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. In this article, you’ll learn what is drop shipping and why you should care about it.
Entrepreneurs love it because there is no inventory to hold, and a lower upfront investment lets you concentrate, in most cases, on the most important thing – bringing in customers.
Dropshipping isn’t something new. Zappos started off with drop shipping back in 1999. Amazon and Sears use dropshipping too. In fact, up to 33% of the entire eCommerce industry uses dropshipping as their primary inventory management model. And, if big names don’t catch your attention, look at the regular guys making their way and sharing their stories on Reddit.
So what does this have to do with AliExpress? Dropshipping is fueled by Chinese suppliers, and the number of Chinese drop shipping companies is 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, drop shipping reminds them of Chinese products and nothing else.
AliExpress dropshipping is the new trend. It’s a way to easily start your first businesses or boost your current store’s efficiency. No doubt it comes with drawbacks, but let me start from the beginning.
What is dropshipping – What is AliExpress?
Charming Jack Ma shouldn’t be a stranger to you. A guy who built a $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 business, Alibaba, you can buy products for your store and stock them in your own warehouse. On AliExpress, you can buy products in single pieces for yourself or you can dropship.
Both options are platforms, meaning that individual sellers can register there and sell their products to the world. Neither Alibaba nor AliExpress holds inventory. They are marketplaces, comparable to eBay.
What is Dropshipping and How does AliExpress dropshipping work?
AliExpress dropshipping works similarly to the traditional drop shipping method. You copy the product from AliExpress to your store, set your own prices/markups, and after you sell a product, you purchase it from AliExpress and have it shipped directly to your customer.
AliExpress dropshipping comes with many advantages. However, drop shipping is much more nuanced than just stocking the inventory. When you dropship goods from AliExpress, you gain more freedom and time to focus on what matters: marketing.
How does it differ from the standard drop shipping?
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:
- You control your own margins. Also, you aren’t bound to a suggested retail price (MSRP) and can decide your retail price on your own.
- Next, you can start immediately, for free. AliExpress drop shipping is possible even without contacting the supplier.
- You don’t need an established business entity before starting your online store. Though you will need one when you grow.
- You have access to millions of products. Instantly.
- AliExpress products are trendy. Chinese suppliers do their research watching the trends. Presidential campaign heating up? Sell Trump and Clinton t-shirts.
This all looks pretty good, right? So what is so messy about it? Below I answer the most frequently asked questions I hear about AliExpress dropshipping. Being fond of AliExpress, I find some questions uncomfortable, but I did my best to provide an honest, accurate picture.
What is Drop Shipping – Common Questions:
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 product, and you make profits.
I’ve personally sold over $3M worth of AliExpress products and know guys who have sold even more. The dropship model works.
2. Will my customers know if the 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 doing quite a bit of sales, you can even arrange custom packages or flyers for free.
3. Why should someone buy from me if you can buy the same product from AliExpress cheaper?
Because you’re better.
Call it better marketing execution which reached the potential customer first, call it a brand which makes people buy from you, call it trusting your store brand or even your location, call it the value you offer by providing extra services or content, or 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 these stores are multi-million businesses. Are these companies price competitive? No. Are they out of business? No. Why? Because in some ways they are better.
That being said, the possibility to set your own prices and not worrying about being price competitive should further ease the start of your business. If you have calculated that it costs $15 to get 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 the 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. Customers of other businesses listed above don’t seem to be concerned with long delivery terms either. Your task is to set clear expectations, define your shipping policy, and display it in the relevant places on your store.
AliExpress packages aren’t delivered by sea anymore, and it doesn’t always take 60 business days. Actually, with the now popular ePacket delivery option, it 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.
Pick only the best suppliers and do your research. If you pick a random supplier, chances are you picked the one with the 2 months delivery option.
Note: the differences between shipping options are huge. Some suppliers claim to ship out their orders the same day with ePacket delivery (delivery time: approximately two weeks), others ship out their orders within 10 days and offer standard China Post 45 days delivery (delivery time: approximately two months).
