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Alibaba.com is the largest B2B (business to business) online portal that connects wholesalers and manufacturers (mainly Chinese) with importers.
This article is a review of The Official Alibaba.com Success Guide, a book written by Brad and Debra Schepp.
The book is a great introduction to everybody that wants to start to buy or sell (yes, you can also become a supplier on Alibaba if you wish) goods on a B2B framework. I suggest you to read the guide when you have an internet connection available as the authors often refer to Alibaba’s website. So it may be nice to test the features in real-time.
Do not make the mistake to just read the book and then forget it in a shelf forever because in this case it will be of little help!
The founder of Alibaba
The guide starts with an interview to Jack Ma, the founder of Alibaba, and a chapter that summarizes the history of the company. So my first impression wasn’t too positive as the book read a bit as an infomercial, kind of “look how cool Alibaba and its founders are!”
And, even though it was interesting, I bought the book to get practical advice. I must say that starting by Chapter 2 the guide only focus on practical aspects so at the end I did get what I was looking for.
Also, looking back at the interview, I think that Jack Ma has a lot of wisdom to teach to any entrepreneur. Here a short extract from the video above (starting at minute 7:47):
The second company is called Taobao and everybody said “Oh my God you are competing with eBay” and I said: “Why not!”
China needs an e-commerce site and build up the China market takes effort and time. At that time people said there were no chance… well, if you never try how do you know there is no chance?
So we tried and I said: “If eBay are the sharks in the ocean we are the crocodiles in the Yangtze river.” Never fight in the ocean, let’s fight in the Yangtze river.
It was difficult, but we survived. eBay got the 90% of share in the market at that time. Today we got the 90% of the share in the market!
Alibaba.com is a portal with a lot of features and, the first time you visit it, you may feel overwhelmed by the numbers of options and links that you’ll find. The Official Alibaba.com Success Guide makes a nice job on presenting the main functions of the portal and how to use them.
Here some of the features that I found especially useful:
The Trade Forum
The Trade Forum, where you can ask for help to business men that have more experience than you or Alibaba employees. Another way to use the forum is to just do a search for the topic you would like to address, for instance “freight forwarders,” and read the past threads on the topic.
Alibaba’s website features a series of success stories where you can learn the tactics and strategies applied by people that were able to source their products with profit on Alibaba.com (you find a great example of these stories on the first video of this article).
Alibaba also offers Trade Manager, a software that you can download for free and install on your computer for chatting in real-time with your potential suppliers.
Standards and Certifications
Products that can be sold legally in China are often illegal in North America or the European Union. The reason is that the standards and certifications required in the West are much more strict than the ones required in countries such as China, Vietnam or Indonesia.
You should never expect that a Chinese supplier will know the regulations that must be respected in your country. Thus you are the only responsible for knowing the certificate that the product you are sourcing needs to respect for being legally imported on your market.
The book offers a list of federal agencies and websites, for instance Commerce.gov, that control the importation of goods (the focus is on U.S.).
Obviously a guide like this one can address such a broad problem only in a general way and you’ll have to dig much more deeper on the standards and certifications required for the product that you are planning to import.
However I found the info quite useful as many wannabe importers aren’t aware of this problem and end up importing goods that don’t have the right certification and, as a consequence, will be seized by the customs officers.
Safe trading on Alibaba
An interesting information that I found on the book was that the countries with the highest number of disputes were Indonesia, Finland and Cameroon. So if you are planning to deal with a supplier of one of these countries be aware that they may be somehow more “dangerous.”
Also, Chapter 8 is entirely dedicated to safe trading practices. Beside the classical recommendations such as “install an antivirus on your laptop,” I’ve found out that roughly the 90% of the suppliers that were caught cheating the buyers and were banned by the portal weren’t Gold Suppliers.
But what’s an Alibaba Gold Supplier?
In a nutshell, if you want to be listed as a gold supplier you’ll have to pay a membership fee, which also represents the main revenue stream of Alibaba.com. An employee of Alibaba will then proceed in verifying whether the supplier has a registered company and other important information such as the address of the company, the name of its legal representative or the amount of registered capital. If the supplier passes the examination it will be listed as a gold supplier.
So, even if you can’t be sure that a gold supplier is honest, you can at least assess whether he’s serious or not (only beginners or fraudsters would think to export from China without even have a registered company). Hence it’s a good idea to only do business with suppliers that have the “gold” status.
How do you do whether a supplier is “gold” or not?
Just go to the profile page of the supplier on Alibaba’s website and check if the box on the right says “unverified supplier” (in which case you aren’t dealing with a gold supplier and you should run away) or “verified supplier.”
In this second case you know that you are dealing with a gold supplier. Also, pointing to the small yellow badge on the top-right corner of the box with your mouse you can discover for how many years the company was listed as a gold supplier. The more the better!
Other useful infos
The book also provides info about the Incoterms, that is the treaties that regulate international trade and define the responsibility of the transportation of the goods, the payment schedules and options, how to deal with your supplier, how to use Alibaba to export your goods (instead of import them), interviews to experts such a Aninda DasGupta of IndoSino Group and Renaud Anjoran of SofEast Ltd and, finally, several success stories.
This is just a book, so don’t expect to learn everything you’ll need to import from China (or any other country, for what it matters). International trade is not something you can master by reading a 272 pages guide. If you want to succeed you’ll have:
- To know in great detail the specifications of your product in order to minimize quality issues or the risk that the supplier starts to cut corners to increase his profit margin.
- To study the certifications and regulations in the market of importation so that you don’t end up with a container of illegal products that will be seized by the customs officers (or in prison, if you fool the officers and get caught selling illegal goods).
- To learn how to select the right supplier and draft a sales agreement that will protect your investment in the case some problems arise.
- To monitor the production phase with the goal of obtaining a product that respects the required quality standards.
Overall I found the book quite useful and I recommend it, especially to beginners.
[Cover Photo’s Copyright: Depositphotos.com]