How to set up your Alibaba dropshipping business
Wondering about dropshipping as a new side hustle? Here's how to set up your own dropshipping business on Alibaba.
Wondering about dropshipping as a new side hustle? Here's how to set up your own dropshipping business on Alibaba.
Alibaba is by far the world’s largest ecommerce marketplace by gross merchandise value (GMV)1. That makes it a great place to find import products from abroad – specifically China – if you run an ecommerce business.
But can you dropship from Alibaba? In a word, yes. However, the company mostly operates as a B2B (business-to-business) marketplace. Alibaba suppliers are generally set up to sell goods in large quantities, and a majority are often unable or unwilling to ship individual items to buyers abroad. This tends to suit wholesalers more than dropshippers.
However, some entrepreneurs on Alibaba require a minimum of one piece per order, which opens the door for dropshipping. That, combined with the low shipping costs that China is known for2, makes Alibaba dropshipping a viable option for any online store. You can get your hands on unique products that may set you apart from your competition.
Generally, Alibaba dropshipping starts with you searching for a supplier who sells the product(s) you need. Once you find one, you can proceed to contact them and ask about dropshipping. You’ll also want to know whether they have minimum order requirements.
If you’re on the same page with the supplier, discuss the preferred method of payment, and then place your order. Below is a detailed, step-by-step process for dropshipping on Alibaba.
The first thing to do as a dropshipper is head to Alibaba and find the products you want to sell. Although it’s home to tons of factories, manufacturers and suppliers, Alibaba has a great search function - complete with product categories - that can help you find the products you need. If you know how to use popular marketplaces like Amazon, then you’ll certainly find your way around Alibaba.
After searching for the products that you want, use the left sidebar to refine the search and find the most suitable suppliers.
It’s always a good idea to work with verified entrepreneurs as well as those with Trade Assurance (more on this in later sections). These add an extra layer of protection on your order, ensuring that you can pay securely and that the product meets the quality standards you expect and will be shipped on time.
“Ready to Ship” and “≤ 1h response time” are also good options to select because suppliers who follow these criteria are more likely than not to support dropshipping on Alibaba.
You also have the option to choose products that are available specifically for dropshippers. On Alibaba’s home page, scroll down to the “Dropshipping” section and click on it.
This will take you to a page where you can search for dropshipping products.
Once you’ve run your search and found products that you are interested in, read their details along with the packaging and delivery info. Take note of the price per unit and the minimum order quantity (MOQ).
These will tell you whether dropshipping the product makes economic sense and is viable to your business model. You don’t want a per-unit cost that will price you out of the market when you factor in your profit margin. Oftentimes the price per unit will drop considerably as you increase quantity. But keep in mind that a good number of sellers don’t include shipping costs, which they list as “To Be Negotiated”.
As far as minimum order quantity (MOQ), many Chinese suppliers who support Alibaba dropshipping allow buyers to purchase one unit at a time. This is a great option if you don’t have a physical shop or warehouse to store bulk products. The downside is that when you buy one item at a time, you’re usually spending more on each unit compared to bulk buying.
You need more than a few suppliers on your list because not every Alibaba seller that you reach out to will work out. Some may be out of stock and others might not have the best payment terms for you. You may even find yourself ruling out sellers because they don’t meet your verification criteria. Therefore, create a list with 5 to 10 suppliers. If you have enough time, you can go all the way to 20+.
With a decent list, you’ll find at least one supplier who meets most, if not all, your requirements and is willing to work with you in dropshipping on Alibaba. Such a supplier should stock the exact product you’re looking for, offer a minimum order quantity of 1, have reasonably-priced products, offer Alibaba Trade Assurance, be verified and have good buyer reviews.
An easy way to contact suppliers about Alibaba dropshipping is through the platform’s built-in messaging service. But you do have other options like email, call and WeChat – all of which are usually available on the supplier’s profile. The primary purpose of reaching out is to know whether your potential suppliers have the products in stock and if they are open to dropshipping in the country you plan to sell.
When contacting suppliers about dropshipping on Alibaba, make sure to keep your message concise. Many sellers on the platform are based in China and English is not their first language. A good number will use tools like Google Translate to interpret your messages from English to Chinese (specifically Mandarin or other local dialects).
To avoid misunderstandings, try keeping away from spelling errors, stick to simple words, and use short sentences – preferably in bullet points. This will help your selected suppliers respond to each of your questions one by one. Some of the key questions to ask Alibaba dropshipping suppliers are:
Answers to such questions will give you a clear picture of what you’re getting into. For example, the supplier might need over two weeks to process and ship your products, yet you need them within a week. Perhaps they only accept PayPal (which also operates as GoPay), yet you want to use your credit card.
