16Aug
By: Tomas Šlimas August 16, 2016

Dropshipping is the easiest way to start your online business. And AliExpress dropshipping is the new trend for good reasons:

  • It doesn’t require much capital – in fact, I wrote a guide on how to start an eCommerce business with $0.00;
  • You don’t need a physical store – it’s an Internet business, so you can work from anywhere in the world;
  • Everything you need to learn is on the web – the Internet provides access to a vast number of articles, videos, and other educational material. Just consume it!

And if any of you think there’s no way this can be a viable business, I will prove you’re wrong. Oberlo users now receive over 15,000 orders that equate to $350,000 in sales, each and every day. That’s nearly $10,000,000 every month!

Here is the ultimate guide to AliExpress dropshipping which shows how it works.

dropship


How does it work?

Let’s say you’ve decided you want to start an eCommerce store. What are your next steps? You would probably try to come up with a product idea, look for suppliers, pay for the products and get them into your real-world store. And after you get your products, you will try hard to sell them.

The problem is you don’t really know what will sell well or if you will be able to sell the product at all.

Here’s an illustration for that:

  • Elena buys 100 units of a particular product line, paying $1,000 for them;
  • Elena only sells 10 products and brings in $200 in sales;
  • Elena quickly realizes that nobody likes her products and decides to close her store;
  • She experiences a loss of over $800.

In the above scenario, Elena invested $1,000 to open her store, but quickly realized the product line she decided to sell is not popular or she just doesn’t know where to find the people who do want that product. She only makes $200 in sales and is forced to close her store with an $800 loss.

Alternatively, if she had tried dropshipping, she would have made $100 in profit in spite of failing to pick the right products at first. Here’s an illustration for that:

  • Elena uses dropshipping, so she doesn’t buy products in advance;
  • Elena only manages to sell 10 products and brings in $200 in sales;
  • Elena orders the products from her suppliers and has them shipped directly to her customers;
  • Elena quickly realize that nobody likes these products and decides to close her store;
  • Elena is still happy because she just made $100 in profit.

That’s how two very similar situations can bring very different results, with the key difference being dropshipping. Of course, if everything went well, she would have made $1,000 in profit in the first scenario. But don’t forget that people often overestimate their ability to perform well. If you believe in numbers, more than 50% of Shopify store-owners never receive a single order at all.

So here’s the beauty of dropshipping. You don’t buy a product before selling it, so you don’t spend your precious budget on stocking inventory.

Drop shipping with aliexpress

AliExpress Dropshipping is one of the most popular dropshipping models. You copy the product from AliExpress.com to your store, set your prices/markups, and after you sell a product, you purchase it from a seller on AliExpress and have it shipped directly to your customer. Easy!

dropshipping

You can read more about AliExpress dropshipping and it’s success stories here: The Huffington Post, The Next Web, Forbes.


The FAQs about AliExpress dropshipping

Now that you understand the basics of AliExpress dropshipping, you might still have many doubts and questions.

I work at Oberlo, a software app that helps eCommerce store owners automate their dropshipping businesses, and we receive hundreds of such questions every day. Here are the three most frequently asked questions we receive, along with the answers.

For a full list, check out this article.

Will my customers know if the products are dropshipped from AliExpress?

Unlike other marketplaces (Amazon, eBay, Etsy), AliExpress has a very unique infrastructure it developed around dropshipping. I’ve talked with dozens of suppliers using AliExpress. They all dropship.

Oberlo users ship over 450,000 orders every month and we haven’t heard any reports of unhappy customers. There are rarely any promotions or invoices in the packages your customers receive and if you’re doing well, you can even arrange for custom packaging.

Why should someone buy from me if you can buy the same product from AliExpress cheaper?

Because you’re better!

You might be a better marketer who reaches the potential customers first, or create a more trustworthy brand that people feel safer buying from, or provide extra services or content.

You will never be the cheapest, so don’t try to compete on price. Especially with lower-priced products (<$100), the price is not the determining factor at all.

Look at the same product on several popular websites such as Milanoo.com, LightInTheBox.com, DHgate, and AliExpress. These companies are all multi-million dollar businesses. Are these companies price competitive? No. Are they out of business? No!

Why should someone buy from me if you can buy the same product from AliExpress cheaper?

AliExpress shipping takes too long, my customers won’t wait.

That’s just an assumption on your part, and I strongly suggest you test it.

Alibaba made over $14 billions in sales in one day. Customers of other businesses listed in the price comparison example don’t seem to be concerned with long delivery terms either.

