How to Verify Whether a Alibaba Supplier is Trustworthy

Alibaba is simply a market place that allows buyers to find manufacturers, wholesalers and so on. In other words, the company, Alibaba is not selling directly to you and has limitations regarding the extent to which it can verify the legitimacy of companies advertising on their website. Consequently, it is prudent to include company vetting to manage your risk management approach. 

This post will mention the 3 forms of supplier vetting information that Alibaba provides. They range in likelihood of security. Consequently, they are best chosen according to your level of risk tolerance.

Alibaba Gold supplier members or A&V Members. WEAKEST CHECK 

Gold Supplier is a paid membership on Alibaba.com. All Gold Suppliers in China have passed Alibaba's Onsite Check while those from other countries and regions have passed a similar check called the 'Authentication & Verification' or A&V Check. These businesses have been verified by a third party agency as a legally registered business. The number of years a member has been a Gold Supplier on Alibaba.com is displayed as pictured above, 

Onsite Check. GOOD VERIFICATION.

This Alibaba onsite check informs you that the supplier's physical business premises have been verified by Alibaba.com staff. The check verifies that physical onsite operations truly exist at the given address. Many buyers like to use companies that have had onsite checks for over a number of years, like 2 or 3 years because some fraudulent companies may still use the physical site of other companies and pass the check. 

• Look for more clues about what customer experiences. Click on this onsite check icon for the company's full trust pass profile.
• Select the 'Business Performance' options for useful details like response rate, average response time, etc.

Trade Assurance. VERY GOOD VERIFICATION.

As you can see below, the 'assessed supplier' verification method is the most comprehensive and trustworthy. In reality, many people trade without incident on Alibaba for years without every using such suppliers. In fact, depending on your area, such suppliers may be hard to find on Alibaba. Such suppliers must undergo a tedious and costly process of verifying all of the listed criteria with Alibaba in order to qualify. Ultimately, such suppliers are most attractive to newbies who have the lowest risk tolerance. However, these suppliers are likely to be more expensive than their competitors.

What more can you do to manage your risk?

The quick answer is to consider other variables like the perceived risk of fraud. Variables may include the way communication has proceeded, the value of the sale and the level of risk management inherent in available payment terms.

Specific example of things you can do include the following. Based on the type of verification provided by Alibaba, consider the type of the foreseeable risk of doing business with a particular supplier and select the option that complements that risk and the associated cost. 

• Using the chat, email, Whatsapp, Skype and other forms of communication on the website, ask questions and assess the way in which suppliers reply. Use whatever means you can to satisfy the level of risk you are willing to take.
• Note whether the supplier is using reliable payment methods, especially methods that help to mitigate risk of loss and fraud. Examples.
• Paypal allows you, the buyer to contest a payment if the sellers can not prove that they sent the items. Consider the cost. Specifically, although the seller pays Paypal directly for the sale, the seller is certain to charge you in turn. However, Paypal is the cheaper of 2 very good safe options with a rate of roughly 4.5% of the sale. Always a good way for newbie buyers.
• Escrow account, aka 'Trade Assurance' in Alibaba. Essentially, an escrow is a holding account that is not owned by either party until pre-existing conditions are met. The conditions often involve proof that manufacture of ordered goods is complete according to specification and or shipped. Although very good, this type of account is even more costly than Paypal at roughly 5% of the sale. However, it trumps Paypal in terms of avoiding having to clean up a messy situation beforehand. However, although the 0.5% seems very small, also consider that 0.5% of a large purchase may still be a considerable sum of money. Always a good way for newbie buyers. 
• The weakest level of risk management is a wire transfer, aka 'telegraphic transfer' or TT on Alibaba. Not surprisingly, this method is also the cheapest. For instance, it usually costs less than USD 50. However, if the supplier was fraudulent, it is very difficult, if not impossible to protect yourself. If you have major doubts about a supplier, the Alibaba verification is weak and the value of the sale is high, it may be wise to avoid this method. However, do NOT disregard it only too quickly either. It is sometimes a most cost-effective and worthwhile method if you already feel confident about the suppliers (like if they have already passed Alibaba's most rigorous vetting, 'trade assurance') and or you have already developed a good relationship and if the sale has a large value. Essentially, this method can allow you to avoid large Paypal or escrow transaction fees. Note above how communication and response rate can help you to determine how 'good' your relationship is or can be.

• Whatever the payment method, feel free to try negotiating payment terms like timing and percentage of payment. Very little is ever written in stone.

CONTENT RELATED TO VERIFYING TRUSTWORTHINESS OF ALIBABA SUPPLIERS

• Consider more secure payment methods like Paypal