preparing my items for drop-shipment

Advantages and disadvantages of drop-shipping (e.g. Aliexpress)

AliExpress.com is one of the most used marketplaces in the world. This will be your new favorite channel for B2C and ordering small quantities from suppliers in China. AliExpress.com is part of Alibaba.com, which is also the biggest B2B (business to business) company. They have more than 20 product categories, which include electronics, cell phones, automotive accessories, clothing, jewelry, and other items.

I recommend this option ONLY if you have small order quantities and want to test the water.

Bear in mind that these items are usually stock from the supplier that they sell on Alibaba’s marketplace (Aliexpress). Be careful, as many of those items are returned goods from the manufacturer’s other customers, faulty items, or over- produced items from another customer’s order. In the last case it can easily be an order from some trading company in Thailand and the instruction manual as well as the packaging could be in Thai.

Be sure to check all these details before you place an order to a manufacturer.

In most cases the companies offering the products on Aliexpress are trading companies that buy stock from the manufacturer and sell online.

The prices can be 30-70% more than if you mass produce with the manufacturer. But again it’s a great option if you want to order 5-10 pieces of an item to test the waters.

Here is a rough overview of Aliexpress:

A) Quality of products

You have no way of knowing. Again, these are items that the supplier has in stock. You don’t know what’s inside and you can’t inspect the goods. On a bulk order with a factory you would always install an inspection measurement before shipment. With Aliexpress you have no way of knowing what you are actually getting. If you buy from Aliexpress make sure you use a seller with great reviews and lots of sales. Ask him to send pictures of the product taken out of the gift box, the gift box itself, and the instruction manual that comes with it.

B) Payment Options 

AliExpress.com offers a safe and secure payment option through escrow. Both the buyer and the seller are protected. AliPay (also an Alibaba company)

holds the escrow payment. The payment is released to the seller once the transaction is completed. Should there be any disputes or problems, the third party (AliPay in this case) will negotiate between the two parties.

AliPay acts completely neutral and does not favor either party, so you can be sure it is a fair negotiation.

One more benefit of using escrow as payment is you do not have to divulge your credit card number, and in the event that you are not satisfied with the delivered items, you can negotiation the price.

This escrow service is initiated via credit card, Western Union, bank transfer or through other online payment processors. Some suppliers differ from each other on that.

C) Shipment methods

AliExpress.com provides free shipping worldwide. They joined hands with the China Post Mail to provide free shipping worldwide to accommodate smaller orders, especially electronic items. AliExpress.com launched Fulfillment by AliExpress, which is designed to accommodate medium orders so that they can have free shipment like bulk orders. This will allow importers at least 30% savings on the shipping costs. However, shipment can be as long as 30-60 days in some cases and there will be no tracking number provided. Shipments could get lost.

AliExpress.com supports DHL, FedEx, TNT, and EMS with the UPS as the most preferred means of shipping goods. These methods deliver product from 2 days up to 7 days, which is good enough considering that we are talking about worldwide deliveries. I recommend using these carriers as there will be tracking, customs help, and obviously you receive goods much faster. Usually the prices for these carriers through AliExpress are quite competitive.

D) Are the prices competitive?

Prices are in general more competitive than if you would buy from your local importer/wholesaler or even online store. The general rule is that the prices are around 30% more than the actual manufacturer’s cost. Again, if you have small orders this should still be a good price to add your margin.

E) Example on drop-shipping

There are a lot of drop-shippers from the US on Ebay/Amazon that operate under the same principle as Aliexpress. They usually cooperate with a factory in China (e.g., Shenzhen) and buy their over-stock or have the manufacturer produce a certain quantity of a specific product. The factory does the fulfillment while the EbayEbay/Amazon seller does the marketing and sales part.

An Acquaintance of mine, who owns an affiliate marketing website (http://www.cheapcheapcheap.com/) pointed me to a good example and asked me how is it possible that this seller can sell so cheap: http://www.ebay.com/itm/201253495057

This seller buys from a factory in Shenzhen and the factory has the fulfillment done.

I know for a fact that this item can be bought in bulk quantity for 0.3USD. So they both make a nice profit. And, the Ebay selling price is still very cheap.

Now how can he sell this cheap and include free shipping?
Many fulfillment centers in China have an amazing deal on logistics with CHINA POST.

Some large fulfillment centers in China ship up to 20,000 pieces of goods a day. Now obviously you will get a great deal for shipping costs with CHINA POST as a fulfillment center. The downside? You as a customer might have to wait for 30-40 days to get your item. Also, there is no tracking or tracing with China Post, so if your parcel gets lost it’s gone for good. Many times there will also be customs issues and you may have to pay taxes and duties.

For an item costing only 3USD you can certainly invest 3USD, knowing that your item might get lost.

If you order larger quantities via drop shipping make sure you use a well- known carrier such as DHL/FedEx, etc. You can track and trace the parcel and they will handle customs issues for you too. Money well spent.

Aliexpress Conclusion

A great way to order goods online for small quantities. A few issues here and there that can be solved with the supplier. Quick and easy for starting and testing the waters with the product. The downsides are that you have no way of knowing the quality of the product and that the shipment could get lost (if you use free shipping). Use DHL/FedEx or other big couriers to make sure that your items actually arrive and customs won’t hold them up.

 

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