Pros and Cons of Using Alibaba
When it comes to sourcing manufacturing in China, Alibaba is a topic that comes up a lot. By some measures, it’s even bigger than Amazon. Two big questions to consider are:
- is it a good place to go to find factories, source components, and communicate with manufacturers and (more importantly),
- can you trust it with your products?
I’d say Alibaba is a good starting point if you don’t have networks or boots on the ground in China and you really have no other way to begin the process of finding and communicating with factories in China. However, it is certainly not the be-all and end-all of setting up manufacturing in China.
Here are some pitfalls to look out for when using Alibaba:
- Many companies listed on Alibaba are not actually factories. As a result, you are often not actually dealing directly with manufacturers even though people using Alibaba expect to be dealing with factories. Although these companies will all pose as factories, many of them are trading companies – essentially, they’re middlemen (or, sometimes, something even worse).
I have an article coming soon that covers how to identify whether you’re dealing with a factory, a trading company, or something else. For now, be aware that you are potentially not dealing directly with a manufacturer when contacting companies through Alibaba.
- Pricing on Alibaba is nearly meaningless. The pricing on Alibaba is really to hook you in. It gives you a very broad benchmark of what you may be looking to pay for a specific off-the-shelf item with no changes.
However, if you want to create your own product, you’ll probably need to make a lot of changes, even if they appear minor. For example, you may not be happy with certain parts of a product because the quality isn’t what you’re after and the manufacturer will then have to upgrade certain aspects. If you take the ‘shelf’ prices and use them to calculate unit costs, etc., you’ll likely be a long way from the actual cost. By the end of it all, you’ll most likely end up paying a much higher price than what you thought.
If it were me, I’d not really pay much attention to Alibaba’s shelf prices, especially if you’re manufacturing a unique product. Instead, you should start asking questions like:
- What components are they selling?
- Is it exactly what I’m looking for?
- Can we start discussions around what I actually want?
All up, I’d suggest Alibaba is okay if you’re looking for off-the-shelf, unchanged, ready to go products and if you want to place a one-time order. If you are going down this road, I’d encourage you to order through Alibaba rather than going outside their platform as this will help if you have anything to dispute, should something go wrong. Even then, you’ll want to be careful as quality can be an issue.
Instead, think of Alibaba as a starting point for identifying possible partners that will need to be investigated further. If you’re looking to set up your product in China, you need to put steps and processes in place to safeguard yourself. This is where a bespoke, individualised service like China Connect Manufacturing can help. We have the expertise and on the ground experience to investigate potential manufacturers and ensure you are protected.