The Official Alibaba Success Guide

Praise for The Official Alibaba.com Success Guide
“This is the definitive guide to those who are interested in using
Alibaba to enhance their business-to-business relationships.”
—Dr. Scott Testa, entrepreneur, college professor,
and marketing and business expert
“Speaking as an e-commerce entrepreneur, veteran eBay Power
Seller and professional eBay instructor, I know that the biggest
challenge facing small to medium-sized businesses is product
sourcing. Alibaba.com provides the answer to this daunting
challenge; however, international trade presents its own set
of challenges. Fear no more, as Brad and Deb Schepp have
come to our rescue once again, by giving us their masterpiece,
‘The Official Alibaba.com Success Guide.’ A comprehensive
reference book and must-read for everyone who has ever
thought about international trade, creating and manufacturing
your own product, or taking your online business to the highest
level.”
—Stephanie Inge, professional eBay instructor
(http://stephintexas.poweru.net) and founder of the world’s
largest eBay sellers group “The Dallas
eBaybes & eMales.” http://www.meetup
.com/dallasebaybesandemales
“This book presents exciting information for all entrepreneurs
by dispelling the myths of importing from abroad. The Schepps,
once again, present valuable information in a concise, inter-
esting format that is sure to greatly increase any retailer’s
knowledge of product sourcing. The interview with Jack Ma,
as well as the seller profiles, is truly inspirational. Alibaba.com
is no longer a mystery!”
—Cynthia Lizana, vice president, Internet Merchants
Association, www.imamerchants.org

“This is the official Alibaba.com guide to help you tap into the
giant global trade market. Profit is made when you buy and
Alibaba.com is the secret to making those global trade partner
connections without traveling all over the world and meet sup-
pliers by chance. Now, savvy online and offline marketers have
a complete roadmap to success with this book.”
—Gary Richardson, Amazon featured merchant and eBay
power seller
“An insightful and practical approach to conducting business
globally. Jack Ma is an inspiration to us all and has a great
record of worldwide success.”
—Laurel Delaney, founder and president of Global
TradeSource, Ltd., GlobeTrade.com
“Alibaba.com offers an amazing opportunity for retailers to
develop and grow valuable relationships for their business. The
Official Alibaba.com Success Guide should be required reading
for anyone looking to grow their retail business successfully.”
—Brandon Dupsky, managing director, eCommerce
merchants, and owner of www.OnFair.com

Copyright © 2010 by Debra Schepp and Brad Schepp. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey
Published simultaneously in Canada.
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Library of Congress Cataloging-in-publication Data:
Schepp, Brad.
The official Alibaba.com success guide: insider tips and strategies for sourcing products from
the world’s largest B2B marketplace / by Debra Schepp and Brad Schepp.
p. cm.
Includes index.
ISBN 978-0-470-49645-9 (cloth)
1. Alibaba (Firm) 2. Purchasing. 3. Imports. 4. Industrial marketing. 5. Business
networks. 6. Electronic commerce. I. Schepp, Debra. II. Title.
HF5437.S298 2010
658.8 72–dc22
2009031720
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1

Contents
Foreword Jack Ma, Founder of
Alibaba.com xiii
Acknowledgments xvii
About the Authors xix
Preface xxi
Part I Alibaba.com: The Opportunity 1
Chapter 1 Alibaba.com Opens the Door to
Global Trade 3
First a Little History 5
Alibaba.com’s Corporate Goals and Values 8
Alibaba.com’s Six Core Values 9
Alibaba.com Today 16
Alibaba.com Corporate Structure 17
Alibaba.com’s Programs, Tools, and Events 18
Alibaba.com’s 2008 e-Business Champion
of the Year: Gene Rumley 22
Chapter 2 International Sourcing: This Isn’t
Kansas Anymore 25
International Sourcing: Your Challenge
and Promise 25
Your First Sourcing Decision 26
Let’s Put First Things First 27
Get a Tax ID Number and Register
Your Business 28
vii

viii Contents
Develop Your Product Idea 29
Build Your Prototype 38
Create and Test-drive Your Business Plan 39
Create a Business Calendar 42
Product Sourcing Basics 43
Calculate Your Budget 43
Safety Checks for Sourcing Products 44
Sourcing Internationally: New Challenges
and Rewards 47
Leaving Kansas: Alibaba.com Opens a World
of Opportunity 48
Importing Your Products 51
Chapter 2 Checklist 52
Chapter 3 Keys to Successful Importing 53
Your Education Begins 55
Your Partner’s Responsibilities and Your Own 56
Terms You Need to Know 57
Standards, Certifications, and Regulations 62
Partners Who Can Help You 63
Who Are the Major Players? 64
Can You Keep It Simple? 68
Part II Putting Alibaba.com to Work for You 71
Chapter 4 The Alibaba.com Web site 73
Let’s Start at the Home Page 74
Trade with the World 77
Keep Scrolling 79
Inspirational Success Stories 79
Alibaba.com Partners 79
Don’t Underestimate the Bottom of the Page 80
Let’s Get You Registered 81
Download TradeManager 85
A Tour of Alibaba.com’s Links 85

Contents
ix
Buy 86
Sell 87
Community 88
My Alibaba 94
Help 94
Alibaba.com’s Search Engine 95
Chapter 5 Finding Business Partners 99
You Are the Boss, So It’s All Up to You 100
Education through Experience 101
Establish Realistic Expectations for
Your Suppliers 101
Set Criteria for Your Products Themselves 103
Build In Your Own Safety Checks 104
Fraud: Forewarned Is Forearmed 104
Qualify and Identify 105
Qualify and Legitimize 106
Let’s Find Some Manufacturers 110
Searching for Partners 110
Posting a Buying Lead 112
Those First Few E-mails 117
Vetting Prospective Partners 118
Do You Like Their Attitudes? 118
Quantify Them to Qualify Them 119
Communication, Communication,
Communication! 121
Should You Travel to China or
Anywhere Else? 123
Chapter 6 Working with Your Suppliers 127
A Two-sided Partnership 128
Alibaba.com Can Help You Learn 129
Getting Your Products Right 135
Get Graphic 135

x Contents
Ask for Samples 135
What to Do When Things Go Wrong 138
Chapter 7 Closing the Deal 143
Getting the Details Right 144
Your Pro Forma Invoice 145
Payment Schedules and Options 149
Spread Out Your Payments 151
Wire Transfers 151
Escrow Services 153
Letters of Credit 153
Shipping Details 155
Forge Good Relationships 155
Bill of Lading: The Final Document 156
Chapter 8 Safe Trading 159
Educate Yourself 161
Alibaba.com’s Safety Security Center 161
Safe Trading Forums 170
Other Web-based Resources You Can Use 172
Keeping Your Computer Safe 175
Security Help Available through Alibaba.com 176
Create Your Own Alibaba.com Sign-in Seal 177
E-mail Fraud 177
Trojans and Viruses 178
Protecting Your Computer 178
Chapter 9 Keeping the Pipeline Full 183
Your Customers Will Change Your Business 184
Your Partnerships Will Change Your
Business 186
When You Are Ready to Travel, Get In Touch 187
Your Expertise Will Change Your Business 188
What Will You Do with Your Expertise? 190

Contents
xi
Turn Those Tables and Sell to the World 190
Alibaba.com’s Selling Links and My Alibaba
Selling Tools 191
Now Is the Time to Consider a Paid Account 196
Your Uncle Sam Stands Ready to Help 196
Part III Alibaba.com Success Stories 201
Gene Rumley—Bell Performance, Inc. 203
Valarie Moody—Fodeo.net 209
Allison Taylor—Jack Webster, Inc. 213
Mary Miller Pembleton and
Gregg Pembleton—Thumball
by Answers In Motion, LLC 219
Joshua Crumbaugh—Platinum
Mortgage, Inc. 223
Valerie Johnson—Big Feet
Pajama Company 229
Index 235

Foreword
When the 18 founders of Alibaba formed the company in
my apartment a decade ago, two of the central tenets of our
business—ones that hold firm to this day—are the focus on
customers above all other stakeholders, and adherence to core
values that guide the way we build our dreams. Through good
times and bad, we never succumbed to outside pressure against
the interests of our customers, and we did not waver from our
core values. As we celebrate our 10th anniversary, Alibaba Group
has grown to more than 13,000 employees serving nearly 200
million Internet users in 240 countries and territories around
the world. Among our many business ventures, we operate the
world’s largest business-to-business marketplace, Alibaba.com,
and Asia’s largest consumer shopping destination, TaoBao, as
well as China’s largest online payment platform, Alipay.
The point of talking about Alibaba Group’s growth is simply
to suggest what a motivated group of entrepreneurs can achieve
when guided by a shared vision and willingness to persevere
through tough times. Today, our goal at Alibaba Group is to offer
the tools we’ve built to assist entrepreneurs around the world in
realizing their own dreams. As we all find ourselves in uncharted
waters in this new economic landscape, there are things I believe
remain fundamental:
Focus on customer satisfaction above all else.
Devote time and resources toward the development, team
culture, and motivation of your employees.
Remain flexible and open toward the inevitable changes
that you will encounter as your business grows.
In addition, regardless of the environment, it is imperative
that you and your business partners engage in principled conduct
xiii

xiv Foreword
that will help ensure success. This means dealing with customers
and each other with:
Integrity
Passion
Commitment
The fact that you are reading this book is an important ﬁrst
step. It shows that you are proactive. You have a dream and
are taking action to help yourself rather than sitting around and
waiting for someone else to help you. We all need to face the
reality that the world has changed, potentially in a way that will
alter our futures forever, and we need to embrace that change.
What is clear to me is that doing business via the Internet is
a continuing trend, and one that will substantially change the
existing business paradigm for everyone. The key to your success
is to understand what is happening and how to proﬁt from it.
I’d like to share with you an encounter that I had earlier this
year. While I was having dinner in a restaurant, the owner, who is
an Alibaba.com member, came up to me and said, “Jack, what do
you think about this terrible economy? How long do you think
this situation is going to last?”
“The end of this year,” I said.
“Wow,” she replied, “you think the economy is going to
recover by the end of the year?”
“No,” I said. “By the end of this year, you are going to get used
to it.”
It is not only the restaurant owner who has to acclimate
to the “new” economy. We all have to get used to it. The fac-
tors that drove economic growth in the past decade—excessive
consumption and borrowing—are long gone and may never
come back. We need to look ahead and focus on tomorrow. I
believe there is a silver lining in every cloud and if you position
yourself correctly there are tremendous opportunities moving
forward.

