East West Manufacturing Blog

5 Reasons Alibaba is the Wrong Place to Find a Supplier

Written by Mary-Kerstin Hassiotis | March 10, 2016

Unless your product is a shelf-stocked, run-of-the-mill commodity, Alibaba isn't the place to find your manufacturing partner – because that is just what you need: a partner. Small businesses often make hasty, emotion-induced decisions. This is the wrong approach. Objectivity becomes valuable when you're looking to forge a long-term relationship, not a short-sighted transaction. The site is alluring, approachable. The easy way out. Resist the urge! If you're serious about making a great quality product and building a successful business, find an experienced and reliable contract manufacturer to serve as your partner.

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1 |  Commodity vs. Customized Product

Rather than quickly selecting a supplier online, seek a seasoned manufacturing partner with a full range of supply chain offerings, including design services. Customized goods should go through a Design for Manufacturing (DFM) process to ensure the design is optimized for manufacturability. If a factory lacks these capabilities and is unable to offer insight into tolerance limitations, efficiencies or general DFM adjustments, chances are you won't end up with the product you've been envisioning.

This isn't to say that you can't find a decent provider on the site who offers product design services, but let's just say the pool is shallow. Even still, these suppliers tend to be more transactional, focusing on short-term results rather than on building a partnership.

2 |  Supply Chain Transparency

Online dating and finding a supplier on Alibaba have one thing in common: you never really know who's on the other side. It could be a reputable business, an underqualified factory, a trader (not a manufacturer at all) or an outright scammer. The issue here is a lack of transparency. 

You could argue that opting for a gold supplier on Alibaba provides some insulation from wrongdoing, but this is a naive stance. In theory, these factories are ones that have been vetted by an independent third party to confirm their authenticity, but the truth is this happens only some, not all, of the time, and gold status can easily be purchased. Back in 2011, a story broke about the company committing fraud itself. According to a Time article, "the investigation revealed that about 100 Alibaba sales people, out of a staff of 5,000, were responsible for letting fraudulent entities evade regular verification measures and establish online storefronts." At the end of the day, we're talking about a for-profit company looking out for their bottom line before their customers.

Our Advice: Don't forgo in-person verification. Schedule a factory visit and inspection before you agree to anything (and especially before forking over any dough). See things for yourself. They can hide behind a digital profile, but there's little that can be hidden in real life. If they balk at the idea of a visit, take it as a glaring red flag and move on to the next prospect.

Free Download: The Supplier Dating Game: 5 Qualities to Look for in the Perfect Partner

3. Quality Procedures

Your product is being made at a Chinese factory, so you're already up against the "Made in China" stigma that's so closely tied to the notion of cheap, low-quality goods. While there are reputable Chinese factories specializing in the low-cost market segment, what's most essential is ensuring your prospect's capabilities align with your quality expectations from the beginning. Asking if they have a quality management system (QMS) in place, like ISO 9001, is a good start, and asking for documentation to support their claim is also appropriate.

A common issue plaguing the site's buyers is receiving a sub-par product that doesn't come close to meeting spec. This can either be a result of a supplier's overeagerness for business they can't handle or an outright bait-and-switch scheme. A portion of responsibility is on the factory, but the other falls on you, the buyer. You must specify quality requirements in excruciating detail. If you don't, a substandard supplier – or one simply trying to cut costs and pad an already meager margin – could substitute lower quality materials instead.

Read more: Addressing Product Quality Issues with Your Supplier [Free Checklist]

4. Intellectual Property (IP) Protection

While this certainly does not apply to all Chinese factories, you do run the risk of an opportunistic one stealing your idea and directly selling your product to turn a profit. You could argue that this is a liability in Chinese manufacturing in general. But, again, the risks are mitigated if you take the approach of forging a relationship with a a company you've vetted and feel you can trust. The sale of counterfeit goods is also a major issue on Alibaba (more on that here). 

Read more: Can a Contract Manufacturer Help with IP Protection in China?

5. Product Safety Compliance

One thing is undeniable: it doesn't matter how right the price is if your product is non-compliant. Don't overlook a factory's ability to meet necessary product safety regulations. Some Chinese factories may not be inherently familiar with country-specific regulations, so outline exactly what you need up front. This ties back to product quality issues that are all too common on the site. A factory might initially agree to meet your spec and promise to comply with certain international regulations and safety standards, but in the end you receive a non-compliant product.

A shipment of non-compliant goods might get held up in customs, and you could get slapped with a hefty fine. If the goods manage to skate through customs unscathed but a consumer is later injured as a result of your oversight, you'll then be fighting a major legal battle (and you're on the losing side). Any company you consider working with should be able to provide documentation to show they've successfully manufactured and shipped compliant products in the past.

According to ChinaImportal, "manufacturers with a main focus on developed markets tend to maintain a higher quality standard, keep defect rates low and offer compliance with foreign product safety standards." Ask a prospect to share their primary markets and exporting history; both will give you some insight into their ability to meet your needs.

Conclusion

Whether you take our advice or not (we hope that you do), the most important thing is to BE SMART when selecting a manufacturing partner, regardless of geographical location. Do your due diligence, don't rush into agreements and follow your gut. Don't take the easy way out by using a site that may not have your best interests in mind. If something seems too good to be true, it probably is. After all, if it walks like a duck and quacks like a duck....

 

 

 

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