Updated: Mar 10, 2021
Needless to say, e-commerce is thriving in today's Covid era. While drop shipping isn’t a new trend in online B2B and B2C categories, it is certainly a growing way to achieve passive income. In fact, more new businesses are opting for the drop shipping model than traditional e-commerce. This post will show you how to get into the drop shipping business and make money using an even better dropshipper than Amazon. That would be Aliexpress.
What is Drop Shipping Anyway?
Typically with online businesses in which you sell products through a website, the owner owns the inventory. However, with drop shipping, the owner of the business doesn't necessarily need to hold or even own any inventory. They can simply just be an intermediary between the customer purchasing the product and the manufacturer/ supplier creating the product. In other words, you can sell any item on this planet and never actually hold the item.
Drop shipping doesn’t eliminate your business risks. It only reduces them. You’ll still perform all business activities including marketing, procurement, supplies, and customer services as you do with the conventional business model.
How Aliexpress Dropshipping Works?
AliExpress is one of the world’s leading online marketplaces with millions of global users and products. The majority of the manufacturers for Aliexpress are from China and the Asian Pacific region. They offer a dedicated drop shipping business model that even helps business owners starting from scratch.
Whether you also have a dedicated website or not, you can set up an online store on the Aliexpress platform. Choose products of your business niche from millions of listed products on Aliexpress. You do have the option of holding the inventory or selling the products through the drop shipping model. In the drop shipping model, once your customer orders a product from your store, you’ll process the order through the selected supplier. Aliexpress gets the item shipped to the buyer directly.
Why Choose Drop Shipping, if Customers Can Buy Directly?
E-commerce platforms like Amazon and Aliexpress offer millions of products with hundreds and thousands of suppliers. Your job is to handpick the right products from the right suppliers and of course present it to the right customers. If your store is trusted, it's in this presentation that you are telegraphing the product's legitimacy.
Online buyers these days face an overwhelming experience of heavily marketed products. Your Dropshipping business model’s success will mainly depend on choosing the right product for your buyers- saving them time and money.
Why Choose AliExpress over Amazon?
Amazon also offers the same drop shipping model to you, the Amazon FBA program. In the past, I sold DVDs through Amazon's FBA with great success. In the US, more than 56% of online buyers opt for Amazon. There are more than 2.5 million sellers on Amazon. The most widely sold items are from electronics and fashion brands. However, what if I told you AliExpress in many ways was better. Not just for business owners, but for buyers too.
First off, these stats mean the competition on Amazon is fierce. It’s already becoming harder to find a profitable business niche with Amazon, considering the abundance of established sellers.
Products are cheaper on AliExpress
Compared to Amazon, AliExpress's suppliers are almost entirely in China. Cheaper raw materials and lower labor costs have meant Chinese products are more affordable than ever. That’s how Chinese manufacturers have won the market share around the world, with cheaper products for the same quality (mostly).
The bulk production for a large consumer market makes the prices competitive for most of the Chinese and Asia pacific manufacturers. Aliexpress’ drop shipping model also caters to the fact that the middleman business owners have to keep a margin.
Is Long Shipping Time A Concern?
Yes, long shipping times will affect your delivery time. One of Amazon’s edge over competitors is fast delivery.
This is where your entrepreneurial skills come into play. There are ways to turn this weakness into your business strength. Consider the following few options:
- Use the faster shipping options like e-packet if possible.
- Offer Free shipping to your customers (e-packet service offers that option).
- Build on supplier relations to process the shipping faster.
- Partner with local warehousing companies if you can afford to store frequently sold products. Start with small, low priced items first, they offer higher profits on percentage terms.
Finally, do not make false promises. It’s better to clearly mention the expected product delivery time than losing a customer forever. You can clearly define your shipping process and offer free shipping and product discounts to compensate for that.
Is Drop Shipping A Risky Business Model?
Every business poses similar risks. Drop shipping is no different. While e-commerce stores offer wider customer reach and flexibility, it can also have more points of failures than a traditional brick and mortar business. Here's some of the risks you should consider:
- Competition will always be a problem no matter which model you choose.
- Finding reliable supplier partners with good quality products is challenging
- Shipping costs, product processing and delivery times make it harder to stay competitive with local businesses
- Product returns and after-sale services are challenging with the drop shipping business model
- Warranty claims and product returns often cost more than small product prices
The drop shipping model of Aliexpress offers greater flexibility and lower startup costs than other e-commerce businesses. Your product differentiation with a carefully selected business niche is your best bet to succeed. The risks of long shipping time from China can be mitigated by offering free shipping and product discounts.