What Is Alibaba and How Does it Work?

Written by

Darren DeMatas



Written by

Darren DeMatas


Reviewed By Our team of writers and content creators are experts in ecommerce and we fact-check every claim in our work to ensure it’s accurate and up-to-date. (Learn about our editorial guidelines.).

What Is Alibaba, Exactly?

Alibaba is an online platform connecting wholesalers in China to individuals and businesses worldwide looking to trade or resell. Typical buyers are retailers, wholesalers, sourcing agents, and manufacturers who source products for resell or private label for their own businesses. Alibaba can also be used by manufacturers to buy raw materials.

What is Alibaba

Alibaba was founded in Hangzhou, Zhejiang, in 1999 by Jack Ma, a Chinese entrepreneur. At the time, Ma worked as an English teacher and recognized the potential for online commerce in China.

He founded Alibaba intending to make it easy for small businesses to engage with ecommerce.

The company quickly grew and now provides a range of services, including product sourcing, payment processing, and logistics services.

Alibaba Homepage

Alibaba.com is now the largest ecommerce platform in the world and has helped to revolutionize online shopping in China.

As of 2023, its market value is $222.36 billion.

Alibaba Group Brands

Alibaba has several different brands that operate under its umbrella. These include Taobao, Tmall, 1688.com, Lazada, Aliexpress, and Alipay.


Alibaba Group Brands

Taobao is Alibaba’s primary C2C online marketplace. The platform is similar to eBay and allows businesses and individual sellers to sell various products online. Taobao is especially popular in China and has helped to revolutionize online commerce in the country.



TMall is highly similar to Taobao, but the main difference is that the platform is B2C, so businesses can sell directly to consumers. Think of TMall as Amazon and Taobao as eBay.



This is Alibaba Group’s wholesale platform. Chinese retailers can purchase low-cost products directly from manufacturers at wholesale prices and sell for a profit on other marketplaces.



Lazada is an online shopping platform that offers shoppers a convenient and hassle-free experience across Southeast Asia.

It provides customers with a wide range of products, from electronics to fashion, and delivers them to their doorsteps. Lazada also offers attractive discounts and deals regularly, making it a popular choice among bargain hunters.

Alibaba acquired the company and now has an 83% interest in the company.



Aliexpress is Alibaba’s international ecommerce platform. This platform allows businesses and individual sellers to sell products safely to consumers worldwide. Aliexpress is especially popular for buying electronics and other Chinese products.



Alipay is Alibaba’s payments platform. The platform allows users to pay for goods and services on Alibaba’s platforms using a variety of methods, including credit cards, debit cards, and PayPal. Alipay is the most popular payment method on Alibaba’s platforms. It has helped to make it easy for consumers to purchase products from China.

Alibaba vs. Aliexpress

Alibaba and Aliexpress are both ecommerce platforms operated by Alibaba Group. However, the two platforms are quite different.

Alibaba is a Chinese platform popular for selling products to businesses and individual sellers. Aliexpress is Alibaba’s international platform popular for buying products from China.

Aliexpress offers millions of products at wholesale and retail prices, making it easy to find what you’re looking for if you’re willing to wait for shipping.

Ways to Use Alibaba

Using Alibaba to sell products is a great way to get started in the business world, and it’s a lot easier than you might think. You can become a supplier, wholesaler, or drop shipper and get all the benefits of doing business without investing much money.

Wholesale Products

How Retail Works

Using Alibaba for wholesale products can take some work. You can purchase items from the site as an individual or a business.

However, there are a few things you need to know before you jump in. First, knowing the minimum order quantity (MOQ) for your desired product is a good idea. You can get a good idea of the cost by checking the supplier’s profile. You can also get a better idea of the quality of the product by checking out the sample.

Next, it’s essential to choose the right secure payment method. Some suppliers don’t like PayPal for small orders. You can also make use of Alipay, which is considered the safest payment method on Alibaba. You can also make use of a variety of other payment methods, including Western Union via Alipay.

It’s also important to find a good supplier. Buying from an unknown supplier can be risky, so it’s a good idea to check out a few suppliers before you make a decision. You can also ask for a sample to ensure you’re getting a quality product.

Finally, you need to find a supplier that offers the best quality product at the best price. You can check out the Alibaba wholesale directory to learn more about the suppliers you’re considering.


How Dropshipping Works

Whether you are starting out or a seasoned entrepreneur, dropshipping on Alibaba Express is a viable option for your online store. The marketplace has over 10 million buyers and is home to over 150,000 sellers. It offers multiple categories of product offerings, from beauty products to electronics.

Alibaba dropshipping starts with contacting a supplier and placing an order. The supplier will usually accept credit cards and bank transfers. Some Alibaba dropshipping suppliers will also offer free samples with a large order. Watch shipping costs, though, because you have to ensure that your store can earn a profit margin.

Alibaba has a great search function that helps you find the right supplier. You can filter the results by product categories or currency. You can also add winning products to your import list. You can even automate some of the steps in the process.

Read more: Aliexpress Dropshipping

Become a Supplier

If you make or have access to bulk products to sell, you can use Alibaba to start an international business. Just be sure you have the necessary business licenses before you start.

Register for an Account

Sign up for an account on Alibaba’s website. Once you create an account, you must verify your email address and phone number.

Create a Profile

After completing an account registration, create a profile for your business. Include detailed information about your company and your products or services. You will also want to upload good-quality photos of your products.

