Sourcing products from China is a risky game, let’s admit it. Essentially, you’re sending money to a supplier in another country who you have never met, so there’s always a possibility that something could go wrong. I have discussed Alibaba Scams on my blog in the past, but if you ask me, scams are NOT the biggest issue you face when sourcing goods for your Amazon FBA business.
In fact, if you’re sourcing unbranded, everyday goods and you do proper research and use safe payment methods, the chances of you getting scammed on Alibaba are very low.
Believe it or not, over the last five years, I haven’t received a single email from someone who has sourced goods using my guidelines claiming they were scammed by a supplier on Alibaba. And by a “scam”, I mean a scenario where money was sent and the goods were never received.
However, I do get emails every week from people who failed to follow my guidelines and, as a result, have been scammed on Alibaba.
It sucks, but it’s always 100% their fault. They try to source branded goods, electronics and phones for unbelievably low prices from very shady suppliers, and then they are surprised when it turns out to be a scam. This is something I have warned people about over and over again. You CAN’T source branded goods from Alibaba, so just don’t do it!
I have put a lot of time and effort into this blog, and over the last ten years, I have constantly reminded everyone that Alibaba is NOT the place to go if you’re looking for branded goods. I have explained in detail how Alibaba scams work and what the top ten most popular scams are, and my number one rule always comes down to:
Stay away from branded goods! If you do, the chances of you getting scammed on Alibaba is reduced by 99%!
Scammers like to “work” with branded goods because there is a high demand for them from uneducated people! These people continuously fall for crazy deals like “buy three PS4 consoles and get three free!” and other similar nonsense. That’s why scammers mostly stick with branded goods—it’s the easiest and most lucrative niche for them to be in!
Now, when I talk about branded goods and Alibaba, I’m always talking specifically about Western brands, such as:
When you first start importing goods from China, you will face many new terms that you haven’t heard of before, like various shipping terms (DDP, FOB, etc.), payment methods, contract rules, etc. One of the questions I am often asked is about shipping marks—what are they and what information should we put in them? Let’s find out!
Basically, shipping marks are the details your supplier will put on the outer cartons/boxes that your goods are packed in. With bigger orders, this information can be printed on the boxes, while with smaller orders, suppliers usually use labels. In many cases, suppliers won’t even ask you about these shipping marks, but sometimes they will. If that happens, you will need to provide information to them.
Legally, you’re not obligated to put any information on these boxes. The supplier can send them to you completely blank, without any shipping marks. But that approach may not be the best, especially if your order is small and sent as an LCL shipment (less than container load).
Imagine that there are orders from twenty, thirty or more suppliers all in one container. Someone is responsible for unloading and sorting those goods at the port. Make their life easier and minimise the chances of your goods getting mixed up or lost by at least putting some basic information on your boxes.
I have previously discussed factory inspections in China on my blog, but today I want to specifically delve into the pre-shipment inspection, which is the inspection you do when your goods are finished and ready for dispatch. Do you really have to spend all that money on a FULL inspection, or you can get away with a PARTIAL inspection? Let’s find out!
1) Alibaba’s service team, which costs $48. This is not really a pre-shipment inspection service as all they check is carton quantity (whether or not it is correct), one item for visual defects and one carton for packaging and shipping marks. I don’t recommend you use this at all, as it won’t tell you anything about the quality of the goods in your order.
If you’re an eBay or Amazon seller who has just recently started importing from China, you know there are LOTS of things to learn! You need to know everything from how to filter out scams on sites like Alibaba to the best ways to order product samples, as well as all kinds of specific, previously unknown business terms and abbreviations.
And it’s not like you can just ignore these new terms and abbreviations. Having your price or shipping terms wrong can turn your first order into a massive disaster! You can easily incur unexpected charges that you never accounted for, which can totally ruin your projected margins and chances of being profitable on eBay or Amazon.
CNF, CIF, DDP, FOB, Ex-Works—what do they all mean? And, most importantly, which of these shipping methods is the most cost-effective? Which one is the best for your situation?
“Alibaba is a SCAM” – you’ll find this written everywhere online! The truth is, yes, it is possible that you may get scammed on Alibaba.com IF you don’t know what you’re doing. However, with the information you learn in this blog post, the chances of you getting scammed on Alibaba will be very slim.
Just to be clear: Alibaba itself is not a scam. In fact, it’s one of the largest companies in the world, with a market value of tens of billions of dollars. Alibaba.com is simply a platform where buyers and sellers meet. Yes, there are some scammers on Alibaba, just like any other online platform, but that doesn’t mean Alibaba itself is a scam. By that logic, you can say that eBay, Amazon and Gumtree are scams because you can find MANY unscrupulous businesses on those websites, too.
The biggest problem that this “Alibaba scam” myth creates is that it makes people who are new to importing too afraid to even start their research process. They have that one line repeating in their minds “Alibaba is a scam, Alibaba is a scam, Alibaba is a scam….” and that’s why, with today’s blog post, I want to clear the air once and for all. I will give you a step-by-step filtering system that you can use to avoid 99% of scams on Alibaba and unlock the potential of one of the world’s biggest online marketplaces.
