A complete guide on Alibaba’s trade assurance!
Sometimes, importers may find it hard actually to trust somebody you’ve never met before. This is a real case that happens when shopping on online B2B platforms. This is the reason Alibaba, the famous Chinese online B2B platform, introduced the Trade Assurance.
The Trade Assurance was launched early in 2015, and this service has done well to improve the platform’s security. However, not every member of this trading party seems to be in support of this feature. It has received some excellent reviews from the buyers, but not so well from the suppliers.
Why don’t the suppliers like this addition? Why do buyers insist on using it? How is this service beneficial to the buyers? Well, let’s take a look at what this trade assurance policy means to buyers and sellers. We’ll uncover and answer some of the relevant questions you might have. So, let’s take it on a step-by-step process. Keep following me!
What is trade assurance?
The Alibaba trade assurance is a protection service that puts security on transactions. It is set in place to improve the trust between the buyers and sellers, with Alibaba acting as an assurance party. Here, Alibaba acts as the intermediary or go-betweens between the suppliers and the buyers. It helps add an extra layer of security to business transactions.
I love to refer to it as an Escrow transaction service. The buyers will transfer the funds to a designated Alibaba account when placing an order of the goods. Additional services can be given, such as refunds when there is a dispute filed concerning the transaction. If there isn’t an issue with the transaction, Alibaba will release the funds. That’s just how it works.
This trade assurance allows buyers to work with trusted parties with no fear of fraudulent activities. Although not every transaction is eligible for this service, your order must meet up specific requirements.
How does trade assurance protect you?
This service works under the regulation of a contract. When you place an order on Alibaba with the trade assurance service in place, you can get 100% payment protection when there is a bridge in the contract from the supplier.
If you’ve placed an order and the supplier cannot ship your goods or meet the expected quality as stated in the contract, you will be allowed to file a dispute with Alibaba and get a refund if the case persists. This will only be possible if the supplier you ordered from is a part of the trade assurance protection coverage.
If the following things happen, you will be able to get a 100% money refund;
- You don’t receive your order on time; in essence, the shipment process is delayed beyond the contract’s estimated time.
- The products you received are not of expected quality with your demands.
What are the benefits of Alibaba’s trade assurance service?
This protection service is beneficial to both parties (the suppliers and the buyers). The most crucial benefit I prioritize the most is that it is a FREE service—no added cost or losses. So here is the help of this service to the buyers and sellers respectively.
To the buyers;
The benefits of trade assurance to the buyers include but are not limited to these;
- The transactions are safe and secured.
- They are free from the risks of being victims of fraud.
- There is insurance put in place against damaged products.
- Delivery will be time to meet up with the terms of the contracts.
- There is a 100% money-back guarantee.
- Refunds are allowed when there is a case of substandard products.
To the suppliers;
The suppliers get these benefits by participating in trade assurance;
- Increase in orders received from buyers.
- There is a chance of acquiring better prices for their products.
- There is a professional customer relationship that is ruled by terms and conditions.
- Precautionary measures to receive the best behaviors from the buyers.
Those are the benefits each party can receive by participating in Alibaba’s trade assurance. Do you see it? All parties get to benefit from this, so it is not a one-sided interest service. How amazing that is!
How do you create a trade assurance order?
Knowing the benefits of using the trade assurance protection service when placing an order, you will have to create such. This will help protect your order.
In this section, I will show you a step by step process on how to create the order. You can choose to build it yourself or ask your supplier to help you do it. You can also choose the dual protection for on-time shipment and the product quality at the same time when you create the order.
Follow these simple steps to create order;
1. Find out your supplier’s trade assurance limit.
Not every supplier participates in the trade assurance service. So firstly, you have to find out if your supplier is a part of this service. It would be best if you chose a supplier with the trade assurance logo on their profile.
Afterward, check the limit of trade assurance. You can do this by pointing to the trade assurance logo. You should bear in mind that this limit is granted to the supplier specifically by Alibaba based on their reputation and experience on the platform. Therefore, it would be best if you chose a supplier with a high trade assurance limit. Okay?!
It is also essential that you choose a supplier with a trade assurance limit that supersedes your order value. If the limit is lower than your order’s value, such an order will likely be rejected by the supplier. Why? This is because the supplier’s capital might be frozen by Alibaba till the delivery is done. This might cause an inconvenience to their business.
2. Create the specification and delivery terms of the product
To ensure that you have the means to regulate the contract and transactions, make sure you specify the product details, requirements of the quality, expected shipment time, disputes resolution, etc. this should be particular so that it will be featured in the contract. The contract will be the legal document to regulate the transaction if a dispute arises.
Specify these;
i. The product design
If you need your products to be given to you exactly how you wish for it, it would be best to send the design file. This would be more specific for the supplier instead of just sending a picture.
ii. Quality requirements
When sourcing for a product, you must have some detailed quality requirements in mind. So, to ensure that what you get is exactly what you want, specify them. This will be included in the contract and used when there is a dispute based on quality issues. The specifications to be included are;
- Color: Be very specific about the color. As you know, there are different shades of one color. Instead of just mentioning the general name, include the color tone and hue. This will give the supplier the exact thing you have in mind.
- Size: the size is also significant. Include the dimensions of the product in terms of length, width, and height.
- Material type: include the material type to be used. For example, you can say ‘100% cotton, and no mixture will be allowed’. You can also have a 3rd party inspection to carry out the material testing for you.
- Weight: if necessary, you can also specify this in the description. You can choose any weight measurement units of your choice.
