Recently, I was put in touch with a friend who wanted to start a private label business on Amazon. And I was like “Yay! That’s awesome.”
That was, until they said this to me: “I have a question first. How can I stop myself from being scammed by Chinese suppliers?” I sighed (away from the speaker). “I mean I really do want to start this business – but not until I’ve read more about how to avoid scammers.”
Honestly, I do find it a little bit frustrating when people come to me “worried” about this. That is why I’ve decided to delve further into this in this blog post – along with some useful tips on how to avoid getting scammed by suppliers.
Watch the video below:
This wasn’t the first person to cry “scam” when it comes to making money online. I get these questions all the time.
- “What if a supplier takes my money and never delivers the product that I bought?”
- “What if they ship a poor-quality product?”
- “What if the product is fake?”
- “What if they ship rocks?!”
(Okay, I might’ve made up the last one.)
In theory these concerns sound fairly reasonable. Sure, a supplier could run away with your money. They could ship you a bad quality product. And even worst, they could even ship you rocks.
But in reality, these so-called “scams” are very rare. And usually, it’s the person who got scammed that is at fault.
That’s not to say I don’t understand why a lot of us are shackled by our fear of “scams” – they linger around every corner on internet. “1-Cup of This (Tonight) Will Burn Your Belly Fat Like Crazy!”. It’s “hypey” claims like these that have people holding two fists up when they surf the net.
So, of course it makes perfect sense why people translate this kind of fear when it comes to selling stuff online. Especially in private labelling, when the majority of the time you and the supplier – or your product – never meet eye to eye.
If you want to take selling on Amazon or Dropshipping in your own store seriously, you need to once and for all relinquish your fear of “scams”. And if you’ve been itching to start an online business, but haven’t because you’re still surrendering to the fear of it being a scam – you really need to read on.
I have four tips to help protect you from any “scams” you could potentially find on AliExpress or Alibaba (so you don’t have to worry about rocks being delivered at your door).
Away we go.
Tip #1: Work with suppliers that have been online for multiple years
This is the easiest way to steer yourself clear of any “funny business”. Because suppliers who have a trusted track record of being online for multiple years are most certainly not out to scam you.
Let’s look at this logically. If a supplier had been running on Alibaba/AliExpress for 2-3 years and was scamming people out of their money, don’t you think they would’ve been erased from these platforms a long, long time ago?
And if you think that suddenly they’re going to go “rogue” when it’s your turn to make an order, you’ll be happy to know that China enforce very harsh rules for criminals.
Don’t believe me? See for yourself. China are ranked 5th in the world for enforceable contracts.
Any company with a history that can be easily tracked by the law enforcement is unlikely going to risk a harsh prison term for some quick cash.
One thing I love about AliExpress is you can see just how long a supplier’s been online for. Since you’ll be buying items individually on AliExpress, working with suppliers who have been online for 2+ years is usually more than enough to safeguard yourself.
However, with Alibaba, you’ll be purchasing orders in much larger quantities – so it makes sense to go that little inch further to protect yourself.
In that case, a smart idea is to only purchase from suppliers who have had a “gold” subscription for 3+ years. These subscriptions cost thousands every year to maintain – so chances are a scammy supplier won’t subscribe to this.
Suppliers who want to “scam” you are not going to be working a sweat to earn a gold subscription, nor are they going to be trying to establish a long-term presence. So, rest assured, you won’t be troubled with any weird activity when you work with the right suppliers.
Tip #2: Be wary of suspicious payment methods
A supplier who asks to receive payment in a suspicious way is BIG red flag.
If you’re Dropshipping from AliExpress suppliers, then stick to buying them via AliExpress and their checkout system.
As your Dropshipping business grows, you may move to a different payment system, usually named CSV bulk Dropshipping. And this is entirely normal.
How it works: You download all of your orders from your Shopify store in a CSV format, and send that file to the dropshipper. They’ll then take that data, and fulfil all of the orders for you off AliExpress – meaning you’ll be making payments off AliExpress.
However, you don’t need to worry about this if you’re starting out. It’s just something to be aware of for when the time comes, and also realise that it’s not some scammy technique suppliers are trying to pull off.
As for Alibaba, stick to paying for orders via PayPal or wire transfers to banks in mainland China – and you should be fine. (This is excluding Hong Kong.)
