Alibaba is a Chinese e-commerce company that provides business-to-business and business to customer sales service through its online marketplace.
The website is considered to be one of two worldwide dominant B2B commerce websites, the other being Amazon. Alibaba was ranked fourth biggest tech firm in the world and dominates both eBay and Amazon put together.
In 2015 Alibaba’s marketplace sold nearly half a billion dollars of goods around the world. It’s a powerhouse, and its potential for new businesses to make money is astronomical.
The products for sale on Alibaba are much lower in price than the products on sale in the UK. One reason being most transactions involve a large order and most businesses in China will offer a discount on larger quantities. Profit margins can be high, but the process will take some time from choosing the products to selling them on your website. Finding suppliers that you can rely on takes time, you should ask for samples of the products which can be free of charge. However, the majority of companies in China will ask for a shipping fee. The shipping cost may be a lot more than what the product is worth, but investment now will pay off later. Before you place any orders down with suppliers make sure you understand what you are doing, you will need to cover every avenue.
Below we will provide you with a step by step on how to use Alibaba:
The first thing you must do is choose what market you are aiming to sell it. Selecting a market that you have experience or understanding it will help you find what your customer’s needs and wants are. Your niche market will be easier to identify as you will be able to sell your products to target those customers solely.Â Becoming an expert in your niche will be much easier, your customers will have more trust and credibility in your product because of your expertise in your field. Customers prefer purchasing from companies that focus on a certain niche, gives them peace of mind because the product they are buying is tailored to that particular market.
This is the backbone of your business and will be where the money will be made. Choosing the right product is important, but you also must be aware of the items you must avoid. HM Revenue & Customs has outlined on its website goods that are banned and restricted for import. These include illegal drugs, offensive weapons, endangered plant species, indecent/obscene materials, meats and dairy products.
When buying from China, you must keep in mind the laws and regulations of the country that you are importing too. Alibaba provides businesses with many different productsÂ like clothes and electricals. However, the quality of electrical items in China are not always to a high standard and may not pass the standards of the country you are importing too. Electrical items imported into the United Kingdom must comply with domestic safety regulations and standards. For example, importing household electrical products must comply with regulations set out by Trading Standards, they include:
Electrical Equipment (Safety) Regulations 1994
Plugs and Sockets (Safety) Regulations 1994
Gas Appliances (Safety) Regulations 1995
If possible try and avoid any electrical items on Alibaba.
After registering with Alibaba and knowing what products you want to order, the next step is to find and negotiate with suppliers. Alibaba suppliers can be negotiated with so you may get a better deal than what is displayed on their site. Alibaba has implemented measures to help the buyer in the marketplace. When you search for your product you will notice that some suppliers will have identity badges:
Gold Supplier: A premium membership for suppliers
On-Site Check: Site operations checked by Alibaba and legal existence confirmed by a third party
Supplier Assessment: Confirmed by a third party inspection company
Trade Assurance: Trade Assurance protects the buyer if the supplier does not send products on time or the products are not of the agreed quality.
When you’re happy with a supplier’s product the next step is to contact the supplier and ask for a sample. Like I said earlier, make sure you always ask for a sample as you need to check the quality of the products that you will be using for your business. They will ask for the shipping cost which will seem high but consider this as an investment for the future. You would save more in the long run then if you risked purchasing a large quantity straight away. Because when you receive your item, you don’t actually know what you are getting and if its bad quality you are going to wish that you listened to me.
Payment should only be through Paypal or covered through Alibaba’s Trade Assurance protection service.
When looking for products on Alibaba, you must take into account the size of the product. The smaller and lighter the product, the more items you can store in your parcel and the cheaper the shipping costs will be. When you use Alibaba, you will notice that shipping costs will be an expense that is important to keep down. Shipping costs can become expensive if you do not take all elements into account, this is one of the most important parts of your business module.
There are two ways your orders will be sent from China to the UK:
Air Freight: This will take up to two weeks to arrive in the UK, this is the best option if you need your orders fast. However, the cost will be much higher.
Sea Freight: Will take up to a month to arrive in the UK. This option will be used if you have a vast quantity of items. This type of shipping is much cheaper, but you may be waiting a long time for your items.
On Alibaba, most suppliers that you will be dealing with will be outside the EU. Importing goods from China to the United Kingdom will mean you have to pay import duty and VAT. You will also be provided to make customs declarations. To understand in more detail, please Click Here to go to the HM Revenue & Customs website.
To make things easier and more affordable, the best option is to use one of many UK Freight Forwarding companies. Companies like Barrington Freight or First Point Freight will handle the shipping from China and when your order arrives in the UK will arrange all the paperwork when going through Customs.
Once you are happy with your products from Alibaba, your next step could be to take advantage of Amazon’s Fulfilment. Send your inventory to Amazon, who then store your items in one of their warehouse units, once one of your customer’s orders your product Amazon will complete the shipping for you for a small, affordable cost. Amazon is renowned for fast delivery and excellent customer service, taking advantage of this may improve your company’s ability to sell. You may be eligible to offer Amazon Prime and Free delivery, providing your customers with the satisfaction that leads to high-quality feedback as a seller.
Let’s get to the catch, the cost is actually quite reasonable especially for the amount of work that is offloaded from you. Below is the Pricing for Amazons shipping services: