With dropshipping, store owners can sell and dropship products to their customers without actually seeing the products. After you sell a product, you simply buy it from a supplier and have it shipped directly to the customer. Dropshippers love dropshipping because there is no inventory to hold, and a lower upfront investment lets you concentrate more on the most important thing – bringing in new customers. In this article, you’ll learn what dropshipping is, and why you should care about it.
Dropshipping isn’t something new. Zappos started dropshipping back in 1999. Amazon and Sears use dropshipping too. If big names don’t catch your attention, look at the regular guys making their way and sharing their stories on Reddit. Nowadays, up to 33% of the entire ecommerce industry uses dropshipping as their primary inventory management model.
So what does this have to do with AliExpress? Dropshipping is fueled by Chinese suppliers, and the number of Chinese dropshipping companies is still on the rise. The growth of Chinese exports during the last decade can be linked to their integration with western businesses, and now thousands of Chinese suppliers understand the opportunity they have with dropshipping. That’s why to most people, dropshipping reminds them of Chinese products and nothing else.
AliExpress dropshipping is the latest trend. Using this platform will make figuring out how to start your dropship businesses much easier and it can also boost your current store’s efficiency. Naturally, it isn’t perfect, but let’s start from the beginning.
What is dropshipping?: AliExpress Explained
The charming Jack Ma shouldn’t be a stranger to you. A guy who built the $179B Alibaba empire is a superstar now. Often compared to Jeff Bezos from Amazon, Jack started his business in 1999 after failing to find Chinese products online. He built a platform to offer Chinese suppliers’ products to the western world.
At his primary venture, Alibaba, ecommerce entrepreneurs can buy products to stock their warehouses. Additionally, dropshippers can purchase items as needed and have them shipped directly from AliExpress to their customers. In other words, with AliExpress you can buy products in single pieces for yourself or you can dropship. Both options have platforms, meaning that individual sellers can register there and sell their products around the world. Neither Alibaba nor AliExpress holds inventory. They are marketplaces, comparable to eBay.
What is dropshipping?: How AliExpress Dropshipping Works
AliExpress dropshipping works similarly to traditional dropshipping methods. You copy the product from AliExpress to your store and set your own prices/markups. Once you sell a product, you can purchase it from AliExpress and have it shipped directly to your customer.
AliExpress dropshipping comes with many advantages. However, dropshipping is much more nuanced than just stocking inventory. When you dropship goods from AliExpress, you gain more freedom and time to focus on what matters: marketing.
What is dropshipping?: How AliExpress Differs from the Standard Dropshipping Model
One of the biggest wholesale directories, WholeSale2b, offers over 1,500,000 products. AliExpress sells more than 1,500,000 t-shirts alone and you can choose to dropship any of them. Not to mention other categories like Consumer Electronics and Jewelry.
In addition to numerous dropshipping advantages, the dropship model is extremely flexible:
- Dropshippers control theor own margins. Also, dropshippers aren’t bound to a suggested retail price (MSRP) and can decide their retail prices on their own.
- Next, dropshippers can start their dropshipping businesses immediately, for free. AliExpress dropshipping is possible even without contacting the supplier.
- Dropshippers don’t need to be established business entities before starting their online stores. Though they will need one once they grow.
- Dropshippers have access to millions of products. Instantly.
- AliExpress products are trendy. Chinese suppliers do their research and watch the trends. Presidential campaign heating up? Sell Trump and Clinton t-shirts.
This all looks pretty good, right? So what can be so messy about it? Below I answer the most frequently asked questions I hear about AliExpress dropshipping. Being fond of AliExpress, I did my best to provide an honest, accurate picture with objective answers.
What is Drop Shipping?: FAQs
1. Can you dropship AliExpress products easily?
Yes, you can easily dropship AliExpress products. It’s even easier with tools like Oberlo.
Dropshipping from AliExpress makes all parties equally happy. AliExpress as a platform gets its share of revenue, suppliers sell their products, and you make profits.
As a dropshipper, I’ve personally sold over $3M worth of AliExpress products and know guys who have sold even more. The dropship model really works.
2. Will my customers know if I’m dropshipping products from AliExpress?
Only if they find the same products on AliExpress themselves. There are rarely any promotions in the packages your customer receives, especially if you tell suppliers not to add them. If you’re making quite a lot of sales, you can even arrange custom packages or flyers for free.
3. Why should someone buy from me if they can buy the same product from AliExpress for less?
Because you’re better. Call it better marketing execution, which reached the prospective customer first. Call it branding, which drives people to buy from you. Call it creating a store that people trust, even if based solely on location. Call it the value you offer by providing extra services or content. Call it technology that allows your customers to shop more easily.
Especially with lower priced products (<$100), the price is not the determining factor.
Look at the same product on different websites:
All of these stores are multi-million dollar businesses. Are these companies price competitive? No. Are they out of business? No. Why? Because in the ways that count, they are better.
That being said, your ability to set your own prices and not have to worry about being price competitive should further ease any worries you have about how to start your dropship business. If you’ve calculated that it costs $15 to gain one customer with Facebook marketing, add $22 to the original AliExpress price and try to make the sale. You can increase your price as long as it makes sense for people to buy the product at that price.
You can reorganize your pricing strategy later, but for ecommerce first timers, this a tremendous no-sales relief.
4. AliExpress shipping takes too long, my customers won’t wait.
Alibaba made over $14 billion in sales in one day. The customers from the businesses listed above weren’t concerned with long delivery terms, either. Your task is to define your shipping policy, and then display it on your store’s website in order to set clear customer expectations.
Further, AliExpress packages aren’t delivered by sea anymore, and it doesn’t always take 60 business days. Actually, with the commonly favored ePacket delivery option, it typically takes only 7-14 days to reach the US. Another benefit of the dropship model, is that the ePacket delivery method is now implemented across 29 countries around the world. In addition, some suppliers keep their most popular products in US warehouses, which offers even quicker delivery.
Note: the differences between shipping options are huge. Some suppliers claim to ship their orders the same day with ePacket delivery (delivery time: approximately two weeks), others ship their orders within 10 days and offer standard China Post 45 days delivery (delivery time: approximately two months).
Last, pick only the best suppliers and do your research. If you choose a random supplier, chances are you picked the one with the 2 months delivery option.
5. What about quality risk and copyright infringements?
You’ve probably heard stories about the ridiculously bad quality of Chinese products. Sadly, these claims are often true. As usual, though, there are two sides to every story.
In reality, you can just as easily run into a bad supplier in Europe or the US. In the end, you need to be cautious when it comes to choosing your dropshipping suppliers. It’s up to you who should sort the bad suppliers from the good ones. The unfortunate stories are well documentated. Read them and don’t repeat the mistakes.
AliExpress is a marketplace. Just as I can put any item on eBay, a Chinese supplier can put any item on AliExpress. Just like eBay has had thousands of scammers and quality issues, AliExpress has had its own as well.
Being a public company and hoping for business in foreign markets, AliExpress is forced to do a great job correcting its shortcomings. Supplier accounts on AliExpress are no longer free. Now, suppliers must pay ~$1,500 to have a full store running, which makes it difficult for scammers. Moreover, AliExpress offers a generous buyers’ safety program and hires thousands of employees to check their listings. In fact, Alibaba’s group hires over 2,000 employees to check that their listings don’t contain copyright infringements.
In short, a lot of Chinese suppliers can’t afford to sell cheap products anymore.
6. Do AliExpress suppliers speak English?
Chinese suppliers’ English isn’t perfect, but you can contact the suppliers in advance to get a sense of their level of proficiency before doing business with them. Larger suppliers are typically quite responsive. They have sales teams managing your orders and can answer your questions via live chat or email.
7. How do you handle AliExpress dropshipping returns and refunds?
An easy refund and returns policy is one of the competitive advantages you can offer. That said, be aware that offering this feature effectively can be a bit tricky.
AliExpress suppliers rarely agree to accept returns and even if they do accept them, you don’t usually get notified when they receive it, and sending your customer the refund is up to you. From my experience, I suggest accepting returns to your office, and if the product is not spoiled or used, reship it later from your location.
It will be simpler for your customers and you’ll be able to offer better customer support.
If your store communicates the relevant information about product features and delivery terms, your return rate should average between 6-8%.
The two most frequent scenarios:
- the order has not shipped or is extremely late;
- the customer picked the wrong product or is not happy with the product’s quality
In the second case, you can apply your returns policy. To reiterate, I suggest accepting the return order at your office or warehouse. If it was a quality issue, cover the return costs and issue a refund. If your customer picked the wrong product or doesn’t want the product anymore — covering the return costs is optional — just issue the refund.
In the first scenario, it’s uncommon to handle a return by depending on a refund from your AliExpress seller and then issuing the refund from your balance to your customer. More likely, you’ll cover the refund yourself.