Foreword
xv
Today’s economic situation is one of the growing pains of
globalization. Ten years from now, I strongly believe there will be
more successful people than there are today. Ten years from now,
I believe there will be more successful companies than there are
today. Those who take action now have the opportunity to be
the Next Big Thing. I speak from hard-earned experience. Had I
not followed my dreams and taken action 10 years ago, Alibaba
Group would not exist today.
Right now there is a prime opportunity for all of us to change
the rules of the game through e-commerce and shift the balance
in favor of entrepreneurs like you. The Internet levels the playing
field and gives everyone—be they big or small—a chance.
The true promise of e-commerce is its ability to transform
an archaic system that has disproportionately rewarded the big
guys while penalizing consumers with higher prices and fewer
choices. In a big box retail environment, for example, the empha-
sis is on managing inventory costs, which results in the big guys
offering fewer and fewer options for each item. On the Internet,
the retail shelf is limitless and the consumer is the beneficiary.
A friend had told me about a famous Chinese wine that sells
for $120 per bottle, but the manufacturing costs are less than
5 percent of its retail price. Why should consumers pay such a
hefty premium for something that should be more reasonably
priced? Because most of the money is being eaten up by guys
in the inefficient distribution chain—it costs so much just to
get the product on the shelf that it benefits neither consumers
nor the people who created the product. That is neither a fair
nor an optimal arrangement. I believe e-commerce, which has
tremendous potential and possibilities, will eventually lead to
disruptive changes to the status quo by eliminating the physical
constraints that prevent the laws of economics from maximizing
value for consumers and producers.
The next game-changing move in this new business paradigm
will be the idea of “designing for the consumer.” In a world
without e-commerce, products are designed and produced
according to the cost structure of manufacturers, and consumers

xvi Foreword
have very little say about the features and functionalities of things
they buy. With e-commerce, consumers will have a high degree
of participation in the design of the products they purchase.
The speed, efﬁciency, and scale of consumer data that is avail-
able through the Internet will make designing for the consumer
a reality. In the new e-commerce world, existing distribution
channels will also be reassessed and, ultimately, eliminated.
The mission of Alibaba Group over the next 10 years is to help
implement a modern business environment with new rules that
will bring success to Internet entrepreneurs around the world.
In this new world, business will be done with more transparency,
responsibility, and trust. We plan to take the power that has been
the province of the big guys and put it in the hands of small
business operators like you.
The future will belong to the entrepreneurs who operate in
the virtual world and bypass the trappings that add cost and
complexity. It will belong to those who make or resell special
goods meant for sale through e-commerce. It will belong to those
who price goods in a way that provides higher margins while still
rewarding customers with more choice at a lower price.
Will you be one of them? Do you have what it takes? Turn the
page and let’s ﬁnd out.
—JACK MA
Founder of Alibaba.com

Acknowledgments
Although writing is often a lonely pursuit, no book can be com-
pleted with the help and support of countless people beyond just
the writers. We would like to thank everyone who has helped
make this book you hold possible.
The people at Alibaba.com must come first. This company
is full of hardworking professionals who are totally dedicated
to their respective missions. Thanks especially to Kelly Sang,
Alibaba.com’s general manager of the Americas, and Andrea
Meyer, Americas public relations manager at Alibaba.com. We
would also like to thank Christina Splinder, director of interna-
tional corporate affairs for Alibaba.com in Asia-Pacific, as well as
Sharon Tung, Sovanna Fung, Cliff Hsia, Claudio Pinto, and Eric
Watkinson. And we offer special gratitude to Jack Ma, who served
as an inspiration to us from the beginning of this project. He will
continue to inspire us long beyond.
At John Wiley Sons, Inc. we had the excellent good for-
tune to work with three of the most capable, professional, and
unflappable editors we’ve worked with in 25 years of writing
books: Lauren Freestone, production editor; Beth Zipko, edito-
rial assistant; and Shannon M. Vargo, editor. Our copyeditor and
proofreader made us look better than we could have on our own.
Thanks to our agent, Bill Gladstone at Waterside Productions, for
bringing us together.
Many Alibaba.com members gave generously of their time,
including Gene Rumley of Bell Performance. We are especially
grateful that he shared his good work in creating the documen-
tary My Name Is Orphan with us. Our special gratitude goes
out to Allison Taylor, Jack Webster, Inc.; Valarie Moody, Fodeo;
Joshua Crumbaugh, Platinum Mortgage, Inc., Gregg and Mary
Pembleton, Answers In Motion, LLC; Elena Neitlich, www.moms
onedge.com; Jane F. Ivanov, EveAlexander.com; Brandon Dupsky,
xvii

xviii Acknowledgments
OnFair.com; Valerie Johnson, Big Feet Pajama Co.; Todd
McCartney, AeroPro, LLC; Dave Simerka, Interstateblue.com;
Lorne Counter of www.list4uonline.com; Todd Sachs, Bamko
Promotional Items; Brent Danielson, Interra International; Sad
Zeng, Ballstar Toys Co., LTD; and Kelly Chen, Silverwood Indus-
trial Limited. Many experts in the import/export ﬁeld were
especially helpful, sometimes answering literally a dozen or
more questions from us. These include Renaud Anjoran, Sofeast
Quality Control; Aninda DasGupta, Alba PLC; David A. Dayton
of Silk Road International; Bruce H. Rubin, BHR Global Asso-
ciates; James Filbird, JMF International Trade Group; Ron Coble,
ImportExportHelp.com; Laurel Delaney, Global TradeSource
Ltd.; and one of the best librarians we know: Shirl Kennedy of
Web Doyenne.
Our family has had to endure countless discussions devoted
to arcane topics, just because they share our world, so they
deserve special thanks: Stephanie, Ethan, Andrew, and Laurel,
you ﬁll us with pride and happiness. And to our cats, Max and
Mollie, who view as part of their jobs the need to keep Deb com-
pany. They’re more than just cats, they’re feline paperweights.

About the Authors
Brad and Debra Schepp are the authors of 19 books that help
nontechnical people make the best use of emergent technolo-
gies. Their areas of focus include e-commerce, telecommuting,
and social media and social networking for business purposes.
They were early pioneers in the ﬁelds of both green energy
and telecommuting, publishing among the ﬁrst guides to these
topics. The couple has focused on practical guides to help peo-
ple best use these tools without overhyping their potential.
Among their best-selling titles is eBay PowerSeller Secrets, which
through two editions has sold more than 35,000 copies. Their
other most recent books include Amazon Top Seller Secrets,
How to Make Money with YouTube, and How to Find a Job
on LinkedIn, Facebook, Twitter, MySpace, and Other Social
Networks.
Brad and Deb are widely recognized as e-commerce experts
not only through their books, but also through their columns
for AuctionBytes and Auctiva (providers of leading e-commerce
software). Brad and Deb have also conducted seminars about sell-
ing on eBay, and have been interviewed many times by national
media including Life, Good Housekeeping, and Entrepreneur
magazines. They have appeared on many radio shows, and also
on the television show Retired and Wired (even though they are
only one of those things).
xix

Preface
The first time we heard Jack Ma describe the Internet as a brand-
new innovation that could dramatically change life for people the
world over, we must admit we were startled: The Internet new?
To us, the Internet and its precursors, online services and online
databases, have been central to life for more than 25 years. When
Jack Ma first came to the United States in the mid-1990s and saw
what was possible through a personal computer and an Inter-
net connection, we had already been online for more than 10
years. He went back to China to fashion the e-commerce global
giant Alibaba.com, and we continued to write and publish books
that helped people learn how to use online services, telecom-
mute thanks to their home computers, help their kids learn how
to safely navigate online, and build successful e-commerce busi-
nesses. By 2009, life without the global online connection was a
little hard for us to remember.
Still, every new partnership or alliance brings new perspec-
tives, and it didn’t take long for us to see that Jack was right.
Although we had mastered living online, along with millions of
other Americans, many people around the world had yet to dis-
cover the possibilities available to them in their own backyards
through global Internet connections. Chief among these pos-
sibilities is the opportunity to build prosperous lives through
e-commerce and international trade. Thanks to the Internet in
general and Alibaba.com specifically, barriers all around the
world have dissolved. Anyone who has access to the Internet
now has the opportunity to import, export, build commercial
alliances, and trade with anyone else, anywhere in the world,
who has the same access.
Alibaba.com has made it extraordinarily simple to find trad-
ing partners and forge independent new lives. That’s not to say
this adventure is simple or guaranteed to succeed. The world of
xxi

xxii Preface
e-commerce is empowering and thrilling, but it can also be chal-
lenging and fraught with risk. The people at Alibaba.com have
worked hard to create a vibrant and safe trading platform to con-
nect suppliers and clients all around the world, but learning how
to trade internationally, although logistically much easier today, is
still a complex and challenging subject. That is where this book
comes in.
If you have ever dreamed of operating your own business;
if you have ever had a great idea for a new product, but didn’t
know where to begin; if you have ever longed for financial inde-
pendence and the opportunity to be your own boss, you will find
The Official Alibaba.com Success Guide is the book you need.
Through Alibaba.com you can source nearly anything your heart
and mind can conjure. You can find partners across town or on
the other side of the globe. You can open yourself up to the pos-
sibility of meeting the greatest business partners you will ever
know, even if you work together for many years before you actu-
ally stand before them and meet them face to face. Alibaba.com
is just that powerful.
Surprisingly, just as many people around the world are only
now beginning to see the potential of the Internet, many suc-
cessful people in the United States are not quite sure what
Alibaba.com is or how it works. “Isn’t that the Chinese eBay?”
we heard as we told people about this exciting new project.
Because we have worked in e-commerce for more than a decade,
of course we understood exactly what Alibaba.com could offer.
Many of the experienced e-commerce entrepreneurs we know,
however, have yet to tap into the power of global trade avail-
able through their own computers and the Alibaba.com web
site. They need experienced tour guides to show them around
the bustling site and teach them how to safely and successfully
navigate the riches waiting there for them. If you are a new-
comer to e-commerce also dreaming of becoming a successful
businessperson, you need those tour guides, too.
Fortunately, you have come to the right place. Although we
have lived online longer than most, we have never been the