It’s also noteworthy that depending on your location, you may be on a different time zone with your potential suppliers. For instance, New York is 13 hours behind China. This means the suppliers may not be able to respond to your messages promptly.
By this point, you should have a few potential suppliers that you’ve thoroughly vetted and are looking to partner with. While they’ll all have listed prices for the product, you can negotiate for lower payment terms. These negotiations are typically done via email, but phone call is an option too if you or the supplier have a common language.
Compare the prices listed by other suppliers for similar products. This will give you an idea of the best price per unit of the goods you’re buying. Besides, you’ll want to take your desired profit margin into account when negotiating prices on Alibaba. If the seller agrees to lower the price, make sure the reduction is enough for your dropshipping store to earn the targeted profit margin.
This is optional, but it’s an option that you want to take. After honing in on one or two suppliers for your Alibaba dropshipping business, consider asking them for a sample of the product. The sample will allow you to test the product for quality. That’s something you need to know beforehand; before you introduce the product to your consumers. Otherwise, compromised quality can create a negative rep around your dropshipping store and ruin sales.
Some Alibaba suppliers provide free samples based on the promise of you placing a large order of the product. Others charge a fee because of the amount of work required to prep and ship the sample. Again, this is something you can negotiate.
Some things to check when examining an Alibaba product sample include:
So, while you may have to pay for a sample before dropshipping on Alibaba, it’s generally a worthy expense. It can help you avoid the mess that comes with second-rate products and disgruntled customers.
Ideally, you want to go with Alibaba entrepreneurs who accept your preferred method of payment. Generally speaking, dropshippers on the platform have four main payment options: bank transfer, Alibaba Trade Assurance, card payment, and online payment.
Ultimately, the best payment method for you is one that you can agree on with the supplier.
Once you chose, vetted and negotiated with your supplier, you can go ahead and place your order. As long as the sample product turned out okay, you can connect your ecommerce storefront and immediately start selling that product. You can either host the storefront on your own website or through a third-party like BigCommerce, Shopify or Wix. In case you set up your online store with WordPress, then a plugin like WooCommerce will help a great deal. In any case, the supplier will start order fulfillment as soon as you connect the storefront.
You can automate some tasks like submitting orders and payments using Alibaba’s Dropshipping Center. Further, the platform allows you to partner with dropshipping firms like Spocket, Dropified and Modalyst, which can customize data for you and even publish product details on your storefront. It’s always a good idea to link your account with these partners and automate as many dropshipping processes as possible. Doing so saves you a lot of time, which you can then dedicate to growing your ecommerce business.
For many dropshippers, some clarity on a few questions can help in the process of choosing a supplier.
Is it okay to buy from Alibaba? The truth is, Alibaba is a safe marketplace with good and honest suppliers. However, like any other ecommerce platform, it’s not short of a few unscrupulous individuals. You will need to do lots of due diligence when choosing a dropshipping supplier on Alibaba. Here’s how to go about it:
Alibaba’s Trade Assurance is a buyer protection service that ensures four main things:
If a supplier’s products don’t meet the quality standards agreed upon, or if the order fulfillment date is later than promised, then Alibaba takes responsibility of resolving the matter. This may involve returns and refunds if deemed necessary.
When you are part of Alibaba’s Trade Assurance, you also get up to 30 days of customer support after your product is delivered. Alibaba offers mediation assistance in case of any disputes between you and the supplier. You also get reimbursement for all eligible claims.
One good thing about Alibaba Trade Assurance is that dropshippers don’t need to pay additional fees to enjoy protection. However, there are specific requirements that you must meet to be eligible for Trade Assurance coverage:
As is the case with all other online marketplaces, Alibaba dropshipping has its advantages and disadvantages. Here’s a look at the good side of Alibaba as well as the things to be mindful of:
When it comes to dropshipping, AliExpress just edges out Alibaba. While both are owned by the Alibaba Group, Alibaba.com is more of a B2B platform. As such, Alibaba is more suitable for ecommerce businesses that are looking to purchase products in bulk directly from manufacturers. This makes Alibaba better for wholesalers who want to take advantage of quantity discounts and lower purchase prices, thus increasing their profit margins.
On the other hand, AliExpress is a business-to-consumer (B2C) platform, which makes it better for dropshipping compared to Alibaba. In fact, AliExpress has Alidropship - a service meant specifically for dropshipping stores. You can make low volume orders directly from suppliers and enjoy ePacket shipping, which expedites delivery times from Hong Kong and China to any location of your choice. This low MOQ and fast delivery can be beneficial for your business, especially if it’s a startup with little capital.
The downside of AliExpress is that prices are non-negotiable. So, whatever price you see on a product page is what you have to pay. And of course, if neither Alibaba nor AliExpress dropshipping works for you, you can always turn to eBay, Amazon and other popular ecommerce and online marketplaces.