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Getting the most out of Alibaba: Part Four

Part 4 – Order Placement & Delivery

Time to bite the bullet. Time to put your money where your mouth is. Time to have the confidence to proceed with placing your order and move into production. Once you are done sampling and are happy with the product, the factory will ask for some sort of deposit or down payment to finally confirm the order and this allows them to have the confidence in starting production.

Generally the deposit payment will be around 30% of the order value. This varies across suppliers and industries however this number comes up a lot. If you end up having a long relationship with the one particular supplier, negotiations can be made to decrease this deposit percentage and sometimes get to a point where no deposit needs to be made at all.

Main Types of Payment:

TT (Telegraphic Transfer): this is a simple wire transfer of funds from your bank account to the suppliers. Most suppliers will ask for the final payment (less deposit) before or during shipping. It is best to obtain photographs of the final products (or visit the factory before shipping for large orders) and obtain copies of the shipping documents before you make the final payment. Do everything you can to fully confirm your order is going to be shipped or has been shipped already! The original shipping documents that will include the

Bill of Lading allow you to release the goods once they arrive at their final location. Suppliers will only provide the original documents upon final payment.

L/C Payment (Letter of Credit): “this is a document issued by a financial institution, or a similar party, assuring payment to a seller of goods and/or services provided that certain documents have been presented to the bank. They are documents that essentially prove that the seller has performed his duties under an underlying contract (e.g., sale of goods contract) and the goods (or services) have been supplied as agreed.”

Wikipedia. This is a longer process than the TT payment (14-21 days) however it can be a safer option.

Western Union Transfer: This would be your very last option due to the fact that transfers through cash offices are generally anonymous. Once your money has been collected, the receiving party could easily just disappear. This is different to a TT payment as each account holder in a TT transaction will have a proven identity, so if something does go wrong, you will have more options to retrieve your wire transfer.

Every supplier will have a different set of conditions so it is best to go through their sales contracts thoroughly and speak to your bank before sending any money overseas. In the past I have dealt with a number of situations where issues have arisen due to suspicious bank details and questionable factories. Also – once your money has been sent overseas, even if things do go wrong, it is extremely hard to get it back – so again, do your research!

The main thing you are looking for is to find suppliers you can work with long term. Aim to create lasting relationships and work together to benefit not only your business but also your suppliers. Spend time in the beginning to find the suppliers that will suit your business best and don’t jump in boots and all; be wary but have trust at the same time. Banks and shipping agents will help you through this process so use their knowledge to your advantage.

Learn by speaking with suppliers through sites such as Alibaba. The Internet has made getting into contact with suppliers SO much easier, so make the most of the tools you have available but also make a visit to your supplier and meet them in person. Nothing is more beneficial than visiting factories, meeting with suppliers, and attending trade fairs.

Hopefully this series provided some information that will help you in getting started in importing and dealing with suppliers. Any questions feel free to comment or shoot them my way!


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