Usually new dropshippers ask about, what if I’d get scammed, if the supplier take the money and don’t send the item -or send a rock instead, how can I avoid scams from suppliers on Alibaba… I find these worries frustrating.
In this article I’m going to explain why these questions are frustrating and I’ll give you some tips how you can avoid this happen to you.
Okay, let’s start to count our tips!
Tip #1. Work With Suppliers That Have Been Online For Multiple Years
On AliExpress, if you come to an item listing, you can see how long the supplier has been on AliExpress because you’re ordering items individually, not in bulk.
Working with suppliers that have been on the site for 2+ years is usually more than enough to safeguard yourself. If you’re working with suppliers on Alibaba though, then the chances are you are doing a much bigger order, and with large scale orders it makes sense to be safer.
In that case, then, a smart idea is to only work with suppliers that have been gold for 3+ years.
That means that they have purchased a gold subscription for that many years in a row. A Gold subscription cost thousands of dollars each year to maintain, so a scam company is not going to have been paying that for 3+ years.
Tip #2. Be Wary Of Suspicious Payment Methods to Avoid Scams
If you’re concerned with being actually scammed, then the biggest red flag is if they ask you to pay suspiciously. If you’re purchasing items from AliExpress, then in the beginning just stick to purchasing items from AliExpress and using their checkout system.
In time though, as your dropshipping business grows, you will very likely move to a system where you actually order items off the site, and this is entirely normal. This is called CSV dropshipping. What you do, if you download all your orders from your Shopify store into a CSV file. Then you send that file to the dropshipper, and they will fulfil all of the orders for you so that you don’t have to come in and buy each item for each customer.
When you do this, you’ll be paying for your items off of AliExpress, and as long as they are not asking you to do this with Western Union, then this is absolutely fine.
However, you don’t need to worry about this type of order fulfilment until you have bought up a relationship with your supplier. In the meantime, stick to just ordering items from AliExpress, and my advice for you is that if you are purchasing items in bulk from an Alibaba supplier, perhaps from Amazon, that you do not send money to a bank that is located outside of mainland China.
This is where the scams happen, instead stick to using PayPal, or with bank wire transfers that are going to a bank located in mainland China, do not send to Hong Kong, and if the supplier asks you to send a Western Union, do not work with them. Western Unions are the payment methods of scammers.
Well, because while Western Union does track the payout locations, these records are only ever going to be obtained with a subpoena, and for small scale international fraud that’s not going to happen. Do not ever pay with Western Union.
Tip #3. Protect Yourself Against Faulty Products
When you’re purchasing items from China, quality control issues are unfortunately going to be an unavoidable part of the business, and this isn’t them scamming you. Even the best manufacturers have quality control issues. It’s just part of the manufacturing process. So let’s start out by looking at how you can protect yourself from this when dropshipping with AliExpress.
With AliExpress you are protected with a refund policy, but it’s not usually the lost money that you spend on purchasing the item that is the real issue here. Instead, the real problem here is your customer getting upset that you or your dropshipper sent them a faulty item in the first place.
The best thing that you want to do is to try and avoid this happening at all. So safeguard yourself by only working with suppliers that have a proven track record of shipping out the items that you’re selling in good condition.
Like take this Guitar Mug here.
This supplier would be a good one to work with as not only have they been on the site for 2 years, they also have excellent reviews from people that have purchased this mug from them.
So don’t just look for highly rated AliExpress stores, make sure that that store has a good track record and a positive review history for shipping out the item that they were selling.
Now, if you’re purchasing items from Alibaba, one way that you can protect and safeguard yourself is to purchase your items with PayPal.
If you do this, then you are protected by PayPal’s dispute program. If you receive bad products, then you know that if you can’t work out some form of compensation with your supplier, that you’ll be able to claim a refund with PayPal.
However, a lot of Alibaba supplies will not accept PayPal as a form of payment, though often they do use it for the product samples, but not for the actual order itself, and there is nothing suspicious about this, it makes sense if they don’t want to use PayPal because it has very high fees unlike a bank wire which has a flat fee.
In that case there, a good way to still protect yourself is to only work with suppliers that are part of the Alibaba’s free trade assurance program, and here is how that works.
1- Identify if your supplier is part of the Trade Assurance program
If they are, they’ll have the trade assurance icon on their listing, which when you click on it, will tell you how much you can be protected for if you purchase products through them.
In this case here, you would be protected for orders up to $72,000, and because most people seeing this will be ordering a shipment with $5,000 at least, you are absolutely fine.
2- Negotiate with a supplier and create your contract
Make sure that everyone agrees on all aspects of the order like shipping, price and the terms, under which you will be covered from the trade assurance program. Make sure that your contract specifies expectations of your products, not things like what size they should be, what materials they should be made out of, and what colours they should be.
3- Pay for the item through Alibaba to avoid scams
You can pay with a telegraphic transfer or a checking if you live in the USA. You’ve also got the option of using your credit card, it does have fees, although it provides an additional layer of protection for you.
Now, I want to stress something; just because a supplier isn’t a part of the trade assurance program, doesn’t mean that they are a scam. However, as a beginner, it is nice to work with these suppliers to safeguard yourself.
Tip #4. Get Your Products Inspected to Avoid Scams
Now, this tip doesn’t apply for people that are drop shipping with AliExpress. This step is exclusively for people who are importing items in bulk, perhaps to private label on sale on Amazon. To safeguard yourself before your items get shipped out to your Amazon FBA warehouse from China, make sure that you get them and inspect it.
If the products do not pass the quality inspection, then you can negotiate with your supplier to fix the problem before the items get sent out, or worst case scenario, if you cannot come to a resolution, you can file a dispute with PayPal or with Alibaba’s trade assurance program.
Alibaba offers a service that lets you organize and inspected through them, it costs about $200, and it’s well worth it.
You occasionally hear stories of people who apparently spend tens of thousands of dollars on new order, only to have it arrive, and to find rocks inside their packages.
Well, those people were pretty stupid, weren’t they?
If they had just worked with the supplier that was part of a trade Assurance Program and they’d had their products inspected before shipped out, then they wouldn’t have had this problem, would they?
The vast majority of the time, the people who get scammed are those that chose to work with unproven suppliers because of the fact that they were offering them lower prices. It was their greed that was their downfall.
I hope you find the article helpful. If you still have concerns about finding suppliers and don’t want to spend time to find a trustable one, just use the Spocket app for free. In Spocket, you can find trustable suppliers from US, EU and China!
And, if you want to get started dropshipping outside the US this short article also can be really helpful for you!
Muammer is a Marketing Analytics Manager at Turkcell. His mission is to empower entrepreneurs and to help them achieve their goals. He also has a passion for illustration.