25Dec
By: Tomas Šlimas December 25, 2016

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.

dropship


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.

Don’t be obsessed with price competition or even worse, uniqueness. In eCommerce, you will never be the cheapest and you will most likely never be unique.

Especially with lower priced products (<$100), the price is not the determining factor.

Look at the same product on different websites:

dropshipping - what is drop shipping

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).

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.

Returns

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%.

Refunds

The two most frequent scenarios:

  1. the order is not shipped or is extremely late;
  2. 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.

If you still need more of an explanation for what is drop shipping, feel free to get in touch at tomas@oberlo.com or on Twitter @TomasSlimas.


Want to learn more?

In this article, you learned what is drop shipping. Share what you love about dropshipping below!


  • Divy

    Hey Tomas
    Great article. I was just wondering if the delivery package states who the item was sent from? Like, would the package state the company name that it was sent from in China? Can I request the supplier to add my company’s name on the package instead?
    Thanks

  • NewShopifyer

    When we use Oberlo on our store to import list of products from Aliexpress, do we have to go again and buy it from the seller once we make a sale or the seller on Aliexpress gets notified of the sale automatically and delivers products?

  • Hey @newshopifyer:disqus,

    You should order that product – the seller is not notified automatically. For more information check out: http://support.oberlo.com/hc/en-us/articles/207278505-What-should-I-do-after-I-receive-an-order-

  • Hey @disqus_413Z4Vo3WE:disqus,

    You could ask your suppliers for custom packages – and they should agree, if you’re making more sales.

  • Adnan Cetin

    Not theoric. Its Practical and easy to understand.. Perfect explaining!! Wish everyone could do that! Thank you so much Tomas!!!

    But I’m afraid of international shipping and not sure.. How about the product that on sale is ePacket shipping to usa and thats great but one customer ordered it from Kenya and shipment has totally changed ( price and maybe no ePacket at all ) ?

  • Thanks so much @adnancetin:disqus! If the costs are too huge, you could just issue a refund.

  • Alexis Durand

    Hi, I am interested in starting with Oberlo. Just wondering, I am from UK, do we have EPacket? How lond does it usually take for an order to arrive to the customer? Do these customers don’t really care about waiting 15-20 days to get there orders? Waiting for my order for up to 30 days, no way!! What do you think?
    Thank you.

  • Hi Alexis,

    Some sellers do offer ePacket services to the UK. You can use our free Chrome Extension to identify these sellers (link: http://bit.ly/291DPr4).

    There’s def a group of people who care about the delivery timeframes, but that doesn’t mean you can’t operate your business successfully. I wrote a lot about the delivery timeframes and dropshipping outside the US here: https://www.oberlo.com/blog/dropshipping-outside-of-the-united-states/

  • Hi I am a shopify developer i have build servaral shopify stores. I Think this app great as compared to other because it provide daily update of the pricing. Thanks for this article Now all the tings is clear to me :):)

  • Thanks so much, @tahirkhan11:disqus !

  • Calvin Jansen Van Vuuren

    This app increases my sales from R2000 to R20,000 per month and growing. Tracking packages is a huge problem however but I still simply cannot run my store without this app. It would be excellent if alien press suppliers could actually give you tracking numbers that you cud trace. I have no idea if my customers get the goods or not and therefore I don’t know if I should extend purchase protection or confirm delivery…spending far too much time sorting out admin that this app is supposed to be taking care of…but having said that I still cannot live without this app.

  • Dky Che Zul

    Hi Thomas,

    Great advice you got there. I know nothing about dropshipping and have done lots of research about it but I’m still confused.

    Do i have to start the website first? or
    Sign up with oberlo and deal with supplier asking them if they do dropshipping first?

    Please help me!

    Regards

  • Thanks @dky_che_zul:disqus !

    Check out these guides: https://www.shopify.com/blog/117806725-how-to-launch-an-online-store-with-no-cash-investment and http://learn.oberlo.com/ecommerce-course

    They cover everything from launching a store to starting your ad campaigns (step by step).

