“Alibaba is a SCAM” – you see this everywhere! And yes, you may get scammed on Alibaba if you don’t use your common sense… just like on eBay, Amazon and ANY OTHER online marketplace.
Really I kinda feel sorry for Alibaba as I know for sure it is not a scam. Alibaba is simply a platform where buyers and sellers meet. Yes, there are of course scammers on Alibaba but that doesn’t mean Alibaba itself is a scam.
With that logic you can then say that eBay, Yellow Pages and even your local business directory are scams as I’m sure you can also find some unscrupulous businesses there too.
The biggest problem this ‘Alibaba scam’ myth creates is that people who are new to importing are too afraid to even start their research process as they have that one line repeating in their heads – Alibaba is a scam, Alibaba is a scam, Alibaba is a scam…. that’s why, with today’s blog post I want to clear up the air once and for all and give you a step by step filtering system you can use to avoid 99% of scams on Alibaba and unlock one of the world’s biggest online marketplaces
But before we go into the actual verification process; let me quickly remind you that you cannot get any kind of branded items wholesale from mainland China.. I’m talking about electronics, DVDs, software, designer clothing, shoes and similar items. If you’re looking for anything branded, China is NOT the place to look as you’ll only receive fakes or get scammed.
Now back to Alibaba – they’ve actually improved their website and listings significantly in this regard – these days it’s very hard to find any “branded” items on Alibaba as they have removed most of these listing and suspended offending advertisers. Years ago you could do a search for any TV series and get hundreds of results. I just tried such a search and it returned ZERO results…
These bootleg DVD box sets were very popular – 24, Baby Einstein, Friends, Prison Break and others – all fakes, 100% copies, sourced for a fraction of the actual cost and sold back on eBay. Luckily, those days are over! Sure, there are still bootlegs available on eBay but not on the scale it was before.
Anyway, what does this have to do with our original topic – well the no.1 rule to avoid scams is – STAY AWAY from anything branded on Alibaba.com! You can only source un-branded goods wholesale from Mainland China! And once you eliminate branded goods, you’ll see that it’s actually very difficult to get scammed! To make it practically impossible, use my 10 step filter system…
1. Gold Supplier
If possible, I always try to stick with Gold Suppliers who are on their 3rd year+. Gold Supplier status still is the number 1 thing to look for when looking for reliable suppliers on Alibaba and to avoid scams especially when used in conjunction with filtering out 1st year and 2nd year suppliers.
The Gold Supplier status costs several thousand dollars each year – scammers simply can’t afford that kind of money. Besides that, they’ll never last longer than 1 or 2 years – by then they get caught and have to change the company name and register a new Alibaba profile.
That’s why I try to stick to Gold suppliers who have been trading on Alibaba for at least 3 years. If you see a Gold Supplier in their 6th, 7th or 8th year – it’s a sure sign that it’s an established company and the chance of them being a scam are incredibly slim.
I never do business with free members on Alibaba! I even don’t look at free profiles as that’s where most scams are hidden. If a Chinese manufacturer or trading company can’t afford the Gold Supplier yearly fee, it definitely says something about them.
2. No complaints in the last 90 days
This is a new indicator Alibaba recently introduced and it gives us a good idea of any potential problems with the supplier. I would filter out any supplier that has a complaint in the last 90 days.
3. Escrow Payments
Even if you don’t want to use Escrow on Alibaba yourself, if a supplier accepts Escrow then it’s a good sign that’s a genuine company (scammers will almost never agree on using an Escrow payment system).
4. AliExpress Store
This is a very good indicator that you’re dealing with a legit supplier. These days more and more Alibaba companies are opening AliExpress stores where you can shop safely for small MOQs and pay securely via Escrow using your credit card. If a supplier has an AliExpress shop, check it out. –Specifically, check out their feedback as it can tell you a lot about the product quality, how quickly the supplier dispatches goods etc.
And you can take this even further – quite often, just to save me time and avoid extra, unnecessary communication, I use a supplier’s AliExpress shop to order samples. This way you can check the quality of the product and only once happy with everything, place your real wholesale order by contacting the supplier directly through Alibaba or even the same AliExpress!
