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Online Sourcing suppliers with success Anchorbird

Online Sourcing suppliers with Success

June 11, 2020

Table of Contents

Online Sourcing suppliers with Success

The search for the right supplier

My ex-colleague Bob used to work for the purchasing department in my previous company. He had the task of reducing the purchasing costs of his product range. Since the local suppliers could not reduce their prices lower, Bob went online and searched for global online sourcing platforms. 

He found a supplier on of the online sourcing platforms, Alibaba, that sold what he needed at a much cheaper price. 

He requested a sample, he tested the sample, and after the quality control department gave their green light he placed an order at this supplier. He paid the full price and waited for his delivery. 

Can you already guess how this story ended? 

That’s right, he received his shipment, except that instead of his ordered material, it was chalk, pure chalk worth nothing, for which he had just paid a few thousands of Dollars.

This story of Bob should not discourage you from doing global sourcing through e-commerce platforms. It simply should point out some dangers to online sourcing, and make you aware that there are risks linked to it.

What are common online sourcing platforms to find your suppliers?

Anchorbird

The platform where you are reading this article. Anchorbird is based in Colombia but has been working over several years with suppliers in China. Most of the team has lived in China and therefore can communicate in mandarin with factories. 

The major difference of Anchorbird is that you will not have to negotiate with the factory by yourself. Anchorobird will take this burden away from you and all the offered products you can find are pre-qualified and background checked through Anchorbird. Furthermore takes Anchorbird care of any shipment and insurance-related procedures to make sure your goods arriving in the best conditions and on time. 

Pros:

  • Guaranteed quality of the products
  • Shipment and insurance as well related certification is arranged by Anchorbird
  • Very easy to place your order and your products

Cons:

  • A limited selection of products

Probably the most known online sourcing market on this planet. Based on their headquarters in Hangzhou, China, and a very popular CEO, they could establish themselves as a globally leading online sourcing platform for the vendor search.

They have definitely the biggest number of suppliers which comes also with an enormous variety of quality and reliability.

Pros:

  • A sheer endless amount of possible suppliers for literally every product you could think of
  • Easy to connect and get your quotations
  • The user experience can be a bit confusing which can make your online sourcing efforts a little bit more challenging

Cons:

  • Fewer quality suppliers and which involves an elevated risk
  • Often unwelcomed surprises and delays which can cause significant issues for your business

 

Global Sources

Global Sources has more than 45 years of experience in international trade. Their online sourcing platform contains suppliers similar to Alibaba, and additionally, they organize trade shows in Asia.

The overall quality of their retailers seems to be better than Alibaba’s and their experience in the export market seems to be deeper rooted, which makes them more often meeting your needs. Also, the credibility of their suppliers appears to be a bit better.

The better quality comes with more demanding suppliers. They often will ask you about your company background and the purchased volumes. Therefore online sourcing from Global Sources may take more initial work to build up a healthy relationship with your targeted supplier.

Pros:

  • Noticeable higher quality suppliers than Alibaba
  • Proficient in mobile electronics and fashion accessories
  • Better user experience for their buyers

Cons:

  • A reduced selection of available suppliers
  • Acquiring the quotations might come with a higher workload

DHgate

If your purchased volumes are small, DHgate could be an excellent choice for your online sourcing efforts, because of their reduced MOQ’s (Minimum Order Quantities). DHgate offers still a large variety of different products, so it might be a good source for certain niche items.

Pros:

  • A large variety of products
  • Low Minimum Order Quantities

Cons:

  • Elevated prices (25% and more)
  • Costlier and the risk of suppliers disappearing overnight
  • Challenging to build a long term relationship
  • Possible defective and counterfeit products

AliExpress

AliExpress (owned by Alibaba) could be compared to eBay, with merchants from China shipping to clients around the world. They sell individual items and small wholesale lots. This could be good if you want to test the performance of the products. Because of their small quantities, it would not be the best online sourcing choice for scalable business attempts, because the offered prices are most likely not the best.

Pros:

  • Higher prices (at least 25% more)
  • Potential defective and counterfeit products

Cons:

  • Elevated prices (25% and more)
  • Costlier and the risk of suppliers disappearing overnight
  • Challenging to build a long term relationship
  • Possible defective and counterfeit products

1688.com

1688 is yet another online sourcing directory and is also owned by Alibaba. The big difference about 1688 as an Alibaba alternative, is that suppliers on 1688 cater to the domestic Chinese market.

Therefore the quality standards of the offered products are often lower than those found in western countries. 

Another problem is that most of the vendors might not have export licenses. This means that they cannot legally export products outside of China, and will have to deal with an intermediary agent with an export license which adds additional costs and complexity to the supply chain.