Preface
xxiii
type of writers who will oversell and overhype an opportunity.
If we had wanted that type of career, we would have begun
writing infomercials a very long time ago! No, we are the type
of writers who always ask each other, “Where is the truth in
this subject? What should people realistically expect from this
tool?” In the end, that’s what the Internet, with all its e-commerce
potential is: a tool. We like to think of ourselves as the ones who
write the operating manuals for this tool. Whether you want to
build a successful e-commerce business, convince your boss to
let you work from home, or keep your kids safe as they surf
the Web, we can explain to you just exactly how you can best
use the power behind the Internet. You can also rest assured
that the information in this book has been thoroughly vetted
by Alibaba.com, so you know it is as accurate and up-to-date as
possible. This is the only official guide to the Alibaba.com web
site, which means you have a unique and valuable tool at your
disposal.
As you make your way through the chapters of this book, you
will find countless explanations and details about how to harness
the power of the world’s largest business-to-business web site.
You will also meet many successful entrepreneurs who once
stood exactly where you now stand, but today enjoy the freedom
and excitement that comes from operating their own businesses.
The book is split into three distinct parts. Part One repre-
sents the overall opportunity available to entrepreneurs turning
to Alibaba.com in search of success. Part Two examines the best
practices necessary to put Alibaba.com to work for you, and Part
Three includes a series of profiles of successful businesspeople
who have charted their own courses and are now finding satis-
faction and reward through their partnerships forged on the site.
Here’s a chapter-by-chapter look at some of the details.
Chapter 1, “Alibaba.com Opens the Door to Global Trade,”
will give you an insider’s look at the founding of the company
and the incredible growth it has experienced since that founding.
You will also gain insight into the corporate culture that drives
the company and discover some of the tools available to you on

xxiv Preface
the site. An exclusive question-and-answer session with Jack Ma
will give you an idea of the philosophy behind the site.
Chapter 2, “International Sourcing: This Isn’t Kansas Any-
more,” provides you with an overview of many of the issues
entrepreneurs face as they begin to build and nurture their
product sources. Adding the opportunities international sourc-
ing brings to the mix expands the possibilities and makes the
challenges more distinct, but that is where the adventure really
begins.
Chapter 3, “Keys to Successful Importing,” provides you with
a look at the special challenges you will face by looking out-
side domestic borders for new sourcing options. You will get a
glimpse of such issues as clearing customs, determining tariffs,
and arranging transport. You will also be introduced to some
partners who can help you, including freight forwarders and
customs brokers.
Chapter 4, “The Alibaba.com Web Site,” gives you an insider’s
tour of the site itself, focusing on the best ways you can make
use of all the valuable information and tools you will ﬁnd just
waiting for you to explore.
Chapter 5, “Finding Business Partners,” supports you as you
learn how best to go about identifying and evaluating potential
business partners. How wisely you choose your partners is likely
to make or break your venture, so we will show you how to
complete your due diligence and vet prospective new partners
to increase your chances of ﬁnding success.
Chapter 6, “Working with Your Suppliers,” will help you
understand the intricacies of building lasting relationships with
the partners you engage to create your products and bring them
to the marketplace. As your business grows, you will also be
building long-lasting relationships to support that business. We’ll
help you get those relationships started on the right foot.
Chapter 7, “Closing the Deal,” will step you through the
potentially tricky matter of paying for your orders and arrang-
ing to have them shipped to your location. Although it may
seem daunting, many successful entrepreneurs have learned to

Preface
xxv
navigate this part of the process without trouble, and we’ll help
you see how you can become one of them.
Chapter 8, “Safe Trading,” explains the risks you face through
fraud and computer hazards such as viruses and spyware. We
would not be reliable tour guides if we did not explain these risks
to you. Happily, we sincerely believe that Alibaba.com represents
a reliable partner for you, one that recognizes the risks and has
put into place safeguards that will help you.
Chapter 9, “Keeping the Pipeline Full,” helps you to evaluate
how your business will grow and expand as your knowledge and
business experience increase. You may not be able to see all the
turns in the road from where you stand now, but we will help
you take a look at some of the signposts along the way.
The last section of the book, “Success Stories,” will provide
you with inspirational reading that will help you learn the secrets
behind some of the many businesses that are thriving thanks to
the opportunities available through Alibaba.com. Whether the
individuals were already successful businesspeople when they
discovered the site or never before operated their own busi-
nesses, their stories will inspire and educate you.
It has been a great privilege to prepare this book for you, and
to work so closely with the talented pioneers at Alibaba.com.
We are conﬁdent you will ﬁnd a great deal of wisdom and solid
advice as you make your way through the chapters to your future
success. It is also our fervent hope that you will enjoy the journey.

PART I
Alibaba.com:
The Opportunity

1
Alibaba.com Opens the Door
to Global Trade
When you first arrive at Alibaba.com’s home page you may feel
exactly like the original Ali Baba felt upon opening the door to
his room of secret treasure. Nearly anything you can think to buy
or sell is waiting for you on the site. You can explore more than
5.5 million storefronts offering manufactured products in 40 dif-
ferent categories from more than 240 countries and territories
spanning the globe. As you explore Alibaba.com you will be
joined by more than 42 million registered users. If you oper-
ate a small to medium-size enterprise (SME), you may find that
Alibaba.com’s home page offers you treasure every bit as pre-
cious as the one our humble hero Ali Baba enjoyed.
Anyone who operates a SME will tell you that having a
constant and reliable source of quality products is essential to
building and sustaining a successful business. With the advent of
the Internet, not only did an entirely new world of e-commerce
open up to those who were eager to explore it, but now there
are simply no boundaries tying any of us to one particular part
of the globe. The Internet in general and e-commerce specifi-
cally have made the whole world our neighborhood and nearly
every global citizen our prospective customer. Never before in
history has such a wealth of opportunity been available, brought
together in one single place on the Web.
3

4 Alibaba.com: The Opportunity
Ali Baba may well have ﬁrst found himself overwhelmed by
his bounty. You may also look at the Alibaba.com home page,
shown in Figure 1.1, and feel just a little dizzy over the possi-
bilities. With so many choices available and so much potential
opportunity, you will need some guidance as you learn your way
around this vibrant and exciting new world. That’s where this
book will help. Throughout the coming chapters you will ﬁnd a
wealth of information and advice to get you up to speed on every-
thing you will need to know to use the Alibaba.com web site
effectively, safely, and successfully. Dozens of experienced users
have been overwhelmingly generous in sharing their experience,
wisdom, and knowledge to help you follow in the steps they
have taken to the successful lives they once only dreamed about.
Dreaming is a very good place to start your journey.
Figure 1.1 Alibaba.com’s home page promises a wealth of trading
opportunities.

Alibaba.com Opens the Door to Global Trade
5
First a Little History
When Ali Baba spoke his magic words, a door to a world of
riches opened to reveal the treasure that was just waiting for a
bright and ambitious young man to explore. When Jack Ma, a self-
proclaimed dreamer and Alibaba.com’s founder, was planning
and dreaming of his e-commerce business, this favorite child-
hood story came to his mind. As it happens, the tale of Ali Baba is
quite popular among children in China. The story’s global appeal
is clear to any youngster dreaming of standing in Ali Baba’s curly
shoes. Jack Ma, however, is more than just a dreamer. He is also
a man of action.
As a young man growing up in Hangzhou, China, Jack dis-
covered he had an aptitude for learning the English language. At
the age of 12, he was eager to build his English language skills
and offered his services as a tour guide to foreign visitors. All
throughout his teen years, he continued to build his English lan-
guage skills, and after graduating from college, he became an
English teacher. He also worked as a translator, and through this
experience he made his first visit to the United States, during the
mid-1990s. That’s when he saw the Internet for the first time, and
suddenly a whole new world of potential opportunity opened
up within his mind.
Jack quickly recognized the potential the Internet would have
for helping people all over the world build rewarding lives by
sharing information and trading goods. He went home deter-
mined to help bring the Internet to the people of China. Jack’s
first e-commerce business was a sort of Yellow Pages directory
called China Pages, believed to be China’s first commercial Inter-
net site. Having had this experience, many people would have
begun dreaming of riches, but that was not Jack Ma’s initial inten-
tion. “Being successful isn’t just about making money,” Jack said.
“You have to create something. You create value for people. You
help people, and then people help you. As a business, help-
ing others is the result, not the process. Life is more fun than
that.”

