Last Updated on April 17, 2021
Starting an online business is one of the best investments an entrepreneur can make. The benefits of scalability and access to a global market are unimaginable.
However, you can’t start one without a product. That’s where Alibaba.com comes into the picture.
Alibaba is probably the world’s biggest supplier marketplace. Today, we’ll be talking about one reason why they are the favorite destination for online entrepreneurs: Alibaba Trade Assurance.
The platform ensures both the supplier and the buyer; the trade assurance coverage works like insurance. With this insurance coverage, you trade with confidence knowing your purchase, product quality, and on-time shipment are guaranteed and protected.
Let’s get into the details of how to use Alibaba Trade Assurance.
What is Alibaba Trade Assurance?
Alibaba Trade Assurance is a form of trade insurance. It was set up by Alibaba.com to help “create trust between buyers and suppliers.” A trade assurance service contract confers full payment protection on a confirmed order payment on your Alibaba.com account.
The protection starts when the product quality doesn’t match agreed standards, OR the supplier fails to ship the goods on the agreed date in the contract.
Setting up this sort of program guarantees the trust of buyers. It also ensures suppliers source quality products. Buyers are confident they aren’t in danger of being defrauded by suppliers.
When there is a fraudulent transaction, the buyer is guaranteed 100% cashback on their payment. The same happens if the product quality is below par or goods are damaged.
How Much Does a Trade Assurance Order Cost?
The program costs nothing for buyers and suppliers. So, despite all the value you get, it doesn’t increase the cost of your order. What beats FREE insurance on your order in case something goes wrong?
Now, here’s the drawback.
It doesn’t apply to all orders on Alibaba.com. It applies when you buy from a supplier who has signed up for the program and agrees to comply with the Trade Assurance guidelines. To see if Trade Assurance covers your supplier or product quality, all you need to do is look out for the Trade Assurance logo in the product description section.
One more thing – always make sure to check for the supplier’s Trade Assurance limit. Hover your mouse over the Trade Assurance logo. Alibaba.com sets this limit. Alibaba determines the limit from the seller’s historical sales volume and qualification status.
The higher the limit, the better it is for you. For example, if your order value is worth $15,000 and the seller’s limit is $10,0000 – the service covers you up to $10,000.
In practice, this is rarely an issue. The supplier’s Trade Assurance limit often adequately covers your payment amount on the sales contract.
Now, let’s explore how you use the Trade Assurance program.
How Does Trade Assurance Work on Alibaba?
The Trade Assurance order process is pretty straightforward. Here’s how you apply for a refund on the service:
Step #1: Check for Supplier’s Trade Assurance Limit
Every merchant on Alibaba.com that uses this program has a Trade Assurance limit. The limit defines the maximum coverage you get when you purchase products from the supplier.
Alibaba solely decides limits. To come up with one, Alibaba.com checks the supplier’s reputation, the number of sales they have made so far, and their customer experience ratings.
Always make sure the supplier’s Trade Assurance limit exceeds your planned order amount/payment.
Step #2: Spell out Product Details and Delivery Terms
The next step is outlining the product details and agreed on delivery terms. Alibaba.com also finds it easy to open a file in case of any product quality issues.
Here are some of the details you’ll need to spell out:
Product design file: If you have a particular design that you need the supplier to brand on your products, Alibaba recommends you share a product design file, not an image.
Quality requirements: Define the color, weight, and material you need. Leave nothing to chance for the supplier.
Quantity: Specify the number of products on your order for the supplier. Doing this allows you to apply for a refund if you receive goods short in the amount you ordered.
Packaging Details: Outline how the supplier should pack the goods and material used for the packaging.
Shipping date: Specify the exact date you want the product shipped. Doing this ensures your products get to you on time. If the supplier doesn’t send your goods on the agreed date, they’ll have to ask you to revise the Trade Assurance order. You have the option of opening a dispute case if your goods are delivered late.
Customization: Share any badges, colors, packaging, and printing needs with the supplier.
Step #3: Pick Your Coverage Type
Choosing the right coverage type for your order is essential for getting the full benefits of being protected by a Trade Assurance service contract.
- If you pick pre-shipment coverage, the platform ensures your down payment on the goods against any issues before shipment. In the case of any problems, you can file a dispute case.
- But if you pick post-delivery coverage, your order is completely protected within the supplier’s Trade Assurance limit. If a dispute occurs and the supplier is found guilty, the platform refunds 100% cashback.
Step #4: Confirm Order and Make Initial Payment
Next, you’ll need to confirm your order and make the initial payment.
Once you confirm the order, the initial payment is held in escrow by Alibaba.com until you receive your order. That way, you are assured that your investment isn’t at risk. If any discrepancy occurs in agreed terms, open a dispute case with Alibaba and request a 100% refund.
What Payment Methods are Available for a Trade Assurance Order?
To support all of its transactions, buyers, and currencies, Alibaba.com accommodates a range of payment methods. However, not all the payment methods are accessible if a buyer chooses to be protected by Trade Assurance.
