance. This verification is the most secure and reliable, but how does it work?
In this case, Alibaba acts as a verified third party who is willing to step in and correct any issues that might arise. For example, if you order a product and it doesn’t arrive, Alibaba might refund your purchase and shipping costs. The goal of Alibaba Trade Assurance is to protect both the vendor and the buyer from any malfeasance.
However, Alibaba doesn’t guarantee refunds. Instead, it may act as a go-between to facilitate an agreement between you and the supplier. In some cases, you may get a replacement item. In other instances, the problem might be with the delivery service, so you simply have to wait a bit longer to receive your product.
Another point is that you’ll need to use Alibaba’s secure payment platform to use this service. However, this option is usually better because it’s safe and allows you to get refunds from the website if anything goes wrong. If you use a third-party payment processor, you might not be able to get any money back.
Benefits of Using Alibaba Trade Assurance
Since Trade Assurance is a program facilitated by Alibaba and not individual suppliers, it comes with a few extra benefits beyond the potential for refunds if an order goes wrong. Some other advantages of this program include:
Even legit suppliers can’t necessarily control their delivery dates and methods. Once they send a package through a delivery service, it’s (literally) out of their hands. Trade Assurance helps alleviate this problem by giving you an accurate delivery date.
Because Alibaba works with reputable suppliers, the date will be more reliable than if you purchased from a seller directly.
Flexibility to Compare Prices
As a trading company, Alibaba allows you to access data from hundreds of thousands of suppliers across its website. However, because many of these vendors can be disreputable, you may hesitate to “shop around” and compare prices.
Fortunately, by filtering your search results to only show suppliers with Alibaba Trade Assurance verification, you can feel confident in comparing these companies. Now, you have more flexibility about who you can buy from and still get the same peace of mind.
Better Product Quality
Another advantage of this program is that you can negotiate products and prices with a supplier. Since you can dictate elements like product materials and dimensions, you can make sure that you’re getting the best items possible.
When negotiating a deal with a Trade Assurance partner, you have to be specific with the details. Just asking for “high-quality” items is too vague, especially because your definition of high-quality may differ from the suppliers.
What Happens If There’s a Dispute?
While Trade Assurance partners are often reputable suppliers, mistakes and miscommunications can occur. For example, maybe your products didn’t arrive on time or weren’t made to your specifications.
In that case, you can file a trade dispute via the Alibaba website. The primary purpose of this dispute is to agree with the supplier. However, if no agreement can be reached, Alibaba will step in as a mediator to ensure a prompt and beneficial solution.
Here’s a quick timeline of how a dispute works:
- Day One: Start a Dispute Claim – You can message the supplier via Alibaba’s communication system. While you don’t have to use the site’s Message Center, it’s a good idea to have a verifiable paper trail that Alibaba can access if it needs to act as an intermediary.
- Day Four – If you haven’t heard back from the supplier yet, you can escalate the dispute and request Alibaba to step in.
- Day Seven – If the supplier hasn’t responded, the dispute can either be escalated or canceled, depending on the situation. If a dispute is canceled, you may be entitled to an immediate refund.
- Day 30 – If you and the seller have not reached an agreement, Alibaba will act as a mediator to try and resolve the issue. At this point, both parties need to submit their requests along with all evidence and documentation. Alibaba may also request specific information from each party before making a final decision.
Another point to consider is that many suppliers have a Trade Assurance limit. This limit can affect your ability to collect a refund. For example, if a supplier has a limit of $20,000, that’s all you can claim in a dispute. So, if your order was for $30,000 worth of products, you may lose the extra $10,000.
For this reason, you want to keep initial orders underneath a supplier’s trade limit, just in case. Then, after receiving your first order (and if it’s satisfactory), you can increase your order sizes accordingly.
Pros and Cons of Using Alibaba
Because Alibaba is focused on being a B2B trading company, both individuals and businesses can use it. So, the advantages and disadvantages differ from one entity to the next. Let’s break down the pros and cons for both customers and business buyers.
Pros and Cons for Individual Customers
- Pro: Access to International Companies – If you’re based in the US, you may not be aware of some of the incredible products available overseas. In fact, some items may not be sold in the US at all. Alibaba allows you to shop around in a global marketplace, so the possibilities are endless.
- Con: Scamming is Prominent – As we’ve discussed, many people ask “is Alibaba legit?” While buying from verified suppliers is okay, there are tons of smaller, disreputable sellers on the site. Compared to Amazon, you have to be more careful when shopping on Alibaba.
- Pro: Lower Prices – We’ve mentioned that brand-name items are likely going to be more expensive on Alibaba. If not, they’re likely a knock-off. However, if you’re looking for Chinese brands and other products, you can often save money, even when compared to domestic items.
- Con: Longer Shipping Times – Amazon has made us accustomed to getting our packages in a few days. However, when buying from Alibaba, you might have to wait a couple of weeks for your purchase to arrive since it’s coming from overseas.
Pros and Cons for Businesses Using Alibaba
- Pro: Lower Minimum Order Quantities – Many US-based businesses have relatively high minimum quantities to help them cut down on costs. However, manufacturers overseas have cheaper expenses, so you don’t have to order as many items in bulk. Overall, you can cut down on your costs compared to sourcing from a local supplier.
- Con: Harder to Sample Products – When you’re buying from a local vendor, you can often visit their warehouse or request a sample. With international suppliers, though, it’s much harder to verify product quality before purchasing it. So, you might have to start with a small order before you can buy wholesale.
- Pro: More Choices – If a domestic supplier can’t give you what you need, you can expand your outreach to the entire world. Plus, with Alibaba’s Request for Quantity feature, you can get suppliers competing for your business. Finally, when using the Trade Assurance program, you can feel confident when working with an Alibaba supplier.
- Con: Perceived Lower Quality – Many customers believe that foreign-made goods are inferior of domestically-made products. So, while you might be able to save money on your bottom line, you have to consider whether that will offset customer perceptions.
Where is Alibaba Available?
You can access Alibaba in over 190 countries around the world. When it comes to finding suppliers, the website only focuses on a few countries, including:
While you can find individual suppliers from other countries, the countries listed above have registered domains with Alibaba, making it much easier to source from them.
The Bottom Line: Is Alibaba Legit?
As a B2B trading company, Alibaba functions as an online platform, not an e-commerce retailer. While the site does experience more scamming than something like Amazon, it also provides protections and verification procedures to protect customers.
Overall, as long as you know what to expect and how to spot potential scams, Alibaba can be a valuable resource for both consumer and business-related purchases.