Dropshipping is an attractive option for anyone looking to build an affordable and scalable ecommerce business without making any investments towards the storage or shipping of products.
It is a popular business model in the eCommerce industry which offers a convenient retail fulfillment method. As an eCommerce merchant, it doesn’t need you to maintain an inventory of the products or handle them.
Instead, you need to only maintain an online e-commerce store and market it well to get noticed by the target customers. Once you make a sale, you can simply pass on the order to a supplier to manufacture and ship the product to the final customer.
But here’s a catch -- without the right supplier, it is difficult for your dropshipping business to sustain itself, and it is incredibly challenging to find a reliable one.
Over the years, AliExpress has emerged as a popular supplier for several business owners from the United States, Canada, India, Australia, and Malaysia.
This blog post tells you everything you need to know about whether AliExpress dropshipping is worth your time in 2021.
Why choose dropshipping over direct retailing?
There are several success stories of new entrepreneurs making a killing through dropshipping and building profitable businesses. So before getting into the nitty-gritty, let’s understand why dropshipping strikes a chord with thousands of people across the world.
While dropshipping is definitely not a get-rich-quick scheme, with the right strategies, you can certainly use it to earn decent returns and write your own success story. Here's why dropshipping looks attractive:
- Unlike most other ventures, you don’t even need to make a lot of investment towards dropshipping or worry about high overhead costs.
- You get a turnkey eCommerce store without the headache of sourcing the right products.
- eCommerce shops that use dropshipping profit 15 to 50 percent more than those solely relying on onsite inventory.
- Cataloging and photographing the products is off your to-do list. Most suppliers take care of this, giving you ample time to focus on the other needs of your business.
- As you don’t need to purchase a single product in bulk, you get the opportunity to experiment with different products to find out what clicks with the target market without worrying about leftover stock in a warehouse.
- Once you know what works, you can get the dropshipping supplier involved to handle the manufacturing, storing, and shipping of the product. It offers a lot of flexibility as you can decide your own pace of growth and make your business work from any part of the world.
Besides, venturing into dropshipping in 2021 seems even more lucrative because:
- There is an increased reliance on eCommerce due to pandemic -- 16.1% of the retail sales made across the world in 2020 was from the eCommerce retail industry.
- 2020 recorded a 7 percent year-on-year increase in the last 10 years, with the profits from dropshipping and eCommerce going over USD 4 billion.
- Dropshipping offers a convenient shopping experience on the go. Both the seller and the buyer can seamlessly carry out the transaction without stepping outside the comfort of their home.
- Online payment methods work perfectly for dropshipping -- you can sign up with an online payment gateway such as PayPal to receive the payments from your customers.
- Given the steep demand for contactless payments right now, chances are that your target audience will be keener on relying on dropshipping to hunt for certain products instead of the traditional modes.
- Pandemic has shrunk the economy and made the small business owners extremely cautious about the next steps or trying something new. As the start-up costs of dropshipping are almost negligible, more digital entrepreneurs are keen to try out instead of other avenues that need significant capital commitment.
What is AliExpress?
AliExpress is an online-only B2C marketplace and functions as the retail arm of the Chinese giant Alibaba Group. It branched out from Alibaba.com and came into existence in 2010.
However, unlike Alibaba, which caters to the B2B market, AliExpress is a digital store that customers can access directly, browse through a wide range of products, right from apparel to electronics, and place orders.
How does dropshipping with AliExpress work?
As an eCommerce business owner, you can also use AliExpress for dropshipping products across the world. Simply browse through the website and choose the products you’d like to sell. You can also set your sale price and decide the markup without creating any inventory.
Once a customer purchases a product from your store, you need to pay the wholesale cost of the product and send the order across to the AliExpress supplier.
The supplier will source the product from their warehouse and ship it to the customer directly. To use AliExpress dropshipping, you will need an AliExpress account.
