01 July 2015

Alibaba Tips and Tricks for Safely Importing Materials from Overseas

This is the second of a series of blog posts detailing how to import tiny house materials from overseas, see here for previous post. This post looks at safeguarding yourself from inherent problems associated with importing materials from another country (that likely does not speak the same language and conducts business differently to what you are use to). We look at how, with systems like Alibaba and others, this risk has been greatly reduced to make this form of supply a very viable option for most.



Some of the risks involved when importing from overseas are:

  1. Product is not within specifications
  2. Product is delivered late
  3. Product is not delivered at all
  4. Product could be damaged in transport
  5. Issues regarding customs and biosecurity 

There are a number of checks you can do to significantly reduce these risks which are detailed below.


Alibaba Safeguards


Gold supplier


Gold suppliers must pass checks by Alibaba to qualify. Look for suppliers with at least 2-3 years as a gold supplier if possible.  

Trade Assurance


Alibaba uses a free service called trade assurance which is designed to protect the buyer to ensure the product is within spec and on time. Alibaba will grant a refund if the contract is not met and will ensure the supplier is dealt with accordingly. Not all suppliers partake in trade assurance and for the ones that do there is a variation on their limits, so if one suppliers trade assurance is $9000 the next supplier could be more or less. So, to minimise the risks it helps to use a supplier who has trade assurance and to purchase under the limit of that. More info about trade assurance here.




Checking Process - is this company for real?


Website


Internet search the business name, find their website and try to investigate whether it looks legitimate. Do things like products and addresses match alibaba info? Does this website look professional? Check whether the company has any negative feedback! Use a tool like Who Is to look up the manufacturer’s website registration information. When was the website registered? By whom? What is the phone number connected to the account?  Cryo Systems the  company we used had a professional website, accurate contact info, used a poplar domain name and offered multiple products.

Address


You can obtain the suppliers address from alibaba to do an internet search. Using a mapping application we cross checked the address provided to ensure everything was lining up. Because we were using a manufacturer we made sure it was an area that was appropriate for a factory to be, it would raise suspicion if a factory address showed up in the middle of a retail shopping street. However it is important to find out whether you are dealing directly with a factory as you should keep in mind that many “manufacturers” are actually middlemen sellers so you won't always be looking up factory addresses.

Email


Does their e-mail address match the company name? Would you or should you trust a “manufacturer” communicating with a Hotmail or Chinese equivalent email address?

Company Registration


Ask for Company registration number and business licenses. We did not feel this necessary after other checks were ok.


Ask for a sample


Getting a sample of the required product in your hands serves three purposes. Firstly in helps ensure the supplier is serious and real as there is a bit of effort required to produce sample and ship it overseas in a timely manner. Secondly this is the best way to check quality of the product with your own eyes. Finally it is a good test to arrange payment, more on this later.

We chose two suppliers and asked both to send samples, they were very willing to help. We asked for a 100mm block of insulation. In most cases the supplier will ask you to pay for the shipping which we ended up doing. We asked if this cost could be deducted if we made the final order with them but this idea did not suit them (but worth asking as we have heard of it working). Both suppliers used the expression 'express' which just means shipping. We were initially quoted US$100 to ship the block in NZ which was massively overstated as we have shipped and brought items from around the world and knew it would not cost that much. We managed to negotiate the shipping cost down to US$40 which we thought was still expensive but reasonable using TNT. We didn't do this, but it might be worth setting up an account with an international courier company like Fedx or TNT. Both samples turned up within a week and were well packed with the invoice included.

Ask for photos


Ask for photos of the factory, the products, and when your manufacturing run is over, ask for photos of your finished products before making final payment. We asked for pictures of the factory, product and team. We also got a photo of our product in the container before shipping. 






Other means of contact


Ask for other means of contact if they are not already listed on alibaba. We used viber on a phone to have a conversation about their address. This takes effort and helps prove they are legit. We would recommend using alibaba for your main communication feed as it's all within one governing system and all records are kept. Other methods could be skype, phone, another email, whatsapp or facebook.

References


You can ask for references from other customers who have dealt with the supplier. If you can obtain a contact and ask how their experience was dealing with the supplier. We asked but all we could get was a few sentences from a previous customer which was positive, they also had a website in the UK which looked legit.

Invoices


Invoices should be clear, written in English and specify all clauses and guarantees. Does all the information on the invoice match the previous information you know and have collected about the company?


Be Ready to Walk Away 


Finally, with any deal or negotiation, always be willing to walk away if it does not feel right. Completing all these processes can help you have a good business experience and avoid being scammed. Remember, there is no replacement for common sense. If something feels weird, walk away. If a deal seems too good to be true, it probably is.

In the next blog we we detail our story of almost losing thousands of dollars...stay tuned.





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