5. What about quality risk and copyright infringements?
You probably have heard stories about the ridiculously bad quality of Chinese products. Sadly, these stories are true. But there are two sides to every story.
You can just as easily run into a bad supplier in Europe or the US. In the end, you need to do the careful due diligence when choosing who to dropship from. Also, it’s 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, and just like I can put any item on eBay, a Chinese supplier can put any item on AliExpress. Just like eBay has had thousand of scammers and quality issues, AliExpress has had theirs too.
Being a public company and hoping for business in foreign markets, AliExpress is forced to do a great job changing. Supplier accounts on AliExpress are no longer free. You have to pay ~$1,500 to have your full store running, which makes it difficult for scammers. Moreover, AliExpress offers a generous buyers safety program and hires thousand 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.
A lot of Chinese suppliers can’t afford to sell cheap products anymore.
6. Do AliExpress suppliers speak English?
Chinese suppliers’ English can have a few mistakes.
But, you can contact the suppliers in advance to get a sense of their English before doing business with them.
Bigger suppliers are quite responsive. They have sales teams managing your orders and answering your questions in live chat or email.
7. What is Drop Shipping – How do you handle AliExpress dropshipping returns and refunds?
An easy refunds and returns policy is one of the competitive advantages you can offer. But be aware, this part is the most tricky one.
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 the refund is down to you. From my experience, I suggest you accept the returns to your office and if the product is not spoiled or used, reship it later from your own destination.
It will be simpler for your customers and you’ll offer better customer support.
If your store communicates the relevant information about product features and delivery terms, your returns rate should average to 6-8%.
The two most frequent scenarios:
- the order is not shipped or is extremely late;
- the customer picked the wrong product or is not happy with the product quality.
In the second case, you can apply your returns policy. Accept it to your office/warehouse, and if it was a quality issue, cover the return costs and issue a refund. If your customer picked the wrong product/doesn’t want the product anymore, covering the returns costs is optional; just issue the refund.
In the first scenario, it’s unlikely to get a refund from the AliExpress seller and then issue the refund from your balance to your customer. You’ll cover the refund yourself.
AliExpress sellers are opposed to issuing a refund. They will keep claiming that the order is shipped or eventually offer a reshipment.
The risks increase when you’re doing more sales. Try to arrange a refund agreement with your supplier in the beginning because blind dropshipping can cause serious problems.
How to avoid? Try to be strict and persistent, if the supplier refuses to refund you even if there’s an acceptable reason for return (the package was never delivered or the orders tracking status is pending for 30 days), apply for the AliExpress Buyer’s Safety Programme. Write the supplier every day. 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.
Try not to get to the point when 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. What is Drop Shipping – Is AliExpress drop shipping liked by PayPal?
Contrary to what a lot of people say, drop shipping isn’t an illegal business model. The most common gateway used by the dropshipping suppliers is PayPal. The most common problem with PayPal is their 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 of record, ability to provide proof of delivery on time (tracking numbers), your business physical location and many other factors, the limitations can vary.
I’ve personally experienced a block on all our incoming revenues for 90 days. Meaning I had to cover the product, marketing and operation costs from other sources for 90 days. The second shop I had was applied a 30% limitation on all incoming revenues for 30 days + a fixed deposit reserve.
Your account doesn’t experience limits because you’re drop shipping. Your account experiences limits so your customers are safe. PayPal knows you’re not laundering money or pursuing similar illegal activities. Your account can experience this even if you run any other business.
9. What is Drop Shipping – How can established businesses benefit from AliExpress drop shipping?
When learning what is drop shipping, trying it out for yourself works best. Fortunately, AliExpress drop shipping is a perfect model for first-time entrepreneurs.
It’s totally understandable that an established business will not change it’s fulfillment model and adapting AliExpress dropshipping, but you should still consider it.
Also, AliExpress drop shipping 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. And yes, it’s far from perfect. It’s tough and complex. It requires time, careful research, and planning.
But it’s advantages make it the easiest way to kick-off your online business and it’s totally awesome for testing new product ideas.
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?
In this article, you learned what is drop shipping. Share what you love about dropshipping below!