Here are the payment methods you can access on Trade Assurance:
Online bank payments: This is the most secure payment method. It’s an affordable and practical way to make payments. There’s one condition – you’ll need to transfer your down payment into a specified CitiBank bank account. Your payment will be held in escrow until you carry out a product quality inspection on your goods.
Credit card: Using a credit card to pay is useful because you can involve Mastercard and Visa in a dispute. These payment companies will also help conduct their investigation on the matter.
Western Union: This method is popular with U.S. suppliers and smaller orders. It is the perfect option if your payment is less than 2,500 USD.
E-Checking: Alibaba often recommends the e-checking payment method as the preferred option. The platform fixes the transaction rates. However, only U.S. citizens can use the e-checking method. It is only for USD payments.
Alibaba ‘Pay Later’: Buyers without cash at hand use the ‘Pay Later’ service. This service allows you to apply for trade credit worth 150,000 USD from third-party partners verified by Alibaba. You pay no processing fee to use this option.
Telegraphic transfer: Also called T/T or wire transfer, this is the payment method often used by B2B buyers and sellers to transfer money to a bank account. T/T has no transfer limits and supports a majority of the currencies. It’s the best-value payment method for large orders. The telegraphic transfer method is a popular method for initial payment on Trade Assurance orders.
How to Open a Dispute Case if You Receive Damaged Goods?
If you receive goods that don’t meet your supplier’s quality requirements, you can launch a dispute case if you have a Trade Assurance order contract. Alibaba’s legal team will study the evidence submitted and settle any issues.
You can open a dispute if:
- Your goods are delivered late
- Faulty specifications
- Defective products
However, you must open a case within 30 days of receipt of your merchandise.
Here are the steps to launch a dispute:
Step #1: Visit the Order List page and click on ‘Apply for Refund’
First, navigate to the order list page on your account. Then click on the problematic order and then click again on the ‘Apply for refund’ button.
Step #2: Fill the Dispute form
Alibaba will require you to upload some files as evidence to investigate your case, including:
- Documents outlining specifications and design requirements
- Signed Purchase Order
- Inspection report
- Transcript of all communication with the seller
- Signed transaction receipt
Step #3: Wait for the Supplier’s Response
Once your files have been uploaded and the case opened, the seller has five days to respond. If the seller doesn’t respond within the stipulated time limit, escalate your issue to the Alibaba dispute resolution team. You can also escalate to the dispute team if you aren’t satisfied with the supplier’s response.
The dispute team will help investigate the issue. Suppose the submitted evidence is sufficient and the product quality doesn’t match the agreed specifications, or the supplier failed to ship, you get a 100% refund on the initial payment amount on your Trade Assurance order.
Frequently Asked Questions on the Assurance Trade Service Contract
Can Alibaba reject your refund application?
Yes, the dispute team can reject your application. This happens even in cases where the supplier fails to ship. Here’s why they might reject your application:
- You didn’t book a third-party inspection while processing your order
- You discovered quality issues after receiving the goods
- You didn’t provide precise specifications while ordering the product
- You don’t send in your dispute within 30 days
What the difference between Alibaba and Alibaba Express?
Instead of explaining it here, check out our post for Alibaba Vs Aliexpress where we explain all the differences and how the two compare.
What does Alibaba trade assurance cover?
Trade Assurance covers products ordered and paid for through the Alibaba website.
What are Alibaba buyers’ fees?
Being protected by Trade Assurance means you incur no buyer fees when you sign the contract. However, you’ll pay a transaction fee depending on your preferred payment method. The transaction fees are:
- Credit card: 2.95% of the payment amount.
- Western Union: $4.9 – $45 depending on your payment amount
- Wire transfer or T/T: $30 – $50
- Alibaba Pay Later: $0
Can you get scammed on Alibaba?
The platform isn’t a scam. However, there are fraudulent suppliers on the platform.
That’s the reason why they set up services such as the Trade Assurance supplier program. Once you take advantage of all its benefits, such as the inspection service, you’ll discover that such services help make the platform is a great place to buy and sell goods that meet your quality requirements. So is Alibaba safe for Amazon sellers, the short answer is yes.
The Alibaba Trade Assurance program is a great way to guarantee your safety on the world’s largest online marketplace. You can get your money back if there are any quality standards issues with your supplier.
Keep in mind that contract services have their complexities. You need an inspection service to verify the quality requirements of the goods before they are shipped. You also should ask your supplier if their quotes are higher due to the program. That way, you can properly budget.
Plan for the added transaction fees on the payment amount. Use the telegraphic transfer to send the payment to the seller’s bank account if making large orders.
Despite all this, following these tips can be helpful if you use Trade Assurance supplier contracts. It is an excellent way to build trust, guarantee your payment, on-time shipment, and enjoy the full benefits of Alibaba.com by being covered by Trade Assurance.