You should specify all this so they can be used as evidence during the dispute settlement.
iii. Quantity of the products
Specify the exact quantity you want from the supplier. Then, you can file a dispute if the supplier doesn’t meet up with it.
iv. Details of the packaging
The packaging is what ensures that your products get to you the way you want it. Ensure you include the type of packaging you want the supplier to use. Include the packaging material, size of the carton, design, and others.
v. Date of shipment
Instead of just using a month as the date, include the day of the month too. This will be a more transparent means to regulate the contract. And please, be reasonable about it as there might be some protocols alongside shipping your products.
vi. Customization requirements
If you want your products to be customized, ensure you include the specifications of the custom-made designs. Attach the logo and any other design files and send them to your supplier.
Note that you have to be very specific about all these details. This will help your supplier understand your order and ensure there is no issue with what you get. With that, you can have enough evidence to ask for a refund successfully.
3. Choose the coverage type for your order.
The coverage type allows you to pick the right coverage area for your order. Select a coverage type to establish the amount for payment protection.
Basically, there are two types of coverage; Pre-shipment coverage and Post-shipment coverage. They both mean different rates at which the trade assurance will protect your payment.
You get protected for the initial or down payment you make to the supplier for the pre-shipment coverage. While for the post-shipment, it covers the full amount of your order.
4. Confirm the order and make the down payment
This is where you confirm all the specifications you have sent to the supplier. Confirm all of those with your supplier. Ensure that they understand your order, then go ahead to make the initial payment.
How can you pay for a trade assurance order?
When you’re done with creating a trade assurance order, you’ll need to pay for it. There are five different payment methods that Alibaba permits in its trade assurance protection service. They include western union, online payment, credit card, Telegraphic transfer, and Pay later.
Note: Paypal isn’t recognized under trade assurance. If you use Paypal, your payment will not be protected.
In this service, you cannot pay the money directly to the supplier’s personal account. A CITIBANK account will be created for each transaction. This is why I call it an Escrow service. If you don’t pay into that account, your payment will not be protected by Alibaba.
a. Online bank payment
This payment method is only available for buyers with a US account (or sometimes German or French). Although you can transfer using this method, there is a payment limit of $50,000 for the US account and then $10,000 for the others.
b. Credit card (MasterCard or Visa)
Using your credit card is very simple. You can add the card details to pay in USD. The cards supported are only Visa and MasterCard. There is a limit of $12,000 on each transaction and also a transaction fee of 2.955 of the payment made. It will take about two hours for the amount to reflect in the CITIBANK account of the supplier.
c. Pay Later
This is a small loan given to businesses from a 3rd party partner of Alibaba. They will finance the order for your trade assurance for about six months. So, if you are in urgent need of the goods and have the resources to pay for them, they can help you with a small business loan.
The limit of such a loan is $150,000, and no processing fee is necessary. Payment will be made within the days after the agreement by both parties. The only currency supported is USD.
d. Telegraphic Transfer
This is also called Wire Transfer. It is the most popularly used method used by businesses in recent times. It is safe and very convenient to use. There is no transaction limit, but a bank charge of $20 to $50 is included. It will take up to five days to get to the CITIBANK account of the supplier. Various country currencies are supported.
e. Western Union
This is available for only US buyers, and the only USD is supported. The limit is also a bit too small for a business transaction ($2,500). But, it will take only a day to get to the supplier’s CITIBANK account.
How can you open a dispute if your goods are defective?
If the goods you receive are defective or do not meet up with the requirements stated in the contract, you can open a dispute on Alibaba provided the transaction was a Trade assurance order. But, you can only open a dispute when the full amount has been paid, and this must be done within an applicable claim period. To file a dispute;
a. Visit the order list page and click on ‘apply for a refund’ and ‘open a dispute.’
Those icons will be on the order list page of the transaction you have made with the supplier. Click on them and move on to filling the form.
b. Fill the dispute form and provide an upload of the evidence.
Ensure that you have evidence before opening a dispute. The lists of the documents you will be required to provide include;
- A signed copy of the purchase contract.
- A copy of the inspection report.
- A copy of the transaction receipt.
- Pictures or videos of the defective products.
- Documents containing the product specifications.
- Product design files.
Once you have that, you can upload them.
c. Wait for a response from the supplier.
After submitting the dispute form, the supplier will have five days to respond to your complaint. If you don’t receive a response after this time, you can take the case up to Alibaba’s dispute team to get involved in it.
When this happens, you and the supplier will need to submit evidence for further investigation to be done by the team. This will be done to find out if it is you or the supplier who is at fault. So, ensure that you specify your requirements clearly from the onset of the transaction. (I repeat this, okay?!)
How do you inspect the quality of the products before and after shipment?
Based on the coverage type you have chosen, you get to inspect the products before or after the shipment.
It is essential to pay for a 3rd party inspection before the shipment. A lot of people ignore this process as they think it is too expensive. Nevertheless, it would be best you included this to ensure you’re getting it right from the start. You can hire a 3rd party inspection officer on Alibaba or get one from an inspection company.
After receiving the goods and finding them defective, you can hire a 3rd party Inspection Company to issue an inspection quality report for you. If this is not done, it might be difficult for you to request a refund.
It’s a Wrap!
The trade assurance protection service is one of the things I love most about Alibaba. It gives buyers a sense of security when doing business with total strangers. Some suppliers don’t like to get involved in this as they tag it ‘too stressful.’ I advise that you go for one with this service.
However, you can choose those without it. That is if you’re comfortable. Just ensure you get the right supplier for your business.
Buy rightly, trade well!