Why Businesses Should Buy or Sell on the Alibaba Marketplace:
When headlines announced in September 2014 that Alibaba was the largest IPO in U.S. history, most Americans and many U.S. businesses had never heard of the company. With sales greater than Amazon and eBay combined, the Chinese e-commerce company is surprisingly just beginning to attract the attention of established U.S. retailers and aspiring entrepreneurs alike.
Founded in 1999, Jack Ma’s company is now claiming 80% of online sales in China. The international business-to-business (B2B) site connects suppliers with buyers— both businesses — across the globe on a single marketplace platform. Suppliers manufacture and sell products in bulk to buyers, typically businesses looking for inventory for their companies. The company also operates other Alibaba e-commerce sites, Taobao and Tmall. Unlike the main Alibaba site, Taobao is a C2C site, similar to eBay; and Tmall is B2C site comparative to Amazon.
Whether a U.S. business is looking to wholesale in bulk, or to buy products for their business; and whether they operate in the U.S. or globally, Alibaba is a one-stop destination. Key features of the international e-commerce site can help retailers meet their diverse needs and goals.
Why Should U.S. Retailers Buy or Sell on Alibaba?
U.S. retailers are beginning to recognize the advantages and reasons to sell on Alibaba. Among the many Chinese products available on the site, American goods stand out. In addition, American products are trusted for their quality and authenticity. Goods from China, on the hand, are known to often suffer from counterfeit and lower-quality production.
This has been the experience of Absonurix, a nutritional-supplement company based in Greensboro, NC. “We will quote our products one time, and there will be nine Chinese (price) quotations at the same time, but people prefer purchasing ingestible products from the U.S.,” said Adam Thomas, the company’s senior sales manager.
How Businesses Establish Trust When They Buy or Sell on Alibaba
Being an American company is just the first step in establishing trust in global retail trade. Alibaba’s supplier verification categories help to distinguish between suppliers that can be trusted versus others who may not be ideal business partners. When suppliers become a Verified Member or Gold Member Supplier, they make themselves trustworthy to other businesses.
Different types of verification activities are conducted by a third-party, ranging from checking business licenses, to reaching out to the business contact, conducting an onsite check of the company’s premises and more. The highest level is Gold Supplier and is recommended by Alibaba.
Being a Gold Supplier offers benefits that other levels do not, such as the ability to list an unlimited number of products, having access to advanced training on how to sell on Alibaba, getting a higher level of support and customer service from Alibaba, and more.
When a business is a Gold Supplier, a gold logo appears (see right) on their Alibaba site, indicating to buyers that the particular business has passed the highest verification level by Alibaba. To learn more about supplier verification levels and how they can help sell on Alibaba click here.
Other Services U.S. Retailers that Buy or Sell on Alibaba Use to Establish Trust:
A number of services are available on Alibaba that to help U.S. businesses establish trust when trading with and buying from Chinese suppliers. These services are not yet available to U.S. suppliers, but are helpful to retailers making business deals with companies based in China.
Verified Main Product: This service inspects products for quality. When a product has this designation, it indicates to buyers that the product is as described. Buyers should look for this logo:
Inspection service: If businesses are interested in a product that does not have a Verified Main Product Logo, they can pay for an Inspection service from third party inspectors. Alibaba will collect payments, but will not release it to the inspectors until businesses receive their inspection report.
Secure Payment: Alipay, similar to PayPal, provides secure payment when U.S. retailers buy from suppliers in China. Payments are only released to suppliers once businesses confirm that they have received the product. It also protects suppliers, who are notified of the payment receipt before shipping the order.
Note that U.S. suppliers do not have access to this service. A list of common payments include bank transfers, letter of credit, Western Union, PayPal, and Escrow. Click here for information on different payment methods and to learn which methods work best for each retailer’s needs.
Trade Assurance: This free service refunds businesses up to a covered amount if suppliers do not ship on time or their product quality is not as described. The amount is usually between $10 to 20 thousand dollars, enough to cover the initial deposit.
Customs Data: The Customs Data service provides access to public trading records of all companies that have shipped into the United States. Information is imported from U.S. Customs and Border Protection, and is helpful to U.S. retailers buying from foreign suppliers on Alibaba.
Facilitating Communications Between Businesses that Buy or Sell on Alibaba
Language barriers is one of the most difficult challenges of global retail and international trade, and Alibaba has tools to help tackle traditional communications barriers.
