Alibaba.com has started on its plans for world domination global expansion on Monday, quietly launching AliExpress - Alibaba’s first entry into the world of ecommerce portals.
While we will talk about buying on Alibaba and how to spot the scammers let’s just take a look at the background behind Alibaba.com.
Alibaba is perhaps one of the biggest web entities based in China. Alibaba brought in US$440 million revenue last year and claims to have 32 million users on Alibaba.cn and 8.2 million users on Alibaba.com.
However, it’s global users that bring in the money, US$84 million in the last quarter, 63% of its earnings.
This perhaps is the reason that the company has started to look offshore a little more for its money.
So far it has pumped US$30 million into international advertising and another US$200 million into global acquisitions.
And while Alibaba is seen as China’s biggest B2B portal it is really an advertising space, no deals actually go on within Alibaba it is all done outside via email or on smaller vendor’s websites.
This is where AliExpress comes in.
In AliExpress, Alibaba holds the payment for the customer in its Escrow Alipay system and only pays the supplier once the item has been delivered.
You can read more of this story here: prweb.com/releases/China-Wholesale/AliExpress/prweb2769864.htm
This is aimed more at the small to medium retailers sourcing from Alibaba.com who may have been scared off by the chance of not receiving their merchandise.
Further evidence of this is in the $10,000 per order credit limit placed on buyers.
So, essentially, AliExpress is the development of a fully working ecommerce website set up on the same domain the main business of advertising takes place.
According to our PR guru, Rose Li, it’s a move that takes a lot of courage:
“AliExpress is an example of a large public-listed company fearlessly diversifying into unfamiliar waters,” said Rose Li.
So while Alibaba’s investors watch on in baited breath what opportunities does this open up for small ecommerce operators and eBay resellers?
While some may look on this development as a great new sourcing opportunity the reality may not be so rosy.
It is true that the use of the Escrow-based Alipay system to manage payments between suppliers and customers may prevent the non delivery of goods — a big concern of smaller customers — but there are problems that it won’t solve.
Problems To Watch Out For
These problems are likely to include:
- The replacement of items ordered with ‘like’ items (products that are similar to the original specifications but not may not be exact)
- Differences in perception over acceptable shipping times
- A lack of quality control carried out on products
This is largely because vendors will still be dealing with the same suppliers they have had problems with in the past. It’s just that the suppliers wont be getting the money until something is in the customers’ hands.
“Will buyers get what they want from AliExpress? Each supplier you find in AliExpress will have their own concepts of acceptable quality and speed. Since the goods are neither sold nor shipped by Alibaba themselves, the burden will still fall to the buyer,” said Rose Li.
“Alibaba will need to provide AliExpress buyers with strong buyer guarantees.”
So with that in mind any potential buyers will have to go into AliExpress with both eyes open and examine any potential vendors carefully.
Dropshippers should be extra vigilant.
These are the top 5 warning signs you should be wary of when examining their site and sending a test email.
Warning Sign 1, They Offer Everything From Baby Shoes To Butt/Bum Massagers
If you go to the seller’s profile page and they have a wide range of products on offer then there is a good chance that you’re dealing with a trading company and won’t get the best deals.
Warning Sign 2, They Don’t Answer, Or Are Slow To Answer Your Pre-Sale Contact
If they don’t answer your questions when you haven’t bought anything imagine how bad it’s going to be when you’ve bought something and are actually trying to solve a problem.
Warning Sign 3, They Are Located In Fujian
While it would be incorrect to say that suppliers from that region are all crooks and thieves it is safe to say that many people who have tried to source from there have come away with a bad taste in their mouths.
Warning Sign 4, They Don’t Use The Same Name Or They Use A Name Without A Location
Chinese companies almost always have a city attached to them and so ones that don’t have one in the title should be treated with a great deal of caution.
EG
- Back Alley Airfreight (Shanghai) Co LTD
- Back Alley Airfreight Co LTD
Even if a location is in the name you still aren’t in the clear. Check their:
- Alibaba contact address
- Alibaba showroom name
- website/email name
- Proforma Invoice (if you’re getting a price quote)
- Logo and marketing material
If the same name doesn’t appear twice, walk away.
And, if after contacting them, somebody gets back to you with an email address like mrwang82882882888888 @168.cn, asking you to contact him on his personal mobile or msn… Run.
Warning Sign 5, They Claim To Sell Brand-Name Products
The only way you are going to get brand name products is if you pay brand name prices and go through a few select channels.
It is very unlikely that a small player on AliExpress is likely to have the Apple iPhone or Nintendo Wii you need.
And if they are blatantly ignoring copyright even their non-counterfeit products must be called into question.
Even if warning lights don’t go up over those five things it is still worth going online to review sites and wholesale forums and seeing if anybody has dealt with them in the past before.
So is the launch of AliExpress an opportunity an exciting development in ecommerce in China?
You bet
Is it a fantastic new development that is going to open access to the world of China manufacturing to small and medium sized ecommerce operators?
Quite possibly not. But if you’re going to take the plunge keep both eyes open when you jump.
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