Alibaba—the Elephant in the Room

With over 17 years of experience as a premier sourcing company for Chinese manufacturing, we at Avela Corporation have heard a lot about Alibaba. When we hear about it, it is usually from perspective clients who have had bad experiences with businesses they have met through that portal, or they have simply outgrown it. Either way often leads them to come to Avela.

But the purpose of this blog is not to slam the portal, however, so let’s start with an objective look at Alibaba.

Alibaba Group Holding Limited is a Chinese multinational conglomerate founded in 1999 with a $25 million investment by Goldman Sachs. The Alibaba.com website is the world’s largest Business to Business (B2B) portal. It is also the world’s largest retailer and e-commerce company with its Taobao Consumer to Consumer (C2C) and Tmall Business to Consumer (B2C) websites. In 2015 its online sales surpassed Walmart, Amazon and eBay combined.

Clearly, they are doing something right and millions have found their sites useful and profitable. Many United States businesses have used Alibaba to access Chinese sources for products and China manufacturing.

As is often the case, there is a downside to Alibaba, however. It has a reputation as being a hotbed of counterfeit products and scams. Supplier verification is also a vexing problem.

Anyone in business soon learns that it is prudent to vet the other businesses they work with, but this can be difficult when those businesses are half a world away with cultural barriers and language barriers in between.

It is far from unusual for individuals and trading companies to present themselves as actual manufacturers. This is not necessarily bad unless that individual “disappears” when there is a problem or simply moves on to greener pastures, leaving you disconnected from your manufacturer. There is often a fog of evasiveness that surrounds these sorts of relationships that can be aggravating when you need concrete answers.

It is also not unusual for sellers on Alibaba (or anywhere else, for that matter) to dump product through the website, either because they are defective products or an order fell through for some other reason and product is available at bargain basement pricing. A US business trying to build a good reputation over the long run has much to lose by buying under such circumstances.

Again, many transactions through Alibaba obviously work fine for many businesses. Avela just hears from those who are dissatisfied with Alibaba connections for one reason or another.

Avela Corporation has offices in Houston and Shanghai, so our clients know where to find us if there ever is a problem. We have been around since 2002; Avela does not disappear if there are problems, we resolve them.

We work for our clients and represent their interests, not the manufacturer’s. We vet sources in China to find a good fit for our client’s goals while providing the best sustainable pricing. If a client outgrows its source, Avela searches for a replacement and provides a smooth transition.

We also provide transparency. The manufacturers of our clients’ products are not a mystery. Clients can visit the factory if they want, we’ll help arrange it!

Please contact us if you have any questions about how Avela can help you meet your business goals.