Dropshipping is becoming more and more popular worldwide. You run an online shop where you sell goods from another manufacturer. 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 working together? We’ll explain that to you in the following article.
Alibaba or AliExpress?
Earning money on the Internet is also becoming increasingly popular. More and more online shops are being opened that offer very special or widely diversified assortments. An important question in such an online business is whether you want to store and ship the products yourself or whether you use the so-called dropshipping system. The aim is to establish cooperation with manufacturers such as Alibaba or Aliexpress, in which the customers order a product in your shop, but receive it directly from the manufacturer via dropshipping.
You yourself only act as an intermediary and earn money from the profit margin you have calculated. If you want to establish business relationships in China and buy products as a result, you can’t ignore the Alibaba B2B marketplace. The company, which was only founded in 1999, is now the largest and most successful online trading platform in all of Asia and now beyond.
So if you run an online business or an online shop, you can resell third-party goods via dropshipping. You can use Alibaba as a cooperation partner for your shop. For example, you can use the site to buy products and then resell them on Amazon. You don’t need your own products, you can use the creativity of others to generate income. How exactly does it 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?
They 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 from the fact that there is a minimum order quantity for most products. Thus, Alibaba works like a directory of various retailers that you can easily contact.
Aliexpress, on the other hand, is a B2C trading platform, which is more aimed at the end buyer. Every private seller can list his goods on Aliexpress, which is why it is very similar to the Amazon platform. So here everyone can simply search for products and buy them without a minimum order quantity. So if you want to open your own drop shopping online shop, you can buy your products from both Alibaba and Aliexpress.
Registration with Alibaba and Aliexpress
To be able to be active on the B2B portal yourself, you need an account. Getting one takes time, as Alibaba places high demands on its dealers. This is noticeable in the verification process. To identify you as a dealer, Alibaba requires the following documents:
- Business license
- Identification documents
- IP address
With these measures, Alibaba wants to ensure that fraudsters do not have a chance to abuse the platform for their own purposes. Once you have an account approved, it makes sense to provide as much information as possible about your own business so that you can make a good impression if interested parties click on it. Then you can start looking for serious business partners.
It’s a lot easier with Aliexpress. As with any other platform on the Internet, you just have to register with your name and a password. And you can go shopping very comfortably.
The right partners for dropshipping via Alibaba and Aliexpress
One difficulty is that the distance between you and potential partners from China is quite great. It is probably not possible to travel there in person to negotiate. Therefore, you should research very carefully who you are dealing with if you are cooperating with a manufacturer. To check the seriousness, you could do the following:
- Verify that an account has been verified by Alibaba or Aliexpress;
- Check the background of the company interested in cooperation (e.g. commercial register);
- Personal contact of the company or the contact person;
- Acquisition of specialist knowledge on Asian customs in business relationships (e.g. with regard to informal formulation of inquiries, unfamiliar e-mail addresses).
Based on such information, you can usually already assess very well whether a possible cooperation partner is trustworthy or not. The ideal case would of course be that you maintain personal contacts with the company.
Earning opportunities through Alibaba and Aliexpress through low prices
Working with a Chinese producer is particularly appealing because the manufacturing costs for products in China are usually much lower than in other parts of the world. As a shop operator with an account with Alibaba, you usually pay a fee to the platform. Of course, you have to add this to your ultimately calculated sales price. But why are the competitive prices for which Chinese companies offer their products? This is due to the already very low manufacturing costs. If you buy large quantities, the Chinese partner will give you another hefty discount.
Depending on the product, the purchase price is often only cents or at least so low that you can add a decent profit margin. In addition to the costs you incur (office rent, electricity, etc.), you should also include any duties and taxes as well as the desired profit margin. Even with all these surcharges, you will receive a sales price due to the low purchase price, from which you earn something and which is still significantly lower than for an equivalent product from a European country.
When it comes to dropshipping, Aliexpress has the advantage over Alibaba in that you don’t have to order huge minimum order quantities for your shop. You can buy each product here individually as soon as a customer has ordered and paid for a product from you. The disadvantage here, however, is that you don’t get a discount due to large order quantities. Thus, the profit margin for dropshipping via Aliexpress is often lower than that of Alibaba. But you can make sure that you don’t get stuck on a multitude 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 inventory of the Chinese partner, the shipping costs cannot be reliably calculated, there may be uncertainties about the reliability of delivery and, in the worst case, all problems with returns and refunds will weigh 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 after forwarding the order. Only if something goes wrong will the customer contact you. When working with an unreliable partner with bad products, the complaints can ultimately pile up. You will likely get negative customer ratings, which will lead to financial losses in the long run. For this reason, choosing the right business partner is very important.
What to consider when dropshipping with the help of Alibaba
When dropshipping via the Alibaba supplier directory, however, there are a few 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?
- How are returns and complaints handled?
- Has the extended delivery time been taken into account and is this recognizable to the customer?
- Are the delivered products new or does the manufacturer send used goods?
- Can an invoice that is flawless for Germany under tax law be guaranteed?
Dropshipping vice versa
This whole system of dropshipping also works the other way around at Alibaba. With a dealer account, you are not only able to source goods from China, but also offer your own products via Alibaba. The same goes for Aliexpress. So if you want to sell a new, interesting product, you can promote 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. In this case, you have to make sure that you can guarantee a consistently high quality of the product. You should also adhere to the agreed delivery quantities.
Alibaba and Aliexpress offer two-way entry into dropshipping.
Which provider is best for your dropshipping business, whether Aliexpress, Alibaba, or a completely different one, you have to decide for yourself. The fact is, however, that both are very reliable providers who attach great importance to high customer satisfaction. So, especially if you want to start your business, the two providers can be of great help for you.
