Buying on Alibaba: low prices, making a payment outside of Alibaba and more. Lessons learnt!
Hey there! My name is James and I am dreaming about becoming a successful importer and sell products on Amazon. Thanks for joining again, this is a series of movies where I will tell you all about my successes and epic fails when dealing with China and Asian suppliers, stay tuned!
James: Hi Tom, how is it going?
Tom: Yeah, my online business is going well, started to source from Asia directly.
James: Yeah, I remember, you had something purchased on Alibaba, right?
Tom: Yeah I tried to order from a company called Genuine Gadgets on Alibaba, it was with a Gold status and a verified A&V check. They advertised ps4 consoles with a promo of the “buy 2 and get 1 unit for free” and the prices were quite low so gave it a try.
James: Yes, sounds like a good deal.
Tom: Wait till you hear the rest. First we communicated on the Alibaba chat box and then the supplier Jessy invited me to talk on WhatsApp. Weirdly enough so many suppliers reach out to me in WhatsApp or Wechat..
So Jessy requested to place an order and pay the down payment using Money-gram, which is a service separate from the Alibaba platform. The supplier had pointed out that they would be shipping the products to my door step using DHL. But after confirming the payment Jessy said DHL was quite expensive and they would be using a new shipping company called Trace-world logistics.
James: Ok, that’s pretty unexpected.
Tom: Right, and then she gave me a reference number which seemed genuine, but after a day she contacted me to say that the goods were held by customs authorities who were demanding an amount of $1000 for the goods to be released.
I told her that they should cover these costs, but she persisted that we should share the custom liability since they did not anticipate it. I refused to pay and demanded my down payment back, but I could not reach them afterwards and never heard from this scammer again.
James: That sucks, but there are some good lessons to learn from this and other importers’ stories.
Lesson 1: No branded goods can be found on Alibaba! Those which can are 99% scam.
Lesson 2. Asking for additional payment for customs clearance.
Export duties are only imposed on a few resource products and semi-manufactured goods, most of product categories do not need to be imposed on with the provisional export duties or tariffs.
Lesson 3. Sending money to the boss’s bank account. Importers sometimes encounter cases when a supplier said the company’s account is for some reason unavailable so a client could only transfer to the boss’s personal account. Avoid!
Lesson 4. Always arrange a due diligence documentation check and ideally arrange an audit or a virtual audit to the factory.
Lesson 5: Communicate with the supplier with their official business email or within Alibaba chat window. Try Alibaba Trade Assurance, letter of credit or even a middleman platform like UpWork as an extra layer of security if your amount is not very big.
Well, I hope my experience of purchasing via Alibaba will be better than Tom’s. I’ll tell you next time!