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How does Alibaba work? - Sourcing Tips

Here, we’re talking about the B2B platform and not the Alibaba Group. Sellers on are suppliers and manufacturers of raw material and manufactured goods in China and elsewhere. Buyers are retailers, wholesalers, manufacturers buying raw material to make finished products, small businesses and sourcing agents.

Alibaba serves as the middleman, connecting the two. Unlike Amazon, it doesn’t hold inventory and doesn’t own warehouses. When you sell/buy on Alibaba, it takes care of:

Sourcing – You can choose from a huge range of products, buy in bulk directly from the manufacturer/supplier and at highly affordable rates. You can also work directly with a manufacturer and build a custom product based on your design.

Fully digital transaction – You can complete the entire sourcing process online, from searching for a product, comparing and verifying suppliers, communicating/negotiating with the supplier to ordering samples, placing the final order and paying for it. Alibaba also provides logistics support (air and ocean freight, air express, etc) in select regions.

Online marketing solutions – Free listing of items, paid advertisement, data-driven consumer insights, secure digital payment, messaging and media services are some of its offerings.

Digital supply chain fulfilment – Cainiao Network, an Alibaba business, partners with logistics service providers to offer local (China) and international logistics and supply chain management solutions. It aims to fulfil orders within 24 hours in China and 72 hours elsewhere.

Financial services – You can pay for your purchases on Alipay, the group’s consumer finance app that claims to have 1.3 billion global users. Alibaba also has a Pay Later plan, which offers small businesses a line of credit of $500-$150,000 for six months at an interest rate of 3.5%.

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How does Alibaba work?
How does Alibaba work?

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