Instead, Jack took the American dream of successful business
ownership back home and set about helping small to medium-
size business owners make that dream come true in China. Jack
saw the Internet and e-commerce as the perfect tools to help
small and struggling manufacturers in his part of the world reach
global customers. By doing that, they could prosper while creat-
ing jobs and lifting even more people out of poverty.
Today, of course, Alibaba.com is the most successful Inter-
net company in China, and Jack is a very successful man by any
measure. More than that, his dream of helping the struggling
manufacturers he knew locally has spread across the globe. Now
millions of Alibaba.com members are operating and expanding
successful businesses, both manufacturing and sourcing prod-
ucts for sale in a global marketplace. You stand ready to become
the newest dreamer to step onto the site and make your own
dreams come true.
Some Alibaba.com Myths Debunked
Perhaps every company achieving near-meteoric success
carries with it some myths that ultimately become more
recognizable than the facts. Before going too much further,
here is your opportunity to join the ranks of those who
know both the myths and the facts that will lay those myths
to rest.
Alibaba.com is the Chinese eBay. Here is a misunder-
standing that almost refuses to die. The only similarity
between the U.S.-based online auction site eBay and
Alibaba.com is that both companies operate on the
Internet. eBay provides its members a way to buy and
sell on the site. Alibaba.com, however, offers users
a platform that gives them the opportunity to iden-
tify trading partners and create partnerships between
manufacturers who need to sell their goods, and
entrepreneurs who need to purchase goods for resale.

7
Alibaba.com is only useful for finding manufactur-
ers in China. Certainly you will find many Chinese
manufacturers on the Alibaba.com platform. However,
you are just as likely to find a reliable trading partner in
Birmingham, Alabama, as you are to find one near Bei-
jing. Remember that manufacturers from more than
240 countries and territories gather together on the
site.
Only large and experienced companies have the
resources and knowledge necessary for sourcing
internationally through Alibaba.com. There was
certainly a time when the import/export business
required expertise and experience most people sim-
ply did not possess. Today businesses of every size can
easily find products to buy and customers to serve
through Alibaba.com’s easy-to-use site. Most of the
people interviewed for this book had never sourced
(or even sold) products internationally before work-
ing with the trading partners they found through
Alibaba.com. As a matter of fact, many of them had
never even operated their own businesses before they
brought their ideas to the site and set about fulfilling
their dreams of developing their own businesses.
You will need some knowledge of the Chinese lan-
guage to effectively use Alibaba.com. Nothing could
be further from the truth. Many manufacturers, no
matter where they reside, have someone on staff who
speaks English. Without English language skills, manu-
facturers limit the potential market for their products.
Plus, with technological advancements, translation
software available both on Alibaba.com and from
sources outside the site goes a long way toward com-
pletely eliminating language barriers.
(continued )

(continued )
Factories overseas have poor labor and environmen-
tal standards. This myth is a little piece of xenophobia
that can be difficult to overcome. Many small business
owners with whom we spoke had first tried sourc-
ing their products in the United States. Some of them
told us directly that upon visiting the factories here,
they decided to look overseas, because they were not
happy with the working conditions they found domes-
tically. If you set your principles high for both labor and
environmental standards, you will find companies that
meet those standards and companies that fail to meet
those standards in every corner of the globe.
Alibaba.com is only useful if you want to sell
through the Internet. The products sourced through
Alibaba.com can be sold through many different chan-
nels. Although some business owners operate largely
on the Internet, many others distribute their prod-
ucts through every wholesale and retail outlet you
can imagine. It’s not unheard of for someone who has
started out as an Internet retailer to eventually open a
brick-and-mortar outlet, too.
Alibaba.com’s Corporate Goals and Values
You may think that it’s not very important for people out-
side a company to know its corporate goals. Yet Alibaba.com’s
goals permeate every part of its site and are reflected in every
business decision it makes. As an Alibaba.com member, in a sense
your fortunes are tied to the company’s; therefore, understanding
its corporate goals can help you achieve your own.
Alibaba.com’s history is a short one, because the company
has only been operating for a mere 10 years. In 1999, Jack Ma

9
gathered 17 friends and brought them together in his apartment
to fashion and launch a company that is now part of a multibillion-
dollar corporation. Over the course of the past decade, not only
have all 18 original team members stayed together, but this suc-
cessful corporation still owns that humble apartment where the
story all began. Today the team still uses it for meetings and
strategy sessions, returning to their early roots as they set about
building the company and achieving the goals they set not so
very long ago.
Three main corporate goals have driven Alibaba.com from
the very start:
1. To make it easy to do business from any place on earth.
2. To be an essential partner to all businesspeople.
3. To build a company that lasts 102 years.
ALIBABA.COM’S SIX CORE VALUES
Now, we’re betting you’re especially curious about that last goal,
involving lasting 102 years. Later in this chapter, Jack Ma himself
explains what’s behind that. For now, let’s discuss the company’s
core values.
With the three main corporate goals identiﬁed, Jack and his
founding team established six core values to help them drive
their new company. Some of these values may seem a little
surprising to Western businesspeople, but they have served
Alibaba.com and its customers well through the years, keeping
the company focused on achieving the strategic goals with which
the founders began their company. All Alibaba.com employees
are coached in these core values when they join the company. In
their semiannual performance reviews, how closely employees’
work and attitudes adhere to these core values is considered
equally as important as the actual business goals set for them.
Let’s take a look at each of them.

1. The customer comes first. Although businesses here in
the United States often claim that “the customer is always
right,” many of us who serve as the customer know that
this is an ideal often not upheld, not even by a long shot.
For Alibaba.com, this is the most important of the core
values. Never lose sight of the reality that it is your cus-
tomer who pays you. Therefore, the first order of business
is to please the customer so that customer will come back
to you again and again.
2. Teamwork. Stay loyal to your team members, because
with loyalty binding a team together, that team can
weather all sorts of challenges. Implicit in this statement
is perhaps the most astounding piece of strategy from a
Western corporate point of view. If your customer is first,
and your team is second, where does that leave your stock-
holders? After all, Alibaba.com is a public company with
millions of stockholders to consider. Alibaba.com’s corpo-
rate belief about stockholders is that you don’t pay much
attention to them. Succinctly put: Your customers pay you;
your team stays with you; your stockholders are gone at
the first sign of trouble. As surprising as this may be to
American ears, it actually makes a lot of sense! Figure 1.2
shows just how celebratory a successful team can be.
3. Embrace change. It is not enough to just passively accept
that change will come. Rather, Alibaba.com employees
must enthusiastically embrace change.
4. Passion. A key ingredient for motivation, passion for your
work brings passion to your life and makes every day excit-
ing. An employee infused with passion is destined to find
success.
5. Integrity. Without this key ingredient, you can’t truly serve
customers or build a loyal team.
6. Commitment. Alibaba.com employees are expected to
show a dedicated focus in satisfying and supporting their

11
Figure 1.2 Jack Ma and other Alibaba.com team members
celebrate the company’s success.
customers. During the difﬁcult economic time period of
early 2009, when businesses in the United States and
China were struggling to get the credit necessary to keep
growing, Alibaba.com willingly cosigned loans for loyal
customers to help them through any difﬁculties they were
having getting credit. Overall, the company secured more
than $7.9 billion (HK) for suppliers in Guangdong, Jiangsu,
and Shandong provinces and in Shanghai.
A Conversation with Jack Ma
Figure 1.3 Jack Ma, Founder of Alibaba.com, is an award-
winning businessman.
(continued )

(continued )
Jack Ma, shown in Figure 1.3, may have come from
humble roots, but today he has become a global symbol
of business success. His awards are abundant. He has been
named one of Time magazine’s TIME 100: The World’s Most
Influential People. Barron’s has named him one of the 30
World’s Best CEOs. BusinessWeek named him one of the 25
Most Influential People on the Web, and these are awards
received in just the past two years. In 2007, BusinessWeek
named him the BusinessPerson of the Year.
Having received so many business awards, today Jack Ma
is something akin to a rock star in China, and he’s greatly
admired all over the world. He was generous with his time
in answering our questions, and we are very pleased to be
able to share his responses with you.
When you think back over the years, what has sur-
prised you the most about Alibaba’s growth and
development?
There are days when I am surprised that we survived
and have grown into a successful company despite all
the mistakes we have made and the challenges we have
faced, like the Internet bubble burst in 2000. If I ever
write a book about Alibaba, I will call it 1,001 Mistakes.
We are still here today because we learned from our
mistakes, we improved each year, and we never gave up
our dreams. We survived because at the beginning we
had no money, no technology, and no plan. So we used
every dollar very carefully. Our first office was opened
in my apartment. We only expanded when we raised
funding from outside. We didn’t go into debt.
What I learned from Alibaba is that you have to have
a set of common values for the team, as well as a vision
for where you want to go and a sense of mission to get
there. You also have to have perseverance. Never give up

13
your dreams and you always have a chance to succeed.
Also, I learned that when you are small, you have to be
very focused and rely on your brain, not your strength.
As I have said before, my inspiration came from the
American movie Forrest Gump. Because Forrest Gump
said, “shrimp,” we decided to help SMEs. We wanted to
catch the shrimps instead of catching the whales. For-
rest Gump is not a smart guy, but he is focused. He is not
talented, but he is very, very hardworking. And he is very
simple and opportunistic. The thing I told my wife, my
parents, and my friends, is the sentence Forrest Gump
said: “Life is like a box of chocolates. You never know
what you’re gonna get.”
Have your endeavors on the Internet lived up to the
expectations you had when you first realized the pow-
erful impact the Internet would have on both China
and the world at large?
The Internet has revolutionized the way we do busi-
ness and is changing people’s lives. When I started one
of China’s first web sites in 1995, Internet usage in China
was minuscule, and now, 14 years on, China has around
3 million web sites and 300 million Internet users, head-
ing toward half a billion in the next two to three years.
I believe that in a few years’ time, the Internet will
become inseparable from every facet of our lives and
let us live in ways we never imagined. There will be no
distinction between online and offline. The Internet will
be everywhere, a part of life, just like water is today.
We started Alibaba with a dream to help SMEs make
money through the Internet. Today, that dream is being
realized as Alibaba.com is providing jobs and opportuni-
ties for millions of entrepreneurs and SMEs around the
world. People often come up to me at airports and hotels
(continued )

(continued )
to thank me for the new opportunities being created
through our web sites. The other day a hotel worker told
me that his wife began selling things on TaoBao.com, our
consumer e-commerce web site, and now makes more
money than he does!
There are also many, many American entrepreneurs
who have successfully used our platform to start their
own businesses, connecting with buyers and sellers
via Alibaba. A small business owner from Florida once
praised Alibaba.com because it has leveled the playing
field and enables him to compete with big companies
around the world, something he never thought possible.
But there are still so many entrepreneurs and small busi-
ness that we need to reach out to. That is what keeps
me motivated. What is important in my life is that I can
do something that can influence and improve the lives
of many people and SMEs.
When you look at the next 30 years of your company,
what are you most excited about?
The Internet is changing our lives so quickly that no
one knows what the world will look like in 30 years’
time. Our vision is to build a company that lasts 102
years (so we span three centuries, because no Chinese
company has yet to remain in business that long). Today
we have only traveled 10 years. In 30 years we won’t
even be halfway. We have a very long-term view but our
mission will never change: to make doing business easy
for SMEs around the world.
As long as we stay focused on this mission and
provide a service that adds real value to the lives and
businesses of our members, then we will be success-
ful. I am excited that we will create jobs for even more
entrepreneurs and SMEs, and that global trade will ben-
efit small companies, not just large corporations.