But if a supplier asks you to pay via Western Union – DO NOT work with them. This is where the scams happen.
Why? because while records of the pay-out location are kept by Western Union…these records can only be obtained with a subpoena (a writ ordering a person to attend a court.). Which for small-scale international fraud, you are NOT going to get. Do NOT ever pay with Western Union.
Tip #3: Protect yourself against faulty products
Unfortunately, quality control issues are an unavoidable part of the Dropshipping business.
This isn’t any sort of “scam” though. Even the best manufacturers have quality control issues. It’s just a part of the manufacturing process.
But if there’s one thing we all hate – it’s having to wait weeks on end only to receive a poor-quality product. So, let’s talk about how to never end up making this mistake. Starting with AliExpress.
With AliExpress, you’re protected with a refund policy. But usually, it’s not the lost money spent on a faulty item that is the real issue.
Instead, the real problem is the customer being upset that you, or your dropshipper, send them a faulty, broken item. This is the LAST problem you’ll want to face as a dropshipper. As a militia of chargebacks and PayPal disputes can come with it. So, it’s best to avoid this happening in the first place.
To protect yourself from this, only work with suppliers who have a good history of shipping out the product you’re selling. Looking at the product reviews is a great indicator for this, as it shows people have had an excellent buying experience with the supplier.
Take this guitar mug here. This supplier would be a good one to work with, as not only have they have been on the site for 2 years, but they also have excellent reviews from people that purchased this mug from them.
For Alibaba, one way you can protect and safeguard yourself is to pay for an order 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.
Here are some additional tips:
#1: Identify your supplier is part of the Trade Assurance program
If they are, they’ll have the Trade Assurance icon on their listing, which tells you how much you can be protected for if you purchase products through them.
#2: Negotiate with the supplier & create your contract
Make sure you agree on ALL aspects of your order. This includes pricing, shipping dates, and the terms you’ll be covered under Trade Assurance.
Also ensure your contract includes expectations for your products. For example, the size and materials they should be made out of.
#3: Pay for the item through Alibaba
Pay with a telegraphic transfer (e-checking if you’re in the USA). Paying with a credit card is also an option. Although the small fee, it provides you with an additional layer of protection due to chargebacks.
Remember, just because a supplier isn’t a part of the Trade Assurance program, doesn’t mean they’re a scam. As a beginner though, working only with Trade Assurance programs provides that cushion of extra security at the start.
For more on working with Chinese Dropshipper and Suppliers, check out the video below:
Tip #4: Get your products inspected
This tip is geared more towards Amazon FBA sellers who want to start a private label business (or already run one).
Since you’ll be buying in bulk (100-600 units), it makes sense to inspect orders before shipping them to the Amazon FBA warehouse. Imagine purchasing hundreds of units, only to realise AFTER a customer placed an order that the stitching on the item was flimsy and poorly manufactured.
Inspecting your product first prevents disasters like this happening. If a product doesn’t pass the quality inspection, you can negotiate with your supplier to fix the problem, or worst-case-scenario, file a dispute with PayPal or Alibaba.
This gives you the easy option to keep working with the supplier, or cut ties – without sabotaging your seller reputation.
Luckily, Alibaba offers a service that lets you organize an inspector through them, which costs around $200. But it’s well worth it.
A lot of the time, people get “scammed” because they chose to work with an unproven supplier who offered them “lower” prices. It was their greed that was their downfall.
If you’re on the fence of whether to start a private label business on Amazon, these tips should come in handy. But only if – and this is important – you break free from the fear of being scammed online.
If you’re ready to do that, then I’d like to offer you something as a reward.
Six steps to building a six-figure Dropship store
In this free book, I’ve included:
- How just one “winning item” can earn $10k/month. Yep. A lot of people don’t realize this… but most stores make the majority of their money from just a handful of items!
- The right way to choose AliExpress suppliers. Picking the right AliExpress dropshipper is crucial to drastically reduce things like refunds. Learn how to pick the right suppliers.
- Why long shipping times DON’T matter. A lot of people are scared to start Dropshipping because of “long” shipping times. You’ll learn why this doesn’t matter inside.
- Why their stores take 2 hours a day to manage. You’ll learn how they utilize apps like Oberlin to make their stores semi-automated… making managing orders super simple!