Your account will give you access to the AliExpress Dropshipper Center, which functions as the gateway for all your dropshipping needs. You can use the portal to find the products, import them to your online store, get updates about the orders, and track the deliveries -- all in real-time.
Before you begin, make sure to set up an online store on a platform such as Shopify or Magento. You can use a dropshipping app to import the products from AliExpress Marketplace to your store directly.
Pros and Cons of Using AliExpress for Dropshipping
While building a lucrative dropshipping business is certainly attractive, is AliExpress the best bet for all? Let’s weigh in on the advantages and shortcomings of using AliExpress for dropshipping:
Pros of AliExpress
- No upfront fees: You can start dropshipping through AliExpress without making any financial investment. This gives you an excellent opportunity to test out various products before you decide on your niche.
- Locating the trending products is a breeze: Say goodbye to being at your wit’s end about which products you should import to your online store. AliExpress Dropshipping Center offers various powerful tools such as the Product Search and Product Analysis tools that make the entire process incredibly easy.
The Product Search tool allows you to search the hot selling products, sponsored products, and even products through their images. The Product Analysis tool helps you to check the sales volume of the product to gauge the buyer’s behavior.
You can also use it for checking the reliability of the logistic support offered by a supplier so that you only work with the right people in the business.
- The leg work is already done: Adding the right images and product descriptions is an important part of running an eCommerce business. These tools help to make your products more visible and lure the customer.
Since the sellers on AliExpress already upload the images and the description, you can use them right away.
You always have the option to change the existing description to market the product better and make more sales.
- Retailers are actually suppliers: A vast majority of the retailers on AliExpress are actually suppliers. As a result, they understand how dropshipping works and are more open to adapting to your requirements.
- Cost is extremely competitive: Low taxes and duties, strong economic landscape, and cheaper labor make China the world’s factory. So chances are that you will find it extremely difficult to find prices lower than those offered on AliExpress.
As a player in the dropshipping industry, this can work to your advantage. Thanks to the lower base prices, you can fix a higher profit margin.
Cons of AliExpress
- Very little control over the process: As dropshipping is dependant on a third-party supplier, there is very little that you can do about the delivery process. You also don’t get to assure your customers about the product quality as each product is manufactured and shipped by the supplier.
You will need to ensure that you work with the right suppliers on AliExpress so that you don’t disappoint the customers.
- Returns/refund process can be complicated: A clear return and refund policy is the best way to bag loyal customers. While most suppliers offer refunds for defective items, the return shipping is not borne by them.
In some cases, it may cost you an arm and a leg to ship the product back to the supplier.
Moreover, suppose a customer doesn’t like a product and demands a refund. In that case, you won’t be able to get the money back from the AliExpress supplier as the marketplace clearly specifies that disliking a product is not a valid reason for returning products.
- Profit can be low for certain products: The success of AliExpress dropshipping also depends on the type of products you are selling. The profit margins will be higher for a less competitive niche with a high search volume than a saturated niche.
Simply selling the products that are selling like hotcakes right now is not the ideal strategy. Instead, you will need to pick a niche and keep experimenting to earn steady returns.
- Long delivery time: The suppliers on AliExpress are based out of China. On average, it takes anywhere between 3 to 8 weeks for the product to get delivered. Sometimes, it can even take two months!
Avoid these mistake to make the most out of dropshipping on AliExpress
Running a dropshipping business on AliExpress may seem like a no-brainer, but it isn’t.
There are plenty of mistakes that first-time drop shippers make, resulting in an unpleasant experience and slow growth. If you are keen to reap the benefits fully, here are the common mistakes you should avoid:
- Not offering new products: You can’t hold on to the customers for long by only offering the best-selling products. Keep checking ‘new arrivals’ on AliExpress and select the products your customers may be interested in.
Your goal should be to offer a large variety. Weed out the unpopular items periodically so that your storefront always features successful products and has a shot at better sales.