15
Do you recognize anything within yourself that would
have once allowed you to believe you’d create a com-
pany where people could gather to build their own
businesses?
I am a dreamer, and I never give up hope. I am also
persistent. I didn’t get into college on my first try or even
my second. But I finally did. I am also loyal to those
who are loyal to me. I stayed at my first job for five
years because I made the commitment to do so, even
though I could have left early and made more money
elsewhere. But my word was my word. I now feel like
we’ve given our word to our SME customers and our
buyers globally, and we won’t back down from making
good on our commitments there, either.
Once I realized the Internet might be a powerful
tool for SMEs in China and abroad, I wholeheartedly pur-
sued my dream of setting up an e-commerce company. In
1999, I gathered 18 people in my apartment and spoke
to them for two hours about my vision. Everyone put
their money on the table, and that got us $60,000 to
start Alibaba. I wanted to have a global company, so I
chose a global name. Alibaba is easy to spell, and peo-
ple everywhere associate it with “Open, Sesame,” the
command that Ali Baba used to open doors to hidden
treasures in One Thousand and One Nights.
I don’t want to be recognized as a successful busi-
nessman, because I believe that if I can be successful,
then 80 percent of young people around the world can
be successful also. I am just a normal guy. If you work
hard, if you learn quickly, then I think anyone has the
chance.
Believe in your dream and believe in yourself. Do
it because you want to do it, not because the investor
wants you to do it, and not because other people want
(continued )

(continued )
you to do it. Don’t give up the dream, and do anything
you can to make sure you are getting close to your dream
every day. Find good people, get your customers to love
you. Learn quickly, and learn from others the tactics and
the skills, but don’t change your dream.
I remember in 2000, I said if there are nine rabbits on
the ground, if you want to catch one, just focus on one.
Change your tactics if you need to, but don’t change the
rabbit—just stick with it. There are so many opportuni-
ties out there that you cannot catch them all. Get one
first, put it in your pocket, and then catch the others.
What responsibilities do you believe those of us fortu-
nate enough to have access to and an understanding
of this technology have toward those who are less for-
tunate and may not have the means to gain equal
access to these tools?
I am not a technology guy. All I can do on the com-
puter is e-mail and browse the Internet. So if Jack Ma can
use Alibaba.com then anyone can. Small and medium
enterprises want a business tool that is easy to use so
it has to be “click and get it.” If I can’t get it, then it
won’t go on our site. The great thing about the Internet
is that it’s inexpensive and can be accessed by almost
anyone, rich or poor. An entrepreneur in Bangalore or
Buenos Aires can get the same information and oppor-
tunity from Alibaba.com as someone in Los Angeles or
London. As long as you can get online then you can ben-
efit from global trade. Our job is to facilitate the spread
of the Internet and e-commerce so more entrepreneurs
and SMEs can benefit from it.
Alibaba.com Today
Today, Alibaba.com is clearly recognized as the largest and most
successful business-to-business (B2B) web site in the world, and

17
it can also claim its place among the world’s most successful
Internet companies. On November 6, 2007, Alibaba.com’s stock
began trading on the Hong Kong exchange. By the end of the day
the company had raised $1.7 billion, resulting in the biggest ini-
tial stock offering ever for a Chinese Internet company. Investors
sought more than 180 times the number of shares offered!
By January 2009, the company was doing quite well, in spite
of the economic downturn that spread around the globe dur-
ing the fourth quarter of 2008. Alibaba.com announced that
total revenue for the company increased 39 percent over 2007,
and registered users jumped by 80 percent. More than 1 million
new members joined during each of the third and fourth quar-
ters of 2008, representing the biggest quarterly increases since
Alibaba.com was founded. “We see the current global economic
crisis as a great opportunity to help our SME customers move
online,” said David Wei, chief executive ofﬁcer for Alibaba.com.
ALIBABA.COM CORPORATE STRUCTURE
Alibaba.com is part of the Alibaba Group. It is currently the only
segment of the corporation that is available to users outside of
China. Alibaba.com operates three distinct online marketplaces.
In addition to the international marketplace, Alibaba.com, the
corporation also operates a Chinese marketplace for domestic
trade within China, Alibaba.com.cn; and another marketplace for
trade to and from Japan, Alibaba.co.jp. All of the other companies
within the Alibaba Group are independent and operate with their
own set of ﬁnancial goals. Here is a quick look at what the other
companies in the Alibaba Group do:
TaoBao.com is the consumer-to-consumer platform that
often is mistaken as the Chinese eBay. Currently TaoBao.
com, which means “hunting for treasure,” enjoys a 70 to
80 percent market share for online shopping in China.
Although TaoBao.com soundly beat eBay in the Chinese
market, causing the U.S. giant to retreat, it is actually quite
different in that only commodity items are sold on the
site. People in China tend not to buy secondhand goods.

TaoBao.com also includes the offerings of two formerly sep-
arate Alibaba Group companies, Alimama and Koubei.com.
Alimama was a marketplace for web publishers, and
Koubei.com provided online classified listings.
Alipay is in China similar to PayPal in the United States.
It currently enjoys a 50 percent market share for online
payments.
Alisoft is a platform for Internet and software development.
Its products include management software to support SMEs
in accounting, finance, and inventory management.
ALIBABA.COM’S PROGRAMS, TOOLS, AND EVENTS
Over the years, Alibaba.com has developed an effective group of
programs and tools to make using the site easier, safer, and more
rewarding. As you sign on to the site today, you will see that you
have quite a good variety of research options and safety programs
to help you learn your way around the marketplace and conduct
your transactions safely and securely. Chapter 4 will take you on
a detailed tour of everything the site has to offer, but even before
you get that far, let’s explore some of the programs and tools that
will help you most effectively use the site, even as you are just
beginning to learn your way around.
Alibaba.com’s Gold Suppliers
Many users register with Alibaba.com and operate as free mem-
bers while they search for products to source and markets in
which to sell their goods. Free membership is an effective choice
for buyers seeking to locate new sources of products, but as
you begin to narrow down your search for trading partners
on the site, you will soon see that it is wise to gravitate toward the
Gold Suppliers, the ones who pay for membership on Alibaba.
com. Gold Suppliers have been authenticated and verified by an
independent and reputable third-party security service provider.
This authentication process includes thorough examinations of a

19
company’s registration documents and business history to ensure
that buyers have found a legitimate company and worthy trading
partner.
Working with Gold Suppliers adds instant credibility and trust
for any prospective buyer, but that is especially true for new buy-
ers. The fact that a company has paid for the privilege of bringing
its products to the Alibaba.com marketplace enhances the sense
of trust and demonstrates a commitment far beyond just mak-
ing a fast dollar. Time and again, you will read about SMEs who
never consider looking beyond the pool of Gold Suppliers for
the products they want to purchase. That doesn’t mean that
free members on the site are not worthy trading partners, but
knowing that your prospective trading partner has made a finan-
cial commitment to verify its company as an authentic trading
partner boosts confidence among buyers worldwide.
In return for an annual fee, Gold Suppliers receive many ben-
efits in addition to enhanced credibility. Among them are an
unlimited number of product listings. Alibaba.com has found
that Gold Suppliers generate an average of 22 percent more
inquiries than free members do. They also have exclusive access
to new buying leads, posted by prospective customers, a full
seven days before those leads become visible to free members.
Gold Suppliers can use Alibaba.com Web design templates to
create professional company web sites, and Alibaba.com will
work with Gold Suppliers in China to create brief videos about
their businesses and operations that will appear on the site.
They gain greater exposure to targeted trade shows within their
respective industries, and Gold Suppliers’ products appear first
in the search results pages any time a prospective buyer searches
for a relevant item. Finally, Gold Suppliers can access real-time
analyses and compare their performance to industry averages
on such analytics as customer clicks, page views, and buyer
inquiries.
Until 2009, the Gold Supplier program was available only to
members based in China. In the summer of 2009, Alibaba.com ex-
panded the program to include the Gold Supplier international

edition. With the advent of international Gold Supplier status,
businesspeople across the globe gained access to the same
verification process, promotional opportunities, and tools as
Chinese Gold Suppliers. With the initial launch of the interna-
tional program, Gold Suppliers outside of China have the Gold
Supplier logo, the first-level priority listings, and product show-
cases available to them immediately. Later, additional features
such as premium web site design templates and factory videos
will be added. The initial cost of the Gold Supplier international
edition is $2,999 (U.S.) per year, which is similar to the entry-level
Gold Supplier package available in China.
Gene Rumley: An Alibaba.com Premium
Member
Gene Rumley of Lake Mary, Florida, is the director of inter-
national marketing for Bell Performance, Inc. The company
is more than 100 years old and produces fuel additives for
engines of all sorts. Since 2006, Bell Performance, Inc., has
been a premium member of Alibaba.com. As you make your
way through the chapters of this book, you will learn about
many successful businesspeople. Gene has been very gener-
ous in sharing his expertise with us, and he added a special
perspective as a premium member.
“A paid member has maximum exposure on the
Alibaba.com web site,” he explained. “They can list all of
their products and information, giving the buyer confidence
that this company has had a background check. A member
can also receive reports online with the number of leads
coming into their e-mail. There is also a system that screens
out spam e-mail. Being a paid member gives our company,
Bell Performance, more qualified leads and puts us in front
of more qualified international companies. Alibaba.com has
greatly helped us expand our International business, making
it possible to reap the financial rewards. We received over