Your task is to establish clear expectations, define your shipping policy, and display it in the relevant places on your store. Seeing that information, some people might leave your site, but you’ll be surprised how many people really don’t care about that.

Moreover, with the now popular ePacket delivery option, it takes only 7-14 days for most shipments to reach the US, Canada, Australia, the United Kingdom and few other big countries.


How to select trustworthy AliExpress suppliers?

With dropshipping, you can easily lose control over the customer experience because you never see the product; it’s shipped directly from your supplier’s warehouse to your customer.

If you’re trying to provide top-notch customer service (a must), dropshipping could become a liability. Although AliExpress is taking care of improper suppliers itself, we still suggest being very careful when selecting your dropshipping suppliers.

Here are some top tips on how to select the best suppliers:

Don’t Always Go For the Lowest Price

Here’s how a marketplace like AliExpress works:

A supplier called Original Hoodies starts selling a high-quality product named “blue hoodie” at $40.

Then another supplier named Competitive Hoodies manufactures the same hoodie but reduces its price to $15 by adding more polyester instead of cotton.

When a buyer searches for a blue hoodie, he sees two hoodies looking the same but for different prices and in most cases he picks the cheaper one. The first supplier, Original Hoodies, becomes unhappy with her sales and also replaces her “blue hoodie” cotton materials with polyester and reduces the price to stay competitive.

That’s why the quality of marketplace products goes down. Suppliers try to be price competitive and each product has a number of very similar variations, often at artificially reduced prices.

In short, the price on AliExpress.com goes down with the quality. A lot of sellers offer similar products on AliExpress.com. Make sure to compare the prices of different suppliers. If a number of sellers have similar prices on the same product, but one supplier has a significantly lower price, this usually indicates that they have compromised on the quality of the product.

product-prices-aliexpress

Buy From Suppliers That Have 95% and Higher Positive Feedback

The rating systems for products and sellers are extremely important to every marketplace. Imagine you’re walking in a street market and someone shouts that the guy in next booth is a scammer. Would you buy from him? Probably not.

The same applies to a virtual marketplace. Listen to what other buyers say about each seller and learn from that feedback. Look for the highest-rated suppliers:

The Feedback Score indicates the seller’s sales volume, while Positive Feedback represents the feedback rate the supplier has received. Always aim for a 95% and higher in positive feedback and at least a 2,000 feedback score.

scores-table

Be Careful With Brand Products

Known luxury brands on AliExpress.com are very rare. You can’t even search for Versace or Channel products because these search keywords are blocked. If you notice a copyright infringement, you should report it here.

However, not all brand products are fake. AliExpress often organises partnership promotions with brands such as Lenovo and others.

kenzo-fake-sweater

Pay Attention to the Responsiveness of the Supplier

Make up an urgent issue and message a supplier about it to see how they respond. Check their response time, English level skills, and their ability to understand the problem and provide clear information. If they just respond with a generic, meaningless message, you can cross them off your list of potential suppliers. After all, chances are good that you’ll have a real situation like this once in a while and you want to know they will be handled the right way.

replies

Look for ePacket

Long delivery timeframes is a sensitive topic. That’s why you should look for suppliers who can offer the best delivery options.

The best delivery option (the cheapest and the quickest) is ePacket, or AliExpress Premium Shipping, which takes around 14 business days door-to-door and includes a tracking code your customers can check for their order location.

epacket

 

Pro Tip: Oberlo’s Free Chrome Extension offers a handy feature to identify products with the ePacket delivery option.

Order Samples

I don’t recommend ordering samples of all products you add to your store. We often put 100+ products to our stores and ordering them is not so cost efficient.

Instead, order a sample of those products that you’re about to use in your advertising campaigns. Let’s say you have two or three products that are the best deals on your store. You know they’re great so you plan to use them in your Facebook or Instagram Ads to attract many visitors to your store. Order the samples of them.

unpacking

 You can pick the Express Delivery and receive a product within a few days.


How to pick the right product to sell?

An article is definitely not enough to answer this question. Shopify went as far as writing a book about it: LINK

My approach is very simple:

I try to generate a huge list of product ideas and then cross out the ones that aren’t worth testing. Once that’s done, I’m left with a few winners I use in my ads, and throw in other related products to my store so they are there just to make the store look robust.

Generating Product Ideas

Here are the top three product idea sources that help me. For a full article on how I generate product ideas, read here.