Multi-language sites: Alibaba’s 15 different language sites help suppliers connect with businesses whose preferred language is not English. These sites are:
Currently, suppliers can create posts using local languages only on Japanese, Spanish, Portuguese, Russian, French, German, Italian, and Arabic sites. For the remaining language sites, posts are written in English from Alibaba.com, and are automatically translated by its Translation Platform. Note that the automatic translation service is available for all sites, but retailers should be aware that software-generated translations aren’t always correct and literal translations don’t always make sense, a global retail challenge mentioned here.
Applications that help communicating between businesses easier
The AliSuppliers Mobile App, available for Andorid and iOS phones, allows suppliers to manage their buyer inquires, check new RFQs, respond to requests from buyers and to directly chat with buyers suing the TradeManager function.
The TradeManager Chat App is an instant messaging/chat service for suppliers and buyers. Businesses are able to receive instant notifications when a message is sent to them. In addition, they can create contacts and search their chat history. This messaging tool is available for Windows and Mac operating systems, in addition to the AliSuppliers Mobile App. Currently it is available in English and Chinese languages only.
AliSource Pro: How Businesses That Buy or Sell on Alibaba Find Each Other
AliSource Pro is a sourcing tool that helps suppliers and buyers find each other. Businesses looking for suppliers can post a Request for Quotation, or RFQ explaining what they are looking for. Information such as what the product is, its details, order quantity, etc., are listed in the RFQ. Alibaba then reviews the request and recommends the 10 best suppliers. Quotations from suppliers are sent within 24 hours, and buyers are able to compare and contrast suppliers, and pick the supplier(s) that best fit(s) their business needs. This service is available to all buyers and to Verified Members and Gold Suppliers.
Suppliers can view their RFQs on the AliSourcePro Channel, under Recommended RFQs, based on matches that Alibaba recommends; and Preferred RFQs, based on product categories the supplier previously picked. In addition, businesses are able to search for existing RFQs on the AliSourcePro Channel by using filters such as: country, region, category, date approved, and more. For businesses targeting their products to specific countries, the option to filter by country/region is especially helpful.
Other ways businesses can find each other
AliSourcePro is not the only way businesses that buy or sell on Alibaba can find each other.
To search for buyers, suppliers can choose the Buyers tab under the Search Bar, and enter a product name. They are able to filter by category, date approved, language, region, and country to make the search more targeted.
Likewise, businesses looking for suppliers can take similar steps by clicking on the Suppliers tab under the Search Bar. They are able to use the same filters as buyers.
Other Features that Help Businesses Buy or Sell on Alibaba
A number of other features facilitate trading for businesses on Alibaba:
- My Keywords: This tool allows suppliers to analyze their keyword’s performance, including its product ranking, search rate, and any related keywords. Specific time frames can be used if retailers want to view keyword performance in the past week, past month, etc. Knowing how keywords perform and whether they are using keywords in product listings that users are searching for is critical.
- Posting Services: Alibaba offers posting services that makes getting started on the site easier.
- Post Products Service, a free, one-time service offered to Gold Suppliers, posts up to 200 product listings for new comers to the site. Businesses provide data on the product in any format, such as Excel, images, brochures, PDF, etc. Alibaba’s team takes the data and creates product listings in an Alibaba style-approved post. Once businesses submit data for posts, it takes 5-6 weeks to process and create these posts.
- For assistance with posting 100,000+ products, businesses can reach out to Alibaba at email@example.com
- Alibaba Logistics: This is Alibaba’s shipping service that handles shipping out of mainland China to the following countries: the U.S., North America, Canada, Netherlands, Norway, Spain, and the U.K. The service provides assistance with customs clearance, online tracking of shipments, guaranteed service delivery, and more. Because it is limited to products shipped out of China, only businesses buying inventory from a Chinese supplier would benefit from this. To learn more about Alibaba Logistics, click here.
The Future For Businesses that Buy or Sell on Alibaba:
Alibaba has the potential to dominate e-commerce in the U.S., and a number of big businesses are beginning to explore options and pilot test the site. Costco, Neiman Saks, Ann Taylor are among the few. Most businesses, however, are skeptical, and are waiting to see how U.S. retailers perform on the site. Alibaba has enjoyed broad success in the China e-commerce market, but it will be awhile before we’ll know whether the success of the B2B international trade and global retail marketplace can be duplicated in markets beyond mainland China.
*Source: Telegraph.co.uk (video)