21
$250,000 in additional orders in the past 12 months, and we
are working on several international leads with multimillion-
dollar possibilities.”
Training Program
In June 2009 Alibaba.com announced a series of training pro-
grams geared to entrepreneurs and SMEs in the United States.
These take the form of free instructor-led webinars designed to
help members source products effectively and also work with
suppliers safely and productively. The series is called Buyers
Basics and comprises two programs:
1. “Sourcing Products” covers the best ways to ﬁnd and work
with suppliers.
2. “Dealing with Suppliers” covers all aspects of the buyer-
seller relationship, from vetting to closing the deal.
The webinars are live but are also recorded and remain avail-
able on the Alibaba.com site at success.alibaba.com. As we write
this, Alibaba.com is planning another series of webinars for sup-
pliers that is expected to launch in 2010.
TradeManager
The Alibaba.com site offers you a great many tools for enhancing
your understanding of international trade and gaining expertise
as you learn to import your products and trade with the world.
Chapter 4 provides a complete introduction to many of the things
that will make you an effective Alibaba.com user. Before you
leave this chapter, however, a quick look at TradeManager will set
you up for instant communication with potential trading partners
all over the world.
TradeManager is a live, real-time tool that lets you commu-
nicate via instant messaging. Every person who talked with

us about working on the site mentioned what a valuable and
effective tool this is. Many told us that they make their very
first inquiries with prospective new partners through e-mail and
move almost immediately to completing transactions via Trade-
Manager. Best of all, TradeManager is free and downloads simply
in just a few moments. You are bound to find it invaluable as
you go about building your relationships with trading partners
all over the world, or even in the next state.
AliFest
Every year, Alibaba.com hosts a festival-like gathering of interna-
tional businesspeople at its headquarters in Hangzhou. As many
as 10,000 people come from all over the world to share ideas
and learn about international trade. As part of the annual meeting
Alibaba.com hosts an award ceremony naming the Top 10 Online
Businesspeople of the Year. The annual meeting is greatly antic-
ipated and the people we’ve spoken with who have attended
remember their experience with enthusiasm and satisfaction.
Perhaps the day will come when you will travel to China as an
attendee, but until that day, we are happy to share with you the
story of one successful businessman who did.
Alibaba.com’s 2008 e-Business Champion of the
Year: Gene Rumley
Gene Rumley came to Alibaba.com in 2006 searching for new
international markets for his company’s products. In 2008, he
enjoyed the distinction of attending AliFest and earning the
award as the e-Business Champion of the Year. Gene remembers
his experience quite fondly. He appeared with other business-
people on a panel to discuss international trade. He was deeply
impressed, not only by AliFest, but also by Alibaba.com’s corpo-
rate headquarters and its leader, Jack Ma.
Gene’s first impression was of the manner in which
Alibaba.com is operated. “I’ve been in business for over 30 years,”

23
he told us. “Rarely have I seen a U.S. company so well organized
and run. The most interesting part of the trip was to see the inner
workings of Alibaba.com. The company seems to be very highly
organized. Everyone I’ve dealt with has been very professional;
so on-time, fulfilling requests and answering e-mails.”
“Right after the panel session I was on, they had Jet Li and
Jack Ma appear on a panel,” he remembers. “They opened the
floor up and offered anyone who had problems or difficulties to
ask questions about how they could improve their businesses.
“There’s a hunger for people to get ahead, and a lot of times
people who are very successful don’t make time to help smaller
people get ahead,” Gene told us. “They really treat people well.”
Gene told us that having the opportunity to hear Jack Ma speak
was, in itself, worth the trip to China!
As you get ready to move on to Chapter 2 and learn the basics
behind international sourcing, you can take with you the dream
of someday following along in Gene’s footsteps.

2
International Sourcing: This
Isn’t Kansas Anymore
Sourcing products for your business is both your challenge and
your promise. It’s a challenge, of course, because a steady and
reliable source of quality products is what makes your business
hum along. It’s your promise, because if you work hard and
smart, you’ll find yourself immersed every workday in products
you care about and can sell proudly.
There is no doubt that sourcing will require a great deal of
time and effort, but finding the right products to build your busi-
ness can bring you great satisfaction and reward. Nothing builds
your own business quite like the efforts you’ll put into place
for the purpose of stocking your shelves. Whether you find your
products around the corner from your home or discover them on
the opposite side of the globe, the things you choose to sell will
become central to your life. You’ll ultimately surround yourself
with them and gain expertise in their every detail and facet.
International Sourcing: Your Challenge
and Promise
Today, thanks to the Internet in general and more specifically
Alibaba.com, your sourcing opportunities have never been more
abundant or varied. Once viewed as the province of only the
25

biggest and most experienced corporations, looking across the
globe for your next great product idea is now possible, no matter
how small your business may be or how inexperienced you may
feel as you embark on this journey. That’s not to say international
sourcing is going to be easy, but the fact that it is possible and that
so many entrepreneurs have already done it successfully should
give you the confidence to go forward.
YOUR FIRST SOURCING DECISION
As you set out to find your way into the world of international
commerce, your first decision will be a straightforward one. Do
you plan to simply find a standard, off-the-shelf item at a good
price that you can then sell? Or do you plan to customize a prod-
uct and make it exclusively your own? How you answer this
question will determine which path you’ll follow as you step
onto the Alibaba.com platform. “If you buy standard items that
are made continuously by many factories, all you need is to con-
tact a few suppliers,” explained Renaud Anjoran, a quality control
inspector and auditor from Shenzhen, China. “Then get their
best quote, and hopefully do a quick quality check on the prod-
uct. An example like this would be computer cables or an MP3
player with the customer’s logo on it. But if you buy some cus-
tomized products,” he continued, “you need to complete a few
more steps. I am thinking of garments that have to be in the fab-
rics and colors chosen by the customer, and made in sizes that
meet market requirements.”
Most of the entrepreneurs we spoke with for this book were,
indeed, custom ordering their products from international man-
ufacturers. That’s where the real creativity and enthusiasm is
found. It is also where the greatest challenges reside. When
you’re working with your own idea, you’ll need to ensure that
your supplier clearly understands your specifications and can
meet them with the manufacturing resources at his disposal. In
this chapter we concentrate on working with manufacturers to
create and fulfill orders for new items, as simply finding a new

International Sourcing: This Isn’t Kansas Anymore
27
manufacturer for off-the-shelf items is a much easier process.
Once you understand the process of creating your own custom-
made items, searching for commodities to buy will seem like a
walk in the park. Well, almost.
Let’s Put First Things First
Alibaba.com is so full of promise, so inviting, that after seeing
it in Chapter 1 you may feel ready to jump in and start making
your dreams come true. We understand. Following your vision
is one of the most exciting parts of having your own business. It
goes to the core of the American Dream, and the people you’ll
meet through the pages of this book share that dream and that
eagerness. But, just as you had to learn the alphabet before you
could read, you’ll have to take some important steps to estab-
lish yourself before you can transform those dreams into your
reality.
If you are already operating a business, you know that pur-
chasing your inventory is an early and important step, but it’s
hardly the ﬁrst thing you did to get started. Before you can actu-
ally have a business, you’ll need to complete some paperwork
to ensure your enterprise is properly registered and authorized
to do business within your jurisdiction. When you are excited
and eager to get your business on the map it can be hard to
stop and take care of these mundane tasks, but until you do, you
can’t call yourself a business owner, and you certainly can’t start
purchasing inventory from international sources.
Any manufacturer you approach has the right to ask you to
prove that you are a legitimate business and a valid prospective
customer. After all, you’re strangers to each other. Your manufac-
turing partners are taking a risk when they set out to do business
with you, although it may not seem that way to you at ﬁrst. For
example, your manufacturer most likely will not ship your order
without an agreed-upon percentage of the price already in hand
so that their company isn’t risking the entire production run.
It can also be time consuming and expensive for manufacturers

to prepare price quotes for you, especially if your business rela-
tionship doesn’t progress any further. Quotes take man-hours to
produce and some degree of research on the part of the company.
Don’t be surprised if you learn that while you are researching
the background of your potential suppliers, they’re also doing
the same thing, and checking you out. You must be prepared to
present yourself as a bona fide business.
GET A TAX ID NUMBER AND REGISTER YOUR BUSINESS
Most of us live in states that require merchants to collect sales
tax. If your state has a sales tax, your first step is to get a tax ID
number. Not only do you need a tax ID number to sell within
your own state, but many manufacturers will ask you for this doc-
umentation as proof that you are serious about doing business.
In some states this is referred to as a resale certificate. It is not
difficult to acquire this documentation, but the paperwork can
take several weeks to complete and process.
Start by typing “Tax ID number (your state)” into your favorite
search engine. At the very least, this will lead you to the infor-
mation you’ll need to proceed with the task, and most likely
this search will take you to the actual forms you must com-
plete to get your tax ID right on the Internet. Another option
is to go to the Multistate Tax Commission’s home page at
http://www.mtc.gov/default.aspx (see Figure 2.1). Here you’ll
find a wealth of information about state taxes and multistate tax
considerations.
Check with your local county and municipal governments
to ensure you are complying with all local laws that control
commerce in your area. Do you need to incorporate? (Your
accountant can advise you also.) Many of the things you’ll have
to do can be done right from your own computer. “I did every-
thing online,” says Allison Taylor, founder of Jack Webster, Inc.
“Incorporating, sourcing, creating a web site. I spent about a year
creating and designing a product and working with a manufac-
turer,” she said. “It was easier to get the specific products from
China than it was to get my web site designed!” So start early to