  • Dky Che Zul

    Hi Tomas,

    I’ve done building my shopify website and now I’m waiting to launch it. The only problem i have right now is the account that im going to use while running the store.

    I have paypal account and i upgrade the account to business recently because im excited to launch my first online store. The problem is they ask for company name. My question is

    1.Should i just put any name that i like?

    2. Or i have to go and register the company and company name and open a new bank account with the same name as the company?

    because when i want to add bank account on paypal business setup i cant do that because the name appear is the company name not my name. It will create a problem if i want to withdraw any money that i earn. Im starting to get headache about this matter.

    Please help me. Please!

    Regards

  • Hi @dky_che_zul:disqus,

    Have you tried calling PayPal support? You can solve all issues much quicker over the phone than with emails or by reading their support articles.

    I’d say that you just put any name you like. The company name and the brand name (store name) doesn’t have to match. We had one name on the company details page and another as a business account name.

  • Ruchika

    Hi Tomas,

    When the Ali Express supplier will ship the product to the customer they will put the price tag on the product whereas we would have charged higher price for the same product from the customer through our website. How to avoid this kind of situation?

  • Hey,

    We suggest putting a note to a seller saying that you’re dropshipping. You can set an automated note on the Oberlo settings page. I’ve also heard that some people just tell their customers that they put a smaller price on purpose to help them avoid customs charges and fees.

  • Ruchika

    Thanks. The automated note you are mentioning on the Oberlo settings Page, is it for the seller to tell them that we are doing dropshipping?
    Thanks

  • Yes, it’s for the seller. You could something like “I’m dropshipping. No invoices or promotions!” there. Just to make sure they don’t add them.

  • Ruchika

    Thanks Tomas.

  • Ceefo .Ceefo

    given the issue with paypal and placing holds, how can one pay the overseas suppliers if paypal has all the cash for the time period?

  • There’s no way do that, unless you have some cash buffer to pay the suppliers from another account.

  • Ceefo .Ceefo

    You are a good guy for being honest. None of these damn courses mention this in their course, it’s always START w/$0.

    If paypal is not included as an option for a while, will the shopify payment cart release funds?

    What of amazon pay? Any ideas?

  • haha. I’ve heard a lot of people work with 2Checkout, but you might need a supplier-retailer agreement working with them (I used this 2 years ago https://www.dropbox.com/s/zwelp1jpxy62r1z/supply-contract-china-english-chinese-template.docx?dl=0)

    You can also try Shopify Payments: https://www.shopify.com/payments

    For the full list of payment gateways see: https://www.shopify.com/payment-gateways

  • Ceefo .Ceefo

    Thanks dude. I am signing up to your company just cus of what u stand for.

  • Thanks so much! To be totally honest, I suggest you don’t rush into opening an online store. Take some time to plan how you’ll attract customers to your store and learn how Facebook or Instagram Ads work. Marketing is the tricky part. Launching a store is the easy part. If you need any help, here’s my email: tomas@oberlo.com

  • Ceefo .Ceefo

    Wow. Speechless. I will be using your email for sure. Will ensure am not a bother. thanks dude

  • Ceefo .Ceefo

    Hello Tomas,
    I took you up on your offer. I selected a Niche per the pdf I got from Oberlo, a few other things have been done. I sent you an email and would move things forward the moment I hear from you; thanks

  • Eldar David

    Hey Thomas,
    Right now I don’t have (yet) an eBay store or Shopify account, My seller account is doing good (Individual) so far and I started to use AliExpress for Dropshipping lately.
    Does Oberlo will work with eBay? If it does, how will it work?
    I Mean once a buyer purchase one of my products, how does the system recognize for example, where to ship or what to ship?
    That part is missing in my puzzle for perfection.
    Sincerely,

    Eldar.

  • Hey Eldar,

    We see eBay integration as an additional sales channel for our users. It means that you could source products from Oberlo and sell them through your Shopify store, eBay store and Amazon store.

    However, I can’t promise you any exact dates of when that will happen.

