Trading on Alibaba for first timers
Tips for Volume Trading on Alibaba
I have been importing from China since 2000 and my platform of choice when looking for a supplier, is Alibaba.com. The reason is that, it has thousands of traders who post their wares daily and this enables the small scale trader have a wider variety both in choice of item and pricing.
However, there are some not-so-honest people who take advantage of the popularity of the trading site.
SOURCING FOR A SUPPLIER
Therefore, a trader must be discerning and can look out for the following signs to assist him in deciding on the company to deal with
- Do not be taken in by the 'Gold' status of companies listed. As long as a company pays the subscription fee, they are immediately moved from 'unverified' to 'Gold' status.
- To be more sure, click on the 'Onsite check' and 'Assessed supplier' tab. You may click on one or both. This sometimes narrows down the number of companies drastically.
- The length of time the company has been listed on the website is important. If a company has been involved in a scam or dishonest trading, they are pulled down from the website. Be wary of newly listed companies that have no references
- Do check under 'contacts' for a companies website outside of www.alibaba.com. A company may only have recently listed on www.alibaba.com but have been in business for many years. A legitimate website will show their contact details. The beauty of a website is that you will also be able to see which other companies they have dealt with.
- Look out for quality certification on both their alibaba and company website. This gives an indication of the value the company places on quality
- Make sure to click on this pictures to be satisfied that the names listed on the certificate are the same as the company name. In any case, one of the requirements for importation into Kenya is a quality certificate usually issued by bodies such as SGS, BUREAU VERITAS etc If a company has quality certification, it makes the inspection process easier and faster. Time is money, for business people.
This is the crux of the matter. You must keep your wits around you. I will recommend the following methods for me, that have always worked:-
- Avoid use of Western Union as much as possible. Please remember that when you send via this method, the money is received personally and not into a company account. Suffice to say, it will be near impossible to trace the recipient if he does a number on you.
- Sometimes you can use Western Union but my advise is only when it is small amounts of money involved. Money that you can 'afford to lose'. I frequently use Western Union when I am paying for samples of an items I am interested in.
- The most foolproof method I have used is the use of irrevocable Letters of Credit. For the simple reason that the payment will only be released if you receive the goods from your supplier and confirm having done so.
- Telegraphic Transfer (t.t) is also a way of sending payment if you are totally confident that the supplier is legitimate or if you have dealt with him before. The key issue is that you are confident in the supplier.
The mode of shipping that you choose, depends on the actual weight/volumetric weight, urgency and cost of shipping.
- Seafreight- this is mostly used for bulky goods especially where the volumetric weight is too high and the airfreight costs prohibitive. Indeed, it is possible to have a bulky item that is lightweight. Seafreight is also used for certain items that may be prohibited from shipping by air. Like certain chemicals, inks etc. The goods may be in Loose Cargo (LC) form where they are consolidated with others into a container or could be a full container (20 foot/ 40 foot). The rates for sea freight are by far much lower per Kg. They can range between $2.8- $4.0. Loose cargo is more expensive to ship.The port of discharge is Mombasa.
- Airfreight- used where items have low volumetric/actual weight. This is also used when the items are required urgently. The freight charges can range from between US$4.8 - $7.7 (inclusive fuel surcharge). This is dependent on the forwarder that you use as well as the actual number of Kg you ship. Economies of scale. The heavier the weight, the cheaper the rate. The port of discharge is Nairobi.
- Courier- Of all the methods this is the most expensive but sometimes the trader has not alternative. This is especially in the case where the goods weigh less than 45kg. The freight rates are anywhere between $ 10.00 - 20.00. Port of discharge- Nairobi.
Frankly speaking, I have mainly used air freight over the years simply because of the timeliness (hence ability to turn money around quickly), and also I have been fortunate enough to get fairly good rates for the same. Courier is also good because the rate of customs clearance, in my opinion, is faster than the normal airfreight way.
My next articles will outline how to get good shipping rates, alternatives for small buyers as well as getting the best quotations for goods.
How to pay for the different services
Western Union, Telegraphic transfer, credit card
Telegraphic transfer, back to back Letter of Credit, C.O.D
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© 2014 Gathoni Maitai