  • Your head is already full of good ideas, including your hobbies, products you like, trends, exciting products you’ve heard of, and so on. Write everything down that comes to mind. It doesn’t matter if you think the product will be a best seller or not. Trust me — write it down!
  • Browse other stores and look at their offerings, best selling lists, and promoted products. Many stores have a tremendous amount of data and employ entire departments to organize their sales and pick their products. Use that information to your benefit. Here is a link list worth spending time researching: AliExpress Most Popular Products (Weekly), Amazon Best Sellers, Ebay Daily Deals, Lazada Top Sellers, LightInTheBox Top Sellers List.
  • Social Shopping Sites like Pinterest, Polyvore, Fancy, Wanelo have hundreds of millions of products. People often overlook these sites in their research, but they are very valuable. Set up an account at each one, and subscribe to different categories and lists, and trending product feeds. Follow what people like the most and add it to your list.

Filter Product Ideas

Once your list is full and there is nothing left you can add to it, narrow it down so it contains only the very best ideas.

  • Look for niche products that are underserved by larger players. For example, there is no specific interest group for a regular belt, but you can easily tell that cycling gear will resonate well with cycling enthusiasts. Find your niche!
  • Some product categories have grown significantly over the last decade and there are already many strong players and smaller shops out there supplying these products. Cross off the following general categories from your idea list: books, jewelry, electronics, and clothing — you will need to be more specific to find a lucrative niche.
  • In my experience, the sweet spot for a product price is $40 to $60 (including a 200% mark-up). There are a few general rules to remember: The lower the price, the better the conversion rate. The higher the price, the more support you will need to provide.
  • Go through your product ideas and enter each product name and variations into the Google Keywords Analysis tool. Select Keyword Ideas and look at how many searches each Low Competition Keyword receives. If you plan to use Google Adwords or SEO (though I recommend Facebook and Instagram), avoid product categories that have little or no search traffic.
  • Go to trends.google.com, enter each of your product ideas into the search and look at the trend. Is the trend increasing or decreasing? Are there any patterns? Do you see any spikes? Cross out the fading-trend product and seasonal items.

After crossing out the ideas that aren’t worth testing, you should be left with a few potential winners. Open a store and try them out!

A Few Product Ideas I Like:

Fitness Bras and Leggings

A Few Product Ideas

Fitness Activities and Fitness Clothing are trendy. Thanks to new technologies that make sports more social, there is a massive social impact from Instagram and apps like Endomondo or Nike+.

Wooden Sunglasses

Wooden Sunglasses

This seasonal product is constantly ranked among AliExpress top sellers.

MEGIR Watches

MEGIR Watches

A top watch brand on AliExpress offers affordable watches with a look of luxury, and they are well received all over the world. You can find a number of great reviews on Youtube and Instagram to prove the quality.


How do I know about this stuff?

I work at Oberlo, the aforementioned dropshipping automation app.

Before launching Oberlo, my brother and I were running a standard dropshipping business and managed all our orders through email. Needless to say, it was tedious!

Weary from communicating with dozens of different suppliers, we wondered why we didn’t just add products to our store directly from AliExpress. All suppliers sold their products there anyway, and we could avoid all the hassle related to email communication, orders getting lost between Excel files, and not having any protection guarantee.

So we did it and were immediately impressed with the results. We soon had 2–3 full-time employees manually placing orders on AliExpress, but it still didn’t feel quite right. It was extremely time consuming, and we had problems with selling products that turned out to be out of stock.

My colleague was a developer and we discussed how we could try building a tool to automate this AliExpress dropshipping method to be less stressful. We had a working prototype within a few weeks of that discussion and everything started falling into place.

Fast forward a few months we sold the eCommerce retail operation to our partners in China, which left us with the tool that made the business possible. We launched it publicly in October, 2015 and now we call it Oberlo.

We’re extremely happy to have helped thousands of entrepreneurs sell over 2,000,000 products through AliExpress dropshipping since then.

….

That’s pretty much how AliExpress dropshipping got started. And that’s why Oberlo is an invaluable partner in your eCommerce journey — it was built by people like you, to power eCommerce businesses like yours.

It helps you add hundreds of products to your store and ship your orders with just a few clicks, track your order delivery information, and on top of those great features you also get full support from our experienced customer success managers.

Try Oberlo for Free >>


Not ready yet?

Download a free eBook “The Ultimate Guide to Starting Your #1 eCommerce Store” (at the bottom of the page)…

and join fellow dropshippers on our community forum.

Have Questions?

You can always get in touch with me on Twitter or with Oberlo Customer Success managers at hello@oberlo.com.