AliExpress sellers are generally opposed to issuing refunds. They will likely insist that the order has shipped or eventually offer a reshipment. The risks increase when you start making more sales. Try to arrange a refund agreement with your supplier in the beginning because blind dropshipping can cause serious problems.
Avoid pitfalls and errors in this regard by trying your best to be strict and persistent. If the supplier refuses to refund you even when there’s an acceptable reason for return (e.g. the package was never delivered or the orders tracking status is pending for 30 days), apply for the AliExpress Buyer’s Safety Programme. You should also continue to write the supplier every day. You may even consider bombard him/her with the bad reviews. Changing an AliExpress supplier’s account isn’t easy, and they value their source of revenue a lot, so the good ones will be responsive. Just try not to get to the point where you order isn’t delivered, the tracking code is inactive, 50 days has passed, and your customer is now angry.
Fun fact: I made one supplier send a photo of every package they shipped for me. They literally took pictures of every single order they shipped, for months!
8. Is AliExpress dropshipping favored by PayPal?
Contrary to what a lot of people say, dropshipping isn’t an illegal business model. The most common gateway used by the dropshipping suppliers is PayPal. The most common problem with PayPal is its limitations. You can read dozens of horror stories here.
First, you have to understand PayPal. In simple words, PayPal takes care of it’s users. If a PayPal user didn’t receive his/her purchase or the product was not as described, he/she always has the right to claim for a refund. That’s why a lot of people like it.
Now let’s say you take out all your money and your supplier didn’t deliver the product. Your customer claims for the refund but your balance is empty. To avoid that, PayPal puts limitations on your money in advance. Given your business history, track record, ability to provide proof of delivery on time (tracking numbers), your business’s physical location and many other factors, the limitations can vary.
I’ve personally experienced a block on all of our incoming revenues for 90 days. I had to cover the product, marketing and operation costs from other sources for 90 days. The second shop I started was docked with a 30% limitation on all incoming revenues for 30 days, and it had a fixed deposit reserve.
Your account doesn’t experience limits simply because you’re dropshipping. Your account can experience this even if you run any other business. Remember that your account experiences limits so your customers are safe. Also keep in mind, PayPal knows you’re not laundering money or pursuing similar illegal activities. In other words, it’s nothing personal!
9. How can established businesses benefit from AliExpress dropshipping?
When learning about dropshipping, trying it out for yourself works best. Fortunately, AliExpress dropshipping is the ideal model for first-time entrepreneurs. It’s totally understandable that an established business wouldn’t change its order fulfillment model and adapt to AliExpress dropshipping, but it’s still worth considering in these scenarios as well.
AliExpress dropshipping is great for quickly testing out new product ideas. In addition, you can add a new product category within a few days and if it proves to be successful, you can stock the products in your warehouse as you usually do. This way, you reduce the risk of stocking the inventory before knowing what sells. Also, it increases your business flexibility.
What is Drop Shipping?: Conclusion
This article might raise more concerns on AliExpress dropshipping than enthusiasm. Indeed, it’s far from a perfect platform. It’s tough and complex. Becoming adept at using AlieExpress dropshipping requires time, careful research, and planning. I still prefer it because its advantages make it the easiest way to kick-off your online business and it’s totally awesome for testing new product ideas.
Even with the challenges in mind for those who are just figuring out how to start a dropship business as well as for experienced entrepreneurs looking to improve their existing shops, established platforms like AliExpress dropshipping provide lots of benefits. It requires low investments in capital, and therefore you have the ability to try your hand at ecommerce with limited risks.
There are lots of helpful apps and services available to use in conjunction with AliExpress dropshipping, like Shopify. These can facilitate and automate the more complicated aspects of the dropshipping proces and eliminate some of the pitfalls we’ve discussed in this post. With these tools, you can devote your time to maximizing profits through developing the right marketing techniques and solidifying your brand. You don’t have to concern yourself with storing inventory, which only further accelerates the formation of a successful business. To learn more, check out the Oberlo app or have a look at our blog for information about the leading dropshipping apps and platforms.
If you still need more of an explanation for what is drop shipping, feel free to get in touch at email@example.com or on Twitter @TomasSlimas.
Want to learn more?
- How I launched my eCommerce store in less than 30 minutes (with products)
- How To Select Dropshipping Suppliers on AliExpress
- What Should You Sell Online?
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