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Alibaba Dropshipping: Guide to eCommerce Success

sahil bajaj

Sahil Bajaj

Senior Specialist - Marketing @ Shiprocket

December 9, 2023

8 min read

The dropshipping market is experiencing significant growth and is poised to reach a projected value of USD 1.67 trillion by 2031. One major player in this market is Alibaba, the­ renowned Chinese­ wholesale marketplace­, known for its impressive annual eComme­rce sales surpassing USD 780 billion.

Dropshipping is a business mode where products can be sold online without the need to maintain inventory. In this approach, when a customer places an order, the seller reaches out to the supplier, who then directly ships the product to the customer. This method offers a favourable option for starting an e­commerce venture while keeping overhead costs low.

Alibaba, a goldmine for dropshippers, boasts a vast array of competitively priced products sourced globally. From cutting-edge electronics to stylish clothing and exquisite­ home goods, Alibaba offers an extensive range that caters to diverse needs.

Let’s explore Alibaba dropshipping in detail.

Alibaba Dropshipping Guide

Why Opt for Dropshipping with Alibaba?

eCommerce has become one of the simplest methods to start a business venture. Dropshipping in the eCommerce world has the fewest barriers to entry. Thus, more people are getting involved in dropshipping and creating businesses to earn money. Here are a few reasons why people opt for dropshipping:

  • Low Investment Capital: Beginning a business venture around dropshipping does not require a hefty initial investment. You will not need to hire personnel or maintain a store. You only need an eCommerce platform and a good marketing strategy to attract customers.
  • Elimination of Warehousing: No inventory maintenance is required for dropshipping as the need to store goods is eliminated. Traditional stores need storage space to house their inventory, but dropshipping only requires a profitable light operation workflow. 
  • Flexibility in Operation Location: Dropshippers can easily enjoy the freedom of mobility and can run their businesses from anywhere in the world. They are not bound to run their business from a designated place, especially if their suppliers are well-positioned to serve the customers.
  • Flexibility in Business Scaling: Dropshipping business owners tend to expand to larger eCommerce businesses. Dropshipping eases the owner into slowly expanding at their own pace and convenience, as there is plenty of room to test new goods and products and build the type of business you need. 
  • No Issues Concerning Order Fulfillment: Dropshipping allows you to transfer the responsibility of packing and shipping orders to 3PL (third-party logistics) players; hence, you do not have to worry about order fulfillment.

Securing Your Dropshipping Venture: 5 Tips for Supplier Evaluation

Dropshipping can prove to be quite beneficial when starting a new venture. However, selecting the right supplier also plays a key role in determining the success of your business. 

So, how will you know if you’ve chosen the right supplier? Here are five tips:

  • Choose verified suppliers and sellers that give you assurance for trading.
  • Always ask for legitimate documentation like business licences, compliance certifications, and pictures of inventory, warehouses, factories, and other relevant indicators. 
  • Business addresses, phone numbers, and other details must always be verified using Google Earth.
  • Be cautious regarding deals that seem too good to be true, and always walk away if you find something doubtful.
  • Check all supplier reviews and get references from other buyers. 

Step-by-Step Guide for Dropshipping with Alibaba

Here is a step-by-step guide to sourcing products securely with Alibaba:

Step 1: Begin to Search for your Suppliers

To begin the search, head on to the Alibaba website and look for the type of product you need to sell. Then, use the left sidebar to find a suitable supplier. It is a brilliant idea to sort suppliers based on trade assurance. You can also choose the “Ready to Ship” and “Fast Dispatch” options, and suppliers that fulfill these criteria are extremely likely to drop ship products.

Step 2: Check for the Minimum Order Quantity (MOQ) and Cost

After finding the potential listing, you must check out the page of products and also keep an eye out for the minimum order quantity that must be bought. Most times, the MOQ is visible on the landing page itself; however, other times, you will need to scan the page and find it. 

Step 3: Compile a List of Suppliers

Most suppliers might not be useful for some reason or another. Hence, compiling a list of potential suppliers and reaching out to many will allow you to secure the right supplier quickly. 

Step 4: Connecting with the Potential Suppliers and Specifying the Relevant Dropshipping Details

Contacting the suppliers is essential to understanding the finer details and whether or not they are willing to drop ship to your location. The Alibaba website’s messaging service is the simplest method to contact suppliers. 