Finally, the 1688 website is entirely in Chinese. The suppliers usually do not speak any English, because they only cater to the local market. 

Pros:

  • Suppliers are often not listed on Alibaba
  • Possibility of extremely low pricing on products
  • Collect market intelligence on possible pricing

Cons:

  • Most likely lower product quality and often unfit for western markets
  • Difficulties on the supplier side to export their products
  • High chance to encounter problems caused by the language barrier

What are the risks linked to online sourcing?

You paid but you don’t receive the goods.
The sample passed your QC, but the shipment shows full or partial deficiencies.
The sample passed your QC, but the shipment is an entirely different product than the one you tested.
The supplier gives a low price when you show interest but raises the price when you want to place an order.
The supplier tries to increase the price by quoting higher shipment fees.

What can you do to minimize your risks? Check out the list of precautions!

1. Do a background check of the company!

Avoid Ghost Companies

When you choose a supplier through online sourcing, make sure to not just check his profile on Alibaba. Some suppliers have a strong Alibaba profile but are in fact merely ghost companies.

Asked for local Help

Do you maybe have a subsidiary in China? Ask them to help you with the background check by calling in Chinese.

Business Documents

Ask for the 3 business documents of the company: business license, company registration, and tax registration. If the business cannot provide these three documents then you can be 100% sure that it is a fake company.

Background Check

Make sure to do a background check of the supplier on the wider web, by using Google or Baidu (the Chinese search engine). You can also use dedicated tool such as Scam.com or ExamineChina too avoid Scams with Supplier Verification ReportsIs there any information on the supplier? Has the supplier attended any fairs? If there is no further trace of this company then you can be pretty sure that this company only exists on Alibaba.

2. Be vigilant about the supplier ranking

High trade assurance ranking

Alibaba is ranking suppliers with many “Trade Assurance” orders at a higher level. Nevertheless, a high ranking does not necessarily mean a more trustworthy supplier! Many Chinese companies place fake orders or even set up companies who place fake orders just to achieve this high ranking.

High review ranking

The same goes for product reviews, which is one of the most trusted online sourcing criteria. But they can be also placed by fake companies who work for the benefit of the supplier.

Gold supplier

Gold suppliers on Alibaba don’t necessarily mean more trustworthy suppliers. In fact, a Gold supplier is merely an Alibaba label that can be purchased by any supplier with the necessary funds.
Alibaba charges suppliers around 4500 USD to get the gold supplier label. In turn, Alibaba will verify the official Chinese business documents. Most of the suppliers on the site are Gold suppliers since it is an easy label to obtain.

3. Use Alibaba's security functions

Verified Supplier

Contrary to Gold suppliers (see the previous section), verified suppliers need to pay 12000 USD to get this label. They have to allow an audit of their factories by Alibaba’s appointed audit company. You will get to see the competency assessment report, a video of the factory audit, the main product certification.
The downside is that verified suppliers charge higher prices than unverified suppliers, sometimes even eating away the cost advantage of global online sourcing.

Trade Assurance

Alibaba has an option where you can filter on “Trade Assurance” and “Verified Suppliers”. Trade assurance lists out suppliers who have accepted an Alibaba letter that reduces the risk of faulty products. This assurance is nevertheless not 100% guaranteed since the letter contains some loopholes in itself.

4. Check the company’s professionalism

Although not necessarily correlated, you can check the supplier’s professionalism to assess its attitude towards product quality.

Professional Look and Feel

Does the supplier’s product information look professional? Does the displayed information make sense? Does the supplier use real pictures instead of pictures of third parties? All of this can reveal whether the supplier is doing serious business or not.

Specialisation

Is the supplier selling a variety of different product categories or is he specialized in one type of product? You definitely want to do business with a supplier that is specialized in a specific product category, otherwise, chances are big he is sourcing himself from other factories.

Transparency

Online Sourcing is not always the most transparent, thats why you should ask for the contact information off their clients; Some suppliers are happy to share this information, while others hide behind company privacy. A supplier who does not want to share this information is not necessarily doing fake business, but one who is willing to share definitely is doing genuine business (if you can verify his customers of course)!

5. Don't do it alone!

There are always risks with doing global online sourcing, especially because you cannot step foot in their factory that easily. Having someone do the plant checking, both during sample and mass production, is the most secure way to do e-sourcing.
Several platforms do QC at the supplier’s side. 

We at Anchorbird take it even one step further by only putting online suppliers who have been verified by us and who continuously get verified by us. It’s basically like Alibaba but then with only verified suppliers online, which makes your online sourcing efforts much easy.

You  can find our verified products in our Shop:

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