However, don’t get swayed into becoming yet another generic store in the digital marketplace. Even if you cannot narrow it down to a niche, try to keep your offerings specialized.
- Not thinking about branding: Even though a third party will make the actual shipment and delivery, there’s no reason to let the customer forget about your identity. Instead, walk the extra mile to make your brand visible.
Branding allows you to stand out from the competition and make a solid impression on your customers. For example, an eCommerce website that features many random products without a compelling copy will not grab any eyeballs.
You need to ensure that your branding efforts resonate with the target audience. The USP of your store should be clearly visible on your website and make your customers go WOW.
The post-sale customer journey is also vital for boosting your branding efforts. It’s a good idea to send a customer survey form after the order is delivered. It will help you to identify the potential areas of improvement.
You can also send a thank you email to the customers to show your appreciation about how much their business means to you.
- Getting too caught up with low prices: Low prices are no guarantee of quality. Regardless of how attractive the rates are, a customer expects quality. Sending substandard products their way is a surefire way to kill your business.
For example, you come across supplier A on a marketplace that sells high-quality pure satin robes priced at USD 50.
You also spot supplier B on AliExpress, who manufactures the same robes but offers them at USD 25 by using polyester satin instead of pure satin.
As a drop shipper merchant, you are likely to go with supplier B as it offers you a better profit margin. But the quality of the satin robe from supplier B will never be able to match what supplier A offers.
As a result, a customer who purchases a robe from you and places another order with a different drop shipper who works with supplier A is less likely to return to you for business, even though your rates may seem more competitive.
- Not doing enough diligence about the suppliers: Suppliers on AliExpress are the most critical element of your dropshipping business. Choosing the wrong one can be disastrous.
Be careful about who you get onboard. First, go through the ratings and feedback of the suppliers to see what other merchants have to say. As a rule of thumb, the highest-rated suppliers are your best bet.
So always choose sellers with 90% or more positive feedback.
Once you have a shortlist of suppliers, engage with them to check their responsiveness. Delayed or vague responses are a huge red flag, and you should absolutely steer clear of such suppliers.
- Refusing to automate the business: While selecting the suppliers for your store cannot be automated, several other tasks can be. For example, automation, cataloging, tools can help you research the right products on AliExpress, boost your marketing initiatives, assist in sending retargeting ads, etc.
Automating the business can be especially beneficial when you start dropshipping on AliExpress as a side hustle and want to earn a passive income. It will give you more time to pursue your full-time job.
- Forgetting to opt for premium shipping: The AliExpress premium shipping method uses ePacket shipping, which is the fastest and more affordable way to ship the products to the customers.
Usually, the orders get delivered within 30 days, and customers also get a code to track their shipment. The biggest advantage of ePacket is that it returns undelivered shipments for free.
This means that as a merchant, you can refund customers if they don’t receive the parcel.
- You don’t want to invest enough time: Every successful business needs commitment. Unless you are willing to invest at least a couple of hours every day, you may find it difficult to scale your AliExpress dropshipping business.
Once you set up the website, spend a sizeable chunk of your time towards SEO, marketing, and traffic generation initiatives. You also need to be attentive to your customers and resolve their queries without any delay.
Is AliExpress dropshipping worth a shot in 2021?
Dropshipping on AliExpress is a profitable business only if you are willing to work towards making it one.
If you are serious about dropshipping on AliExpress, start your journey with a long-term outlook. Be ready to face challenges and don’t expect to be an overnight success.
Don’t hesitate to experiment with various online advertising formats to market your store successfully. While there is no silver bullet that can guarantee success, implementing the correct strategies can make the experience worth it.
Above all, the most crucial strategy is to continuously test different products and analyze the data.
Remember that AliExpress also serves as the perfect platform to learn about the hot markets -- this means that you can pivot and launch other businesses in these markets.
To conclude, dropshipping on AliExpress is still a lucrative option. It may not be as easy as one would expect it to be, but it is certainly not impossible.