YES, even on AliExpress you can get significant discounts when buying in true bulk so if you want to stick with AliExpress & their escrow system, you can simply negotiate a deal with your supplier there. Just keep in mind that it will always be more expensive than to deal with the supplier directly as AliExpress takes their cut in fees for each transaction.
5. Live Factory Video
If a supplier has a video on their Alibaba profile, check it out. If it’s produced by Alibaba themselves, it’s a sure sign that the company is real and genuine. If not, still try to use it and look for signs that tell you this is the company you’re dealing with (logo / company name on office walls, factory footage showing production of the goods they’re advertising, trade show footage etc.).
If a company owns a proper, standalone website in English,that’s another good sign that you’re dealing with a reputable company. You should also do a Who Is database check to find out when the domain name was registered; the older the better, of course.
7. Trade Shows
Whether it’s on a company’s Alibaba profile or their website, look for Trade Show information. Scammers DO NOT attend trade shows so if you see trade shows listed for up-coming months, or past trade show information with pictures, it’s another good sign. But always make sure to try and verify this information on the official Trade Show website (for example, China’s biggest trade show is Canton Fair).
8. Google Search & Global Sources Profile
Do a quick Google search of the company’s name. Quite often you’ll get links to their profile on other Chinese B2B websites, such as MadeinChina or Global Sources. If the company has a verified profile on Global Sources, chances of it being a scam are reduced to an absolute minimum as unlike Alibaba, Global Sources takes it’s verification process very seriously and there are stringent requirements for authentication. So depending on the number of stars a supplier has on Global Sources, you can be sure that you’re dealing with a real company.
While still on Google, do another search for “company name + scam”. Usually this will pull up any forum posts or scam reports associated with that company.
9. Invoice / Bank Details
When you’re already in the negotiation process and receive your first proforma invoice, always check the company address, name & bank details. It should be exactly the same as on their Alibaba profile.
NEVER send money to a personal bank account! This is the most typical scam played out on Alibaba – the supplier will tell you that they’re having a problem with their business account so please pay to our boss’s account. NEVER do that! Money that goes to a personal bank account is often nothing more than money gone down the drain.
10. Payment Options
If the only payment methods a supplier accepts are Western Union and Money Gram, run away! I would never even consider dealing with such a supplier. And while not all suppliers in China will accept PayPal, a bank transfer to a company’s account should be a default payment method that is always available to use. If they also accept Escrow, a letter of credit or PayPal – even better! But never only Western Union or Money Gram!
The only time that I’m happy to use Western Union is when paying for samples as it’s quicker and cheaper to send small amounts via WU than to do a bank transfer.
That is all pretty straightforward, right? Excellent!
So that is my TOP 10 filters to use when looking for a new supplier on Alibaba. There are of course many more, smaller ones, like – watermarked pictures. If a supplier has their own, watermarked pictures on their Alibaba product showcase, it’s another good sign that it’s a legit supplier (scammers usually don’t have the time or resources to get unique product pictures).
But overall, if you follow these 10 verification steps to check new suppliers, the likelihood of you getting scammed on Alibaba is really, really small. Sure, you can get unlucky – no one is protected 100%, risk is part of any business but in general, you’ll stay safe and avoid scams on Alibaba if you follow my advice.
Lastly, let me quickly note that there’s a difference between getting scammed on Alibaba AND simply getting a bad supplier with low quality stock or a supplier who is lazy, unresponsive and doesn’t want to hear about your problems after the sale is made. There are good and bad suppliers everywhere – be it China, UK, Argentina or anywhere else!
That’s why you should always start with a sample order, just to test the product quality and the supplier’s reliability. If you’re happy with the sample order, place your first real order but still keep it to a relatively small size and increase your orders gradually. Why? Well what often happens is that suppliers send out a perfect sample but then if you go ahead with a massive first order, they could send you a lower quality product.
Ideally, you would want to do some quality inspection for large orders but that’s an additional expense most small time traders can’t afford. So by gradually increasing your order quantity, you minimise the risk of getting scammed and it also acts as a product quality check.
That’s it for today. I really hope this helps you to stay out of trouble and avoid scams on Alibaba! As I said, there are actually not that many scammers left at all, but if you avoid branded goods and follow my 10 step verification process, your chances of getting scammed are reduced to a minimum.