  • Jan Blazek

    Hi, how do you solve problem with different languages. I expect the Oberlo App to copying the title of product from Aliexpress in English., but what about other languages ? Are there some ways how to change the title to any other language ? Does my new title stick to the product ID forever ?automatic or manual, does not matter.. thank you Hans

  • Hey Jan, Oberlo imports products in English. We don’t support other languages, but you can display your products in different languages using translations apps: https://apps.shopify.com/search/query?utf8=%E2%9C%93&q=translate

  • Jan Blazek

    As I could realise, Aliexpress has millions of products and their titles are sometimes even in English little weird. Can`t imagine the process of translation into Czech language. So there is no such a toll for re-writting?

    Probably will have to give a try with the translator..
    Thank you for your answer,
    Hans

  • Kazaa L

    Hi if we dropship from aliexpress via ePacket the value(price) of the item would be written on the package, is it Ok for your customers that the knew the real price?
    is there any way to hide the price on the package

  • benjammartin

    Thank for this article. I have a beginner question… Does the dropshipping suppliers show real price to the buyer ?

  • benjammartin

    I have same question…

  • Hey, you can find the answers with the images here: http://ask.oberlo.com/d/553-price-on-the-parcel/2 😉

  • EnhanceYourLife

    Hey! if your looking for some great new
    dropshipping methods, I recommend going here:http://34.gs/1uuq

  • glaros

    Thank for this article tomas.
    WebTipster ebay Dropshipping Tool is the searching drop Shipping software for dropshippers. This dropshipping tool shows certified suppliers who have the same item in stock and you can directly see it near to ebay listing’s main image. WebTipster ebay Dropshipping Tool shows you useful informations that will increase your sales!!

  • @tanyaYT1

    Thanks so much for the article, Tomas! There are many articles about private labelling and your articles are much appreciated!

    I heard from other experienced seller that they rarely communicate with the Aliexpress supplier that I don’t understand. My concers are that some products come with Chinese manual and terrible packaging, and I have asked for supplier to send over the packaging image one by one. My question is – 1. Is it the practice you follow as well? Asking the packaging image? 2. Up to how many quantity that you’d ask them to brand it. – Either ‘print a logo’ or have a custom packaging. FYI, I am selling accessories so consider the packaging is important if it makes econimical sense.

  • Thomas Lopez

    Thanks for this good article ! I will try drop-shipping in France, for now I just have a catalog of the best products on Aliexpress, if you guys want to check it: http://www.jrdesign.fr/aliexpress/

  • @tanyayt1:disqus, you can read more about the packages on the Oberlo forum here: http://ask.oberlo.com/d/553-price-on-the-parcel

    I believe they could brand a single package, if you paid them for that. So it’s a matter of discussions.

  • Josh Barnard

    Tomas,

    Do you know what the tax implications are for doing an eCommerce business while dropshipping with Aliexpress?

  • Hey Josh,

    It really depends on your business location. You might want to reach out to other dropshippers from your country at ask.oberlo.com I’m sure most of them have already figured this out.

  • Naimad

    Question 1) Some items are designed for a different market than I cater to, can changes be made? For example, on a stage light the data connector must be 5 pin DMX in the USA. Many of the items I see are called “stage lighting” but have 3 pin DMX data connector, which would be used only in the DJ or AV markets. They match in all other ways, but stage lighting users cannot connect to a 3 pin data port in the USA. How do I get that modification and keep it that way consistantly? Question 2) I do not want to sell an item with a Chinese Brand Name. How do I arrange to have my own brand name applied to the product, and keep it that way consistantly? email: ddelaney@lehighdim.com

  • Jeffinho Santos

    How do I make sure that I do not get in trouble with the government when it comes to taxes?

  • Muhammad Balhi

    thank you

    *

  • Marie Tatibouet

    Hey @tomasslimas:disqus I was wondering ~ how can you tell which aliexpress suppliers have warehouses in the US? I want shipping to be faster than the regular epacked timeframe and figure that’s the only way.

    Alternatively, how do you know how much time epacket will take? 6 days is very different to 12 days in the mind of my consumer.

    Thanks!

  • You look good Tomas ! I’ve just started a lot to read and get my head around all this, but I can do it. Tks for your great tips. Best!