Step 5: Settle on the Mode of Payment

Alibaba offers several payment methods, and understanding which method your supplier is open to is vital to completing the transaction. Payment methods that are offered on Alibaba include:

  1. Alibaba Trade Assurance: These secure payment services include a third-party agent that holds the buyer’s money and only transfers the payments to the suppliers when the customer confirms satisfactory order delivery.
  2. Bank Transfer: T/T payments or Telegraphic Transfer methods are extremely popular amongst Chinese suppliers. Full payment must be made before starting production. Bank transfers are tedious processes; hence, it is the least preferred method for drop shippers.
  3. Credit and Debit Card Payments: Alibaba accepts all major cards, including MasterCard, Visa, American Express, etc., to make payments.
  4. PayPal: PayPal is a popular and secure payment method that many Alibaba suppliers and buyers use.

Step 6: Asking for Order Samples

After contacting your potential supplier, you can ask them to send you samples of the products and also check for alternatives. Comparing your suppliers and their samples based on quality criteria will help you determine the best supplier to source your products from. After you choose your supplier, you can place your order. 

Product Procurement for Your Alibaba Dropshipping Business

Even though Alibaba often allows large B2B purchases, it is still feasible to discover extremely lucrative dropshipping agreements on the platform. Before making a purchase order, be aware to confirm the legitimacy and reliability of any Alibaba dropshipping vendors you find. Additionally, look for a different source if something doesn’t feel right.

Advantages and Disadvantages of Using Alibaba

Advantages:

  • The manufacturing cost is low
  • Generally, the suppliers are open to working with small businesses and manufacturing smaller quantities
  • There are more suppliers to choose from
  • Most products sold on Alibaba are unique and are only made in Asia

Disadvantages:

  • Lower quality and unsafe products can be sold
  • The labour standards are minimal
  • There are many manufacturing issues
  • It has almost zero intellectual property protection
  • At times, there are many communication and language barrier issues due to the location of the supplier
  • It is almost impossible to schedule site visits to the supplier’s place
  • The shipping time is more than the usual
  • Tedious imports and customs clearance
  • Low security of payment and recourse

Is Alibaba a Safe Platform for Your Business?

Purchasing in mass quantities from an unknown source can be a new experience. But buying wholesale items through Alibaba, which is known to host reputable and safe sources for your dropshipping niche, can also be profitable. It may be a secure and successful business plan for your online store with a little basic understanding and standard precautions. Always do your research and be prepared to walk away if a bargain seems unreliable. With just a few clicks, you can find out about a hundred other vendors.

Differences Between AliExpress and Alibaba

The table below highlights the difference between AliExpress and Alibaba.

AliExpressAlibaba
It is suited for all types of customersIt’s most suited for business-to-business transactions.
Dropshipping services are available for sale at retail prices to anyone.It offers dropshipping services to both large and small businesses for bulk purchases.
Products for sale are mostly pre-made, and hence, customisations might not be an option.Products for sale are generally made as per the order, and hence, you can customise your products.
Sellers offer ePacket shipping, and hence, they deliver higher-quality products.There is less possibility of the quality of products being verified.
It ensures quick deliveries to customers.Shipment deliveries are slow-paced and might be a little unreliable.

Conclusion

Alibaba, the global online marketplace, has opened up a number of opportunities for entrepreneurs, big and small, by introducing a dropshipping model. From understanding the basics to discovering the hottest products, Alibaba has proven to be a dynamic platform that can catapult your eCommerce business to new heights. Remember, success in dropshipping doesn’t happen overnight. The key to success is not just about the products you choose but also about building strong relationships with suppliers, providing excellent customer service, and staying updated with market trends.

Can I use Alibaba for dropshipping?

Yes, you can use Alibaba for dropshipping. You get lower-priced products, almost no commission on sales, personalised labelling and designs, and direct interactions with manufacturers and suppliers on Alibaba.

How can I find a reliable supplier for Alibaba dropshipping?

To ensure the supplier is reliable, you must look for an Alibaba-verified supplier with a proven track record. You should also check and ensure that they provide competitive prices and reliable shipping options.

How can I safely source products on Alibaba?

To safely source products on Alibaba, you must thoroughly research suppliers, compare prices, request product samples to analyse the quality, communicate with potential suppliers, secure the payment method, and use their Trade Assurance service.

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