Dropshipping is becoming increasingly popular in the world. You run an online shop where you sell goods from a third-party manufacturer. In order for this to work properly, however, you need a reliable cooperation partner. Alibaba and Aliexpress are two very well-known dropshipping providers here. But what is the difference between the two and what should be considered when collaborating? We explain Dropshipping Alibaba Vs Dropshipping Aliexpress to you in the following article.
Making money over the internet is becoming more and more popular. More and more online shops are being opened that offer very special or just a wide range of products. Why? Because it’s a lucrative business model. At least if you use the so-called dropshipping system. The aim here is to establish a cooperation with manufacturers such as Alibaba or Aliexpress, within the framework of which customers can order a product in your shop but have it sent directly from the manufacturer via Dropshipping at the Alibaba store.
Pretty convenient, because you yourself only act as an intermediary and earn on the profit margin you calculate. If you want to establish business relationships in China and buy products as a result, you can’t get past the B2B marketplace Alibaba. The company, which was only founded in 1999, is now considered the largest and most successful online trading platform in Asia and beyond. Therefore, an Alibaba shop offers lucrative revenue opportunities.
So if you run an online business or an online shop, you can resell other people’s goods via dropshipping. You can use Alibaba as a cooperation partner for your shop. You can buy products from the site and then resell them as an Alibaba store on Amazon. So you don’t need your own products, but can use the creativity of others to generate income. But how exactly does that work? What do you have to do to get cooperation partners and reliable suppliers for your dropshipping business with the help of Alibaba or Aliexpress?
Alibaba and Aliexpress: what’s the difference?
Aliexpress and Alibaba are both companies that belong to the Alibaba Group and were developed by Alibaba founder Jack Ma. Alibaba is a Chinese B2B trading platform that is particularly interesting for manufacturers, trading companies and wholesalers. As an entrepreneur, you can search for available manufacturers for your product here. You can also tell that this is a B2B platform by the fact that most products have a minimum order quantity. Thus, Alibaba and the Alibaba shop work like a directory of different retailers that you can easily contact.
Aliexpress, on the other hand, is a B2C trading platform, so it is more aimed at the end buyer. Any private seller can list their goods on Aliexpress, which is why it is very similar to the Amazon platform. Here you can simply search for products and buy them without a minimum order quantity.
Register with Alibaba and Aliexpress
In order to be active on the B2B portal yourself, you need an account. Getting one involves a lot of effort, since Alibaba places high demands on its retailers. This is noticeable in the verification process. In order to identify you as a merchant, Alibaba requires the following documents:
- Business Licence
- ID documents
- IP address
With these measures, Alibaba wants to ensure that fraudsters do not get a chance to misuse the platform for their own purposes. Once you’ve been approved for an account, it’s a good idea to provide as much information about your own business as possible so that you make a good impression when prospects click on it. Then you can start looking for reputable business partners.
With Aliexpress, it’s a lot easier. As with any other platform on the Internet, you only have to register with your name and a password. And you can easily shop for the Alibaba shop.
The right partners for dropshipping via Alibaba and dropshipping via aliexpress
One difficulty is that the distance between you and possible partners from China is quite large. It is probably not possible to travel there in person to conduct negotiations. Therefore, you should research very carefully who you are dealing with if you cooperate with a manufacturer. To check the legitimacy, you could do the following:
- Check if an account has been verified by Alibaba or Aliexpress;
- Check the background of the company interested in a cooperation (eg commercial register);
- Personal contact with the company or the contact person;
- Acquisition of specialist knowledge of Asian customs in business relationships (eg regarding informal wording of inquiries, unfamiliar e-mail addresses).
With the help of such information, you can usually assess very well whether a possible cooperation partner is trustworthy or not. Ideally, of course, you would maintain personal contacts with the company.
Earning opportunities through Alibaba and Aliexpress through low prices
Working with a Chinese manufacturer is particularly appealing because the manufacturing costs for products in China are usually much lower than here in USA. As a shop operator with an account on Alibaba, you usually pay a fee to the platform. Of course, you have to add this to your final sales price to be calculated. But why are the prices for which Chinese companies offer their products so competitive? This is due to the already very low production costs in the Alibaba shop. If you buy large quantities, the Chinese partner will give you a heavy discount again.
Depending on the product, the purchase price is often only a few cents or is at least so low that you can add a decent profit margin. In addition to the costs you will incur (office rent, electricity, etc.), you should also factor in any customs duties and taxes as well as the desired profit margin. Even with all these surcharges, the low purchase price gives you a sales price that earns you something and is still significantly lower than for an equivalent product from a US country.
When it comes to dropshipping, Aliexpress has the advantage over Alibaba that you don’t have to order huge minimum order quantities for your shop. You can buy each product individually here as soon as a customer has ordered and paid for a product from you. The disadvantage here, however, is that you do not get a discount due to large order quantities. Thus, the profit margin when dropshipping via Aliexpress is often lower than with Alibaba. But you can make sure that you are not left with a large number of products.
Disadvantages of dropshipping
There are not only advantages to the dropshipping system, but also disadvantages that need to be carefully considered. They mainly concern the areas of dispatch and control. The main risks are that you cannot control the Chinese partner’s inventory, the shipping costs cannot be calculated with certainty, there may be uncertainties about the reliability of delivery and, in the worst case, all problems with returns and refunds will fall on your shoulders.
A disadvantage that should not be underestimated are possible problems with so-called cross-selling (cross-selling of suitable additional products, spare parts or accessories). Since the goods are not sent by you, but directly by the manufacturer, you have little influence on the following processes once the order has been forwarded. Only when something goes wrong will the customer contact you. When working with an unreliable partner with bad products, the complaints can ultimately accumulate. You will probably receive negative customer reviews, which will lead to financial losses in the long run. For this reason, choosing the right business partners is very important.
What is important to consider when dropshipping with the help of Alibaba
When dropshipping via Alibaba’s supplier directory, however, there are some questions that you should answer or clarify for yourself before starting such an activity. For example, the following questions are existential:
- Is there a supplier relationship between you and the manufacturer?
- Is the delivery of the goods really guaranteed by the Alibaba shop?
- How are returns and complaints handled?
- Has an extended delivery time been taken into account and is it recognizable to the customer?
- Are the delivered products new or does the manufacturer send used goods?
- Can invoicing that is tax-free in US be guaranteed?
Important information about dropshipping on Alibaba
On the Internet you will find numerous advice texts on the subject of dropshipping via Alibaba for your shop. The company now also offers a English-language website where you, as a retailer, can find out about the possibilities and search for partners. With this service, the company makes it clear that the US online market is also of great importance. You can find all the important information on the English-language Alibaba website.
Drop shipping vice versa
This whole system of dropshipping also works the other way around at Alibaba. With a merchant account, you are not only able to purchase goods from China, but also to offer your own products via Alibaba. The same goes for Aliexpress. So if you want to sell a new, interesting product, you can advertise it on Alibaba. This works via your carefully filled out account, on which you advertise the product and underpin it with the highest possible resolution photos. With a convincing appearance, you will ideally find Chinese dealers who will sell your product for you on the Chinese market to sell.In this case, you must ensure that you can guarantee the consistently high quality of the product and that you can comply with agreed delivery quantities.
Conclusion: Dropshipping Alibaba or Aliexpress
Alibaba and Aliexpress offer a two-way approach to dropshipping. You have to decide for yourself which provider is best suited for your dropshipping business, whether Aliexpress, Alibaba or a completely different one. The fact is, however, that both are very reliable providers who attach great importance to a high level of customer satisfaction. Especially if you want to start your business, the two providers can be of great help to you.
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