As Alibaba founder Jack Ma rings the bell to open Wall Street for one of the largest floats in history, the online commercial website has captured the attention of investors around the world.
Alibaba’s founder, former Chinese school teacher, Jack Ma raised $24.4 billion through the float, making him not only the richest man in China, but one of the richest in the world.
The company also owns a stake in two other sites; Taobao, China’s biggest shopping site and Tmall, which specialises on online sales of branded goods. Together the companies link merchants and businesses with millions of users across the globe.
Unlike eBay, Alibaba is primarily a business-to-business portal and operates by connecting buyers to suppliers. The appeal is the price competition with so many suppliers.
In Australia, small businesses, and individuals looking for a bargain, have been taking advantage of the competitive pricing for years – enabling them to deliver products to consumers, or mates, at a cheaper price.
Claire Primrose, proprietor of Melbourne-based fashion label, 17 Sundays has used Alibaba for a number of years for packaging and labels.
“It’s important to do your due diligence. Use suppliers who have a ranking and make sure you see a sample before you place an order,” she says.
“In my experience they are more than happy to provide samples. It’s better to do this then to end up with 2000 items you can’t use.”
Sydney photographer Clare Stephens discovered Alibaba last year while looking for packaging products. She was able to find products at half the cost of her previous US supplier.
“Because I’m saving, I can offer more to my customers than just their photo on a USB,” she says.
She admits to being apprehensive about using Alibaba until she heard about the impending IPO a few months ago.
“The IPO gave me some confidence. I figured they must be a serious business. I decided to try it and found two different suppliers.
“While I was very nervous and worried about placing the order, I need not have. Both were extremely helpful and efficient. I chose suppliers with the gold star ranking.”
As with any online site, the buyer beware remains. Alibaba has a ranking status, so where possible stick with suppliers who have “Gold” ranking .
A Google search on Chinese B2B websites, such as MadeinChina or Global Sources, can offer links to the supplier’s website.
Lisa Goodhand, from Australian import export consultancy, China Blueprint, says a large proportion of the companies listed on Alibaba are trading companies and not factories, meaning you are not dealing directly with the producer.
Her advice is once you identify a supplier on Alibaba you like, if possible, visit the factory or have someone perform due diligence on them to ensure they are:
1. Competent to manufacture your products;
2. Will carefully manage and respect your intellectual property;
3. Sign contracts that you have prepared.
Australian consumer protection
No matter where the product originated, consumers who buy goods in Australia enter into a contract with the retailer and not the supplier, says Dan Simpson from the Consumer Action Law Centre.
So if you’ve bought something that seems dodgy – you are entitled to a refund.
‘When it comes to getting a replacement or refund for a faulty products, it is the retailer’s responsibility.
“If a product is faulty and you’re after a refund or replacement, don’t let the retailer send you elsewhere.
“The retailer is responsible. How it then deals with its supplier is not something customers should have to worry about.”
He adds retailers need to be aware of their responsibilities under the Australian Consumer Law.
“If a retailer plans to import products they’re also responsible for making sure they meet safety standards and that they are fit for purpose.
“If a product is unsafe or doesn’t do what it is supposed to you might find yourself answering to Consumer Affairs or the Australian Competition and Consumer Commission.”