29
Figure 2.1 The Multistate Tax Commission’s home page is a great
place to start gathering information about getting your tax ID
number.
make sure all of your business paperwork is in order so you can
be ready to launch when your new products arrive.
DEVELOP YOUR PRODUCT IDEA
You may already have an idea for a product you’d like to produce
and sell. But merely having an idea for a product and making
sure that product is commercially viable are two different things.
There’s a lot to be said for looking to your own interests and
expertise as you begin to build your business. Sourcing in an area
in which you have some knowledge and experience can give you
confidence as you make those initial decisions about how you
want your final product to be produced. If you are starting from a
base of knowledge, you’ll also be that much farther ahead as you
begin determining the specifications and manufacturing require-
ments you’ll need to produce your own particular product. All of
the businesspeople we profile in this book saw an empty corner

of a specific market, and set out to fill that empty corner with a
great new idea. But how do you find that empty corner?
While occasionally lightning strikes, we’re going to be up
front with you and say that good ideas don’t usually come out
of the blue. To get there you are going to need to learn to love
research: to turn over a few rocks and shake some trees. Okay,
maybe you’ll never actually learn to love research, but you’re
going to have to learn how to become proficient at it no mat-
ter what. There are some very specific steps you can take to
test your idea, and fortunately, many of them begin with your
own computer. Online shopping sites are amazing repositories
of information about current trends and successful products, and
you’re probably already quite familiar with how to use them.
Keep Your Edge on Alibaba.com
As you gather input about your products and business
through your interactions with customers, suppliers, and
all the other people who will support your business, don’t
forget to come back to the Alibaba.com web site to research
your next good product sourcing move. We’ve already intro-
duced you to many of the opportunities for learning on
Alibaba.com, but now let’s look at the corner of the site
that will help you spot the next hot trend. You need look
no further than Alibaba.com’s home page.
This time, scroll down near the bottom of the page, and
look for the “Trade Trends” heading along the left-hand side.
You’ll find links for “Rising Demand Top 20,” “Hot Products
Top 20,” and “Popular Categories Top 20.” To get a com-
plete picture of the information that’s available here, click
the “View All” link. Your next stop is the page shown in
Figure 2.2. The “Trade Trends” page provides links to the
products in each of the high-demand categories.
By default, the products and product categories that
appear reflect activity across all of Alibaba.com. However, if

31
Figure 2.2 Alibaba.com’s Trade Trends page gives you a
glimpse of in-demand products and popular categories.
you’d like information about a speciﬁc country, that’s avail-
able here, too. On the main “Trade Trends” page, just click
the link for the country of your choice. You’ll see the prod-
ucts and categories that buyers in that particular country
are currently searching for most often.
You’ll also ﬁnd great market intelligence available
through the “Buying Leads” link, which you will learn about
in Chapter 5. These buying leads are actually statements
from buyers summarizing the products they are looking to
source, so they’re a very reliable indicator of what is cur-
rently in demand; and at any given time, thousands of leads
are there for you to study.

Figure 2.3 The search results page on Amazon.com can help you
research best-selling products for your business.
Amazon and eBay Can Help
Let’s put aside for the moment the question of whether you’ll
ultimately sell your products through sites such as Amazon and
eBay. Instead, let’s take a look at how helpful they can be as
you test the viability of a product idea. For example, you can
search for your product idea on both of these sites. On Amazon,
search for your product and then sort the results by “Bestselling.”
Figure 2.3 shows the results of a sample search we did for pocket
T-shirts. Now you can see what the most popular items are and
then work to determine what exactly it is that makes them best-
sellers. On eBay, you’ll do an “Advanced Search,” by clicking on
that link from the home page, entering your keywords, and lim-
iting your results to completed listings. When you scan your
results, pinpoint items with prices that are in green because the
only measure of success on eBay is whether the item in question
has actually been sold. Figure 2.4 shows such a search, again for
pocket T-shirts.

33
Figure 2.4 Completed listings on eBay can show you which items
are actually selling on the site.
Once you have this information, you’ll be able to see clearly
what others are willing to pay for products like yours. But, even
more important, you may discover a gap in the market that you
can ﬁll. Perhaps there’s something just a little different that you
can bring to the market. For example, Mary Miller Pembleton,
co-founder of Answers In Motion, knew from the very beginning
that other people sold small vinyl sports balls. But she also saw
that no one else was creating these balls for use in educational,
health, and therapeutic settings. Her many years as a speech
therapist helped her to envision a new use for a standard type of
product, and now she and her husband operate a thriving and
successful business. Figure 2.5 shows you a few examples of the
Thumball.

Figure 2.5 Thumball, from Answers In Motion, is the brainchild of
Mary Miller Pembleton and Gregg Pembleton.
Searching the Internet at Large
Of course, you should expand your search for product intelli-
gence beyond these two mega online shopping sites. Simply
enter your product idea (e.g., “pocket T-shirts for college stu-
dents”) into your favorite search engine, and add the term “best
selling.” Your search results will likely include items that have
been sold on eBay and Amazon, but they’ll also include items
sold through other sites as well. These may include smaller,
mom-and-pop retailers such as jiffyshirts.com, gobuckeyes.biz,
and teenormous.com, as well as the retailing giants that have
thriving web sites, like Target, Sports Authority, and L.L. Bean. It
won’t take you too long to see if you have a viable idea.
Use Some Trend-Spotting Web Sites
Fortunately, the Web is full of people and places discussing
the newest and best product ideas, and for someone looking

35
Figure 2.6 The home page for Trendhunter.com is a fabulous
resource for researching what’s currently popular and what looks to
be promising in the near future.
for sourcing ideas they are gem-rich mines. Trendhunter.com,
shown in Figure 2.6, calls itself number one in trends, and it’s
pretty hard to argue with that assessment. Here you’ll ﬁnd trends
tracked daily, weekly, even every 12 hours. You can search from
among the 6 to 8 million trends posted and even become a trend
hunter yourself. Plug in your product idea to see if there is cur-
rently any excitement in the general area of your interest. Or just
browse for inspiration. We went on the site recently and spotted
the following trends:
Golden disco mermaid gowns.
Tents used as “mobile shelters.”

Geeky stuffed toys (think a cuddly Steve Jobs doll).
Interlocking cups and saucers.
Eco-friendly dog collars.
Unisex leg warmers.
Another useful resource for spotting great trends is the blog
BoingBoing.net. This site, shown in Figure 2.7, calls itself “a direc-
tory of wonderful things” and many new and innovative ideas
and products turn up on the site every week. Search around to
see what people are thinking about and writing about. You may
Figure 2.7 BoingBoing.net is a great web site for spotting and
tracking current and emergent trends.

37
just uncover a synergy between your next great idea and a newly
emergent trend.
Step Away from the Computer
We know that computers make market research easier, but using
them will provide you with only part of the story. Don’t ignore
the possibilities for real-time research with real people. Once you
have a solid idea of what you want to produce, talk to everyone
you know and trust about your idea, to see how they react to it.
You don’t want to spread this research too far from your trusted
network at this point in your business development, because it is
way too easy to lose control of a great idea and see someone else
pick it up and run with it. Now is not the time, for example, to
blog about it or tweet about it on Twitter. But you certainly have
friends, neighbors, and colleagues whom you know well enough
to be able to trust. Talk to them and see what their reaction is
to your idea. Ask them about pricing and the materials they’d
like to see in such a product. People love being asked for their
opinions, and this kind of market research is invaluable.
Keep your eyes and ears open wherever you go. You’ll find
the more you think about your business idea, the more you’ll
notice others who may benefit from it. When you’re out and
about, notice what people are wearing, what accessories they
chose, what gadgets and tools they’re using. Listen as you wait
in line at the post office, for example, to see what problems
people are grappling with and what product you could think of
that would help solve those problems. When you’re shopping,
notice what other customers are asking for. Don’t be afraid to
strike up conversations with other shoppers to see what they feel
is missing from the marketplace. Yes, it’s true that eavesdropping
is rude, but a little strategic overhearing can be very useful to
your market research efforts.
Once you have an idea, go to the places where the people
who would benefit from your idea congregate. For example, if
you’re thinking of a product that would benefit teens, camp out

at your local coffee shop as school lets out. You’ll gather a whole
lot of information just by listening to the chatter as the newly
released students storm the place for their afternoon drinks. One
very successful e-commerce merchant knew that her product
line was very much in keeping with the types of things her fellow
yoga students would want. So when she was in class she got
busy, and not just with her poses. She made it a point to notice
what jewelry the students chose, what fragrances they wore,
what accessories they purchased to carry their yoga equipment
to and from class. Before too long, she knew just what to order
to appeal to this specific demographic.
BUILD YOUR PROTOTYPE
Once you’ve confirmed that there is a market for your product
idea, you can get busy creating a prototype. This will be a physical
representation of your idea, and it will become an invaluable tool
for you, both as you continue your market research and once
you are actually working with a manufacturer. There is no better
way to make sure you’re getting the specifics correct and your
product accurately produced than to send along an example of
what you have in mind.
“The first thing to do is to make your prototype,” says Elena
Neitlich of Moms on Edge, LLC, who suggests you have this pro-
totype made locally. According to this school of thought, having
your prototype made in this country, preferably near where you
live, lets you work closely with the person who is creating what
will become such an important business tool for you. Your initial
cost of manufacturing this piece may be a bit higher than you’d
like, but it is so important that you get every detail exactly as
you want it, that the extra cost is money well spent. When you
factor in the time and expense of swapping information, sam-
ples, and final prototypes that don’t quite hit the mark across
international borders, you may find it was well worth it. Still,
other small to medium-size enterprises (SMEs) we spoke with
agreed that as long as their graphics were sharp and clear and

