May 31, 2017
Jack Ma and the inspirational story of Alibaba’s rise in the world of e-commerce became front page news after the company’s IPO broke all conceivable records on the 22nd of September 2014.
Its popularity coupled with China’s rise as a manufacturing hub has led millions of individuals and businesses from across the globe to seek solace in the entity that is Alibaba.
As with most online movements, there are a lot of good balanced out by bad experiences and a cursory search using the keyword ‘Alibaba scams’ would quickly get you acquainted with the struggles of sourcing out suppliers on Alibaba.
But today, this article will attempt to narrow the negatives of shopping on Asia’s biggest e-commerce platforms, by focusing on its effects on LED lighting businesses across the western world when searching for LED Lighting Suppliers.
1. Sourcing LED Lighting Suppliers on Alibaba and the Scamming Problem
Ask a cross section of manufacturers why they source out most of their products and manufacturing tools from China and the first answer you get is: The affordable prices.
But taking advantage of this comes with the difficulties of navigating through the thousands of fake vendors currently making a living of transaction scams on Alibaba.
Although there are no official numbers, the resignation of the e-commerce giant’s top two staff and the sacking of approximately a 100 staff from the rank and file in 2012, showcased its lax approach to vetting vendors.
An investigation unearthed 2,300 fake accounts which had been used to scam unsuspecting shoppers on the platform.
This makes the issue of navigating through the ‘sharks in Alibaba’s waters’ one of the more important reasons why shopping for LED lighting suppliers could end up stabbing your business in its back.
There are many ways to avoid been scammed on Alibaba as can be seen from this guide to Alibaba scams but these methods cannot be relied upon by businesses that purchase hundreds or even thousands of LED lighting products under a month.
Therefore, the best solution to sourcing LED fixtures still remains to purchase locally or actually travelling to China LED Lighting Fairs to partner directly with genuine LED manufacturers which come with considerable costs.
2. Standards and Quality Control is a Myth
Despite the in-roads made in China goods have made in the West, the developing world still remains China’s biggest markets and sadly, the quality of the goods they manufacture may not meet the standards of the West.
These same limitations apply to LED lighting supplies and fixtures.
Therefore in most cases, the LED items businesses end up importing do not meet the standards or requirements your customers expect when purchasing a LED fixture for the long-haul.
Forbes ranked the problem of no quality standardization policy as one of the 2nd most important problem US companies face when sourcing for suppliers from China.
There have been multiple calls by foreign standards organizations to instill a form of quality control over items sold on Alibaba but till date, no defined policy has been set.
The lack of standardization means that as a LED manufacturer, your Alibaba purchases are done on blind faith.
Facing this alongside the challenge of a no-refund policy could hamper your business dealings in the long run.
3. Lack of Payment Protection
Shopping on Alibaba is synonymous to shopping in China which means your business now swims in the murky waters of international trade.
Also, Alibaba’s reliance on its own payment gateways means that you may end up having to pay upfront before receiving your goods which of course comes with multiple challenges.
These challenges include paying fully to the LED lighting suppliers without first ascertaining the quality of the goods you will receive or even knowing if it had been shipped in cases where the shipping plans are arranged by the vendor or supplier.
There are a couple of ways to avoid the issue of losing your funds which include:
- Buying through Escrow services
- Paying a small percentage upfront
- Sending a post-paid check prepared by your bank.
But in these situations, the risk of losing a part of your funds still looms large and this is a risk most LED business are ill-prepared to handle.
4. Battling China’s Problem with Fakes
Statements that depict China as the biggest source of counterfeiting goods worldwide definitely holds true till date.
According to the 2016 annual report from the US Customs and Border Protection agency, China accounts for more than 80% of the counterfeit goods seized at the border.
China’s place the king of counterfeit is made possible by its government lax implementation of trademark laws across the country.
Furthermore, brands with no existing trademarks or copyrights in China have no legal recourse to fight counterfeiting.
This leaves LED vendors who source goods from China at a disadvantage.
Simply imagine a scenario where you spend thousands of dollars with a LED lighting supplier on Alibaba to purchase branded products, only to get a call from customs confirming the seizure of your goods due to counterfeiting.
The heartache and loss of funds is something businesses can avoid through direct purchases from recognized LED lighting manufacturers.
As for those who believe they can avoid this tragedy, available statistics which puts 70% off all counterfeit goods worldwide at China’s doorsteps show that your LED business will definitely fall into the counterfeit trap.
5. Navigating the Language Barrier
You speak English, he speaks Mandarin.
This alone lays the ground for confusion when business transactions occur.
The rule of thumb for LED businesses interested in sourcing from Alibaba is providing clear specifications and requirements in order not to receive products with defects or inaccurate items.
The language barrier has landed many a business in serious trouble when purchases go awry due to either willful or a genuine miscommunication problem.
To solve this issue, most LED vendors now employ a team of Mandarin speakers to handle business transactions when communicating with manufacturers from China.
But the prevalence of some of the other issues listed above—fraud, scams and counterfeiting—still makes your businesses entire sourcing plan a difficult one.
The dearth of individuals who truly go through the terms and condition associated with a product before purchasing it also has a role to play in making shopping on Alibaba an adventure to avoid.
As a LED business owner, you must take it to heart that you can be scammed at any time on Alibaba and this will ensure that you stay on your toes when sourcing for LED items.
Conversely, you can also consider making your LED purchases from local manufacturers in close proximity to you to avoid the pitfalls stated above.
Have you ever considered buying from an Alibaba LED Lighting Supplier? Do you have any experience? Was it a positive experience or a negative experience? Share your opinion with the readers of this blog!