DDP: Delivered Duty Paid! It sounds like a dream come true for so many Amazon sellers importing products from China! Isn’t it great that you can pay a slightly higher price for the product and get it delivered to you with all taxes already paid for? Perfect! Or… is it?
I’m afraid that when it comes to offers like these, we always come back to the age-old truth that if it looks too good to be true, it probably is. And DDP is no exception.
If you’re importing goods from China using Alibaba.com to sell on Amazon, eBay or anywhere else, you should read this article very carefully, because the chances are you’re currently breaching the law and could be facing severe problems due to tax evasion.
Sounds terrifying? I agree. So, let’s clear the air once and for all and learn about DDP Incoterms and how you CAN and CAN’T use it in your importing business.
Chinese New Year is around the corner, and you have to act fast to get your goods dispatched before your supplier switches off for several weeks.
I’m pleased to see that more and more people are following my advice on doing pre-shipment inspections in China. Ten years ago no one was doing this for small-scale orders as we didn’t have such cheap and accessible inspection services available like we have now. Today, when you can have an inspector to work for you for one whole day for just $100, it’s utterly stupid not to use this opportunity and check goods quality before they leave supplier.
Speaking of quality of the goods coming from China – please do understand that there are various standards in manufacturing and it’s not that Chinese manufacturers have problem manufacturing products up to highest standards. They can! At least most of them can.
The problem is that most people always try to negotiate the lowest possible price with the supplier, which results in a product of substantial quality where the supplier has cut cost on materials, labour, quality check or testing.
To avoid problems, you need to communicate with the supplier from DAY ONE that you’re after the highest quality/grade product they can offer. Inform them clearly, before placing the order, that you will be doing pre-shipment quality control inspection and goods with defects won’t be accepted.
I have some really good news to share with you—some REALLY good news! I have been waiting for this moment for years now and it has FINALLY become a reality. Transferwise is now supporting USD payments to China! BINGO!
This means we no longer have to overpay our banks for sending USD to our suppliers in China, and don’t have to use shady online currency exchange places, etc. It’s all gone, forever! We can now make simple, quick and cheap international USD payments to Chinese suppliers (and many other countries), and all for a very low fee with guaranteed currency exchange market rates!
If you have been importing your products from China, you will know that banks can charge £20 or even £30 for international bank transfers to China—even if the amount is very low, like £1000. Plus, they never use actual market rates for exchanging GBP to USD (the market rate is basically the BEST exchange rate you can get, which gives you most dollars for your pounds). That means that you’re overpaying twice:
1) The high fee for making the payment
2) The bad currency conversion rate (which can be as much as a 2% difference)
Combining these two, you can actually lose 5% (or more!) on a GBP to USD conversion and transfer to China, which is SHOCKING! Obviously, the more money you send, the lower the percentage because the transfer fee per £1 decreases as the sum increases. Still, why pay even 3% to a bank when you can put that money in your pocket? Exactly!
As small business owners, we are always looking ways to save money and efficiently cut costs, and bank fees and transfers are an area where you can cut costs with absolutely no impact on your product quality or customer service. You should never be overpaying on fees and you should always seek out the cheapest, most efficient cost-saving processes for services that don’t affect your customers. (more…)
It’s Friday today and that can only mean one thing – it’s time for this week’s Reader’s Question post!
Today I’ll be answering an email sent in to me by Steven, who is looking to start an importing business, but needs some help. And that’s exactly what I’m here for – so let’s get to it!
I don’t want to bother you with a lengthy email as I’m sure you’re incredibly busy but I wanted to ask just one question about something that I just cannot find the answer to…
I’m starting to import homeware goods like throws, rugs, furniture etc. and I’m concerned with laws governing the import of fabrics. I’ve heard there are laws stating textile goods have to comply with standards i.e. fire retardant materials etc. but I’m struggling to find any info on it and don’t want to get the goods to customs and be told I can’t have them or be told that I’m not able to sell them on my site. Have you had any experience in this kind of work Andrew and can you shed any light?
I also wanted to say a quick thank you for all of your business related help, out of all of the blogs, Facebook pages, and YouTube channels out there, I find your content has explained queries the most clearly and to the point. Coming from a haulage background into this world has seemed daunting for me if I’m honest but I’m gonna give it my best shot!
If you get a moment to reply to my email, that would be brilliant!
Thanks again mate! Steven
Thanks for your email & question Steven. And thank you for your kind words – I obviously put a lot of time and effort into this blog but it’s all worth it if I can help people achieve their dreams and create their own online business, so I’m very happy to hear that it’s been helping you.
Moving on to your question and yes – you’re 100% right, there are laws in place regarding the fire safety of furniture and related goods that you, as an importer and seller of such goods, have to comply with.
These Regulations are UK Law “designed to ensure that upholstery components and composites used for furniture supplied in the UK meet specified resistance levels and are suitably labelled” and they’re enforced by the Trading Standards Department.
These regulations were created because the number of fire-related deaths in the home had increased to more than 700 a year in the 1980s and it’s estimated to have saved nearly a thousand lives so please take this seriously! Failure to comply with these regulations is an offence under UK Law and pleading ignorance “is not accepted as a defence.” (more…)