39
their communication exact, they could work quite well with
their international partners to create prototypes. The final pro-
totype under these circumstances could be less expensive than
one produced locally.
With your prototype in hand, actually go and visit local retail-
ers. “Take it to store owners and ask them if this is something
they would stock,” recommends Elena. “Also go to Nordstrom
and Bloomingdale’s and see if they would be interested in buying
it.” Visit boutiques and specialty shops that cater to your prod-
uct idea. Jane Ivanov of Eve Alexander, LLC, also suggests that
you ask retailers how they think their customers might react
to your product. That way you can gain insight into both the
retailer and consumer viewpoints. A broad response from a range
of prospective clients can help you clarify your idea and more
clearly visualize your potential customers, before you even find
your manufacturer. This is a great way to get real and firsthand
information about just exactly how marketable your idea truly is.
Of course, getting big retailers to stock your final product is not
an easy process and will take time and resources, so be prepared
for some hard work, but the rewards, as the entrepreneurs we
spoke to will tell you, are worth it.
Your prototype should help your manufacturer clearly under-
stand exactly what you want your finished products to look like.
You dramatically reduce the risk of misunderstandings between
you and your international supplier when you can send along the
exact item you want created. You will find that the sample mate-
rials your manufacturer sends for your review are much closer
to what you want, because he’s actually seen and touched the
item you’re imagining. It will also help you and your ultimate
manufacturer to more accurately estimate the cost of producing
the final product.
CREATE AND TEST-DRIVE YOUR BUSINESS PLAN
Having your prototype in hand can make your business begin
to seem quite real and possible. However, before you find that

great new manufacturer and begin to build your mutually satisfy-
ing relationship, you still have some essential tasks ahead. Every
business needs a business plan, and yours does, too. We know
that you may feel you’re ready to jump onto Alibaba.com and
start sourcing, but until you know how you will move, store,
process orders, and deliver your goods to your customers you
simply aren’t ready to move forward. A good business plan will
answer all of these questions and also provide you with a docu-
mented way to assess your future achievements. How will you
know if you’re reaching your business goals if you skip the step
during which you deﬁne them?
These are some of the questions you’ll need to answer for
yourself as you build your business plan:
How will I sell my merchandise?
How will I distribute my products to my customers?
Will I have to incur storage or warehousing fees?
Do I need any special equipment to process my orders and
prepare my shipments?
Do I have all the necessary systems in place for operating
this business, including computers and software?
Will I build a Web presence, and who will help me create
and maintain my web site?
SCORE Can Help
Try not to feel too overwhelmed if you don’t know exactly how
to create a business plan. Such knowledge isn’t inborn. But fret
not—you won’t need to pursue a master’s in business adminis-
tration to complete one (not that there’s anything wrong with
that). You have a lot of resources available to you, and many
of them are free or relatively inexpensive. The Service Corps

41
Figure 2.8 The Service Corps of Retired Executives (SCORE) offers
abundant free advice for businesspeople all over the country.
of Retired Executives (SCORE) is a great example. Backed by
the U.S. Small Business Administration (SBA) and based in Hern-
don, Virginia, SCORE staffs 370 offices across the country. You
shouldn’t have to travel too far to find an active and supportive
SCORE operation near you. Additionally, there are tremendous
online resources available to you right from the SCORE web site,
shown in Figure 2.8.
As a matter of fact, you can go right to the SCORE web site at
www.score.org and download a 31-page template for completing
your business plan! You’ll find a huge selection of business forms
and templates you can use and plenty of advice about completing
them. You can sign up for a SCORE newsletter and find a local
SCORE office right there on the site, too. In operation since 1964,
this is an amazing resource for a budding entrepreneur, and even
a seasoned business owner can brush up on some skills and
information by visiting the site.

Visit Your Local Business Librarian
Most libraries have someone on staff who is well versed in all
things business. If your local branch doesn’t have such a staff
member, then your central branch is likely to have one. Here’s
someone who can answer many of your questions as you begin
to build your business plan. You’ll also find this person to be very
well connected within the local business community. Librarians
thrive on answering specific questions and assisting patrons with
very specific information.
Don’t feel as though you are bothering your librarian. As a
matter of fact, most libraries track the statistical data that comes
from specific requests. Those statistics then get submitted to the
library’s funding agency, whether county, state, or local, to justify
the cost of operating the library. You’re actually supporting your
library by using it, so get yourself into the building and start
asking away. Just be sure to choose a time when the library isn’t
overwhelmingly busy, such as a morning in the middle of the
week. If you want guaranteed one-on-one-time with the business
librarian, call ahead to make an appointment.
CREATE A BUSINESS CALENDAR
“Give yourself a year, setting business goals monthly and quar-
terly,” advises Kelly Sang, Alibaba.com’s general manager of the
Americas. “Keep track of how you’re doing to advance your busi-
ness. If you can’t see your business advancing, you’re in trouble.”
When you are caught up in the excitement of creating your own
business it is too easy to let time slip away. Without a plan tied
clearly to a calendar, how will you be able to measure your suc-
cess a year from now? Your business may not be out of the red
and profitable in one year. Many require more time than that to
take off. But a year from now is a good time to assess how much
progress you’re making.
As part of your business calendar, you also need to track how
many hours you are spending to build your business. The early
years of every business require incredible dedication and huge

43
amounts of effort and work. The time you spend on your business
is part of the overall cost of operating it. You don’t want to think
of it as being paid by the hour, because it’s not that type of job.
But you should have an idea of what your time is costing you in
terms of the progress you’re making. So, although you may never
punch a time clock, you should be tracking how much time you
are spending almost as carefully as you would how much money
you are spending.
Product Sourcing Basics
Do you feel like you’ve been reading for a very long time before
you’ve gotten to the specifics of sourcing your products? Good!
That means you are proceeding exactly as you should be. You
know our mantra by now: This isn’t something you should
undertake without deliberate and careful planning. Until you’ve
addressed the issues put before you so far, you simply have no
business jumping onto the Alibaba.com web site to find your
manufacturer, even if your fingers are itching to do just that.
Details of product sourcing require you to plan, evaluate, rethink,
and plan some more. Before you step across the border to source
internationally, make sure you fully understand what sourcing in
general entails. It will make your virtual trip overseas much less
overwhelming and you’ll be more likely to succeed.
CALCULATE YOUR BUDGET
Now you are getting down to the hard part. Before you start
reviewing manufacturers’ quotes and proposals, you need to
know how much money you have to spend on this endeavor
and where that money is coming from. Most of the entrepreneurs
featured in this book had a finite start-up budget and knew what
that was when they began. Be as exacting as you can here, and
do those calculations down to the penny. Include every part of
your proposed operation. Your costs go far beyond those of just
having your product manufactured and shipped to your location.

You’ll also need to consider how and where you will store
your inventory and how and where you will fulfill your orders.
“There are families who have blown their whole life savings
on trying to get one product idea off the ground,” noted Elena
Neitlich. “Start small. Stay in your own home or kitchen, if you
can,” she further advised.
As you calculate your budget, don’t forget to factor in the
costs of producing your prototype and the costs you incur to
import your products. Those costs, covered in much more detail
in Chapter 3, include far more than simply shipping the items to
your location. You’ll also have to pay for the services of one or
more freight forwarders or import agents. In addition, you need
to consider the expenses you’ll have to pay through customs and
duties to bring your items into the country. On top of all that,
you may also have to upgrade computer equipment and consider
insurance for your inventory. The more specific you can be as
you build your budget, the less likely it will be that something
unexpected derails your plans.
Your Profit Occurs when You Buy
Here’s a classic business nugget worth its weight in gold.
Most of us think about the money we can earn from sell-
ing an item, but an experienced businessperson knows the
truth, which is that your profit occurs when you buy your
inventory at the right price. When you buy right, you will
always be able to sell with confidence, knowing your final
price is sure to cover your purchasing expenses.
SAFETY CHECKS FOR SOURCING PRODUCTS
Whether you’re sourcing your products from a company across
town or a manufacturer on another continent, online or offline,
there are certain safety checks you can implement to make sure

45
you are doing all you can to protect yourself from fraud and
crime. Chapter 8 provides a great deal of information about pro-
tecting yourself from fraud, but as you begin to explore product
sourcing, you’ll need to consider some of these details right off
the bat.
Make Sure You’re Dealing with a Real Company
One of the easiest ways to trap an unsuspecting new entre-
preneur is to set up a fake company and offer to fulfill that new
businessperson’s every request. When you’re exploring sourc-
ing opportunities, be sure the company you’re evaluating actually
exists. Here are a few ways you can do that without your passport
in hand.
Make sure the company exists in physical space. You can
check this by getting a street address and doing some
research online. Most businesses now have a Web presence
and that presence should include a way for customers to
contact the company off the Internet. (And, as we discuss
in Chapter 4, suppliers on Alibaba.com may create com-
pany profiles, which you should carefully review.) Don’t
be satisfied with a P.O. box, as that is way too easy for a
criminal to obtain. Make sure the building is really there.
Make sure someone actually answers the phone when you
call. You may have to get up in the middle of the night
to place an international call, but no matter what, make
sure the company you are considering actually has some-
one on staff to answer the phone. A bona fide business will
have a live human staffing the phone during the business
hours in their own part of the world. A bogus business
is more likely to have a voice mail system that prompts
you to leave a message and promises a return phone call.
What possible reason would there be that you could never
reach a human at a legitimate office? In Chapter 4 you’ll

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The Official Alibaba Success Guide

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