Find Buyers

Once you create your profile, search for buyers interested in your products or services. You can use Alibaba’s search engine to find buyers by location, industry, or keyword.

Contact Buyers

When you have found some potential buyers, you can contact them through Alibaba’s messaging system. Be sure to introduce yourself and your company, and give the buyer some information about your products or services. 

Businesses can send requests for quotes (RFQ) if they’re interested in what you offer. Be prepared to respond to those to grow your customer base.

Negotiate Terms

Once you have contacted a potential buyer, you can negotiate payment terms, delivery date, delivery method, etc. It is crucial to reach an agreement that benefits both parties before proceeding with a transaction.

How to Safely Alibaba to Source Products

If you’re looking to source products from Alibaba, there are a few things you can do to help ensure a safe transaction:

  • Check the supplier’s trade assurance rating. This is a good indicator of the supplier’s ability to fulfill orders.
  • Read reviews of the supplier. If other buyers have had positive experiences with them, they’re likely to be a reliable source.
  • Communicate clearly and frequently with your supplier throughout the sourcing process. This will help build trust and ensure that both parties are on the same page.
  • Pay attention to red flags, such as unprofessional communication or unrealistic prices. If something doesn’t seem right, it’s probably best to move on to another supplier.

Verify Alibaba Suppliers

Using Alibaba to source products is safe, but you must use the right supplier. Using the wrong supplier can lead to losses and inconvenience. But there’s a simple way to prevent these problems.

Alibaba Buyer Protection

Alibaba has a series of checks and procedures to protect its customers. This includes Trade Assurance. Trade Assurance provides a money-back guarantee for buyers. It covers a variety of factors, including product quality and supplier performance. It also protects buyers from unsafe or fake products.

Alibaba also uses a third-party service to check factories. These inspections help keep the company safe from scams. It’s free to use.

The inspection service is based on ISO9001, an international standard for quality management systems. It helps manufacturers and suppliers show their consistency and dedication. Suppliers are also given badges according to their level of verification. Aim to work with a Gold Supplier whenever possible, as these companies have a strong track record.

You can search for verified suppliers on Alibaba by name or by filtering by ISO certification. You can also review their company profile and contact them for questions or clarification.

Order Samples

Using Alibaba to order samples is a great way to get started with your new supplier. However, you should consider a few things before you start ordering samples.

Some suppliers offer free samples, while others may charge a fee. You should also learn the shipping method for your samples. Some suppliers may send samples via freight forwarders, while others may ship directly from the factory.

Alibaba also provides a ‘Free Sample Center’ that allows potential buyers to request samples from suppliers. This is a wonderful way to figure out if a supplier is worth dealing with.

Negotiate with Suppliers

Using Alibaba to negotiate with product suppliers can increase your business’s efficiency and profitability. However, a good negotiation requires mutual respect and a little negotiation savvy. 

An excellent first impression is a great way to build trust. Be sure to ask lots of questions and give as much information as possible. This will help you build confidence in your supplier and give you an idea of their capabilities.

Show your supplier a little respect by praising their products. You can do this without sounding too contrived. You can also show respect by showing your supplier that you are serious about buying their products.

Ask questions about the products you are interested in. Be sure to ask the most pertinent questions first. You may want to ask about the product’s history. The answers will give you a better idea of whether the supplier is right for you.

Handle Logistics and Shipping

Using Alibaba to source products can be complicated, but it can also be a great place to find reliable suppliers. However, shipping products through the site can also be costly. The shipping costs vary according to how many items you’re purchasing, the weight of the goods, and the shipping service.

You can use Alibaba’s free shipping service if you’re shopping for just one or two items. However, if you’re buying a large quantity of goods for your business, you’ll have to pay for the shipping.

Consider using a third-party logistics service if you’re buying large quantities of products. Several 3PL companies are available to help save time and money, and you’ll be able to track shipment progress.


Alibaba is not Amazon, but it can be compared to it. Amazon is based in the United States, and Alibaba is based in China. Both ecommerce sites have millions of users, so it’s easy to see how people could think they were the same company.

Yes, Alibaba is one of the largest ecommerce platforms in China. They offer great customer service and provide useful information about how to start an ecommerce business. However, Alibaba has been criticized for selling fake goods. Some items sold through Alibaba may be counterfeit, so doing due diligence with suppliers is crucial.

Alibaba even went public on the New York Stock Exchange (NYSE) with the U.S.’s largest IPO at $68/share in 2014, raising $25 billion. It’s also on the Hong Kong stock market.

As one of the largest marketplaces today, Alibaba connects individuals and businesses to potential suppliers and overseas manufacturers. The search bar allows you to find products and suppliers who may respond to your RFQ.

Yes, the platform isn’t limited to just Chinese consumers. Individuals and companies alike can import products from various suppliers. Shipping times vary widely, depending on the product, order quantity, and supplier.

Alibaba is cheap because of its large network of Chinese manufacturers and suppliers. They can offer prices much lower than U.S-based suppliers.

Using Alibaba for Your Ecommerce Business

Alibaba can be a great source of dropshipping products if you order samples and test quality first. Shipping can take a while, though, so it’s important to set customer expectations from the start. 

Alibaba isn’t right for all ecommerce businesses, and that’s okay. Take some time to browse through the assortment of items and suppliers who ship from the U.S. to help decide if it’s right for you.

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