Dropshipping has become a hot topic in the past decade among eCommerce entrepreneurs. This is clearly shown by how much the dropshipping market was accounted for in 2019. In 2019 it was valued at $162.44 billion and was projected to have a steady growth over the years. The projected compound annual growth rate of the dropshipping market is at 18.3%. Whit this growth rate, it can achieve a value of $591.77 billion by 2027.
This business model helped many first-time entrepreneurs to enter the online marketplace. The reason for this is that starting a dropshipping business requires a relatively low initial investment. Together with not holding stock, these impose low risk for the person operating the store which is a huge advantage. Also using dropshipping you can focus solely on marketing the aspects of a sale of your business. Your supplier will handle your inventory and the fulfillment process. So, this allows you time to learn and excel in sales and marketing first.
Our dropshipping articles helped the growth of numerous dropshipping businesses. Subscribe to receive our latest tips and skyrocket your sales!
The importance of choosing the right supplier
Choosing the right supplier for your dropshipping store is the first step towards success. This will not only determine the quality of your products but also the shipping time, packaging, and return policy. When dropshipping, you do not own the product nor the supply chain. Although these two have a major impact on your reputation. If you are a dropshipper, your reputation is everything because you are the one handling sales and customer service. You can excel in marketing and sales but if you have a bad reputation it will not serve your goal of selling.
For this reason, it is one of the most important things that you find the supplier that best matches your business and your expectations. You can either choose to partner with a dropshipping supplier or try dropshipping on AliExpress. This article will sum up the pros and cons of both options. So you will be able to make a more informed decision. But first, let’s have an overview of both options.
Dropshipping companies usually offer you a partnership for a monthly payment. These companies will link you to the best-in-class manufacturers that you can source your products from and resell them to your customers. Most companies do not impose minimum order quantities when it comes to dropshipping and provide both quality and authenticity guarantees where applicable. You can choose a company that has a warehouse in your region, this way you can eliminate tax and import duties for your customers. Alternatively, you can check out our dropshipping supplier guides on our website. We have one for each region, such as Europe, USA, Canada, South Africa, Australia and so on.
BrandsGateway is an example of a dropshipping supplier that provides high-quality branded clothing for online stores.
AliExpress was founded in 2010 in China by the Alibaba Group. This marketplace offers the products of small businesses across China to international buyers. This platform offers millions of products across multiple categories such as clothing, toys, electronics, homeware, and many more. Benefiting from the low-cost labor in China, AliExpress is able to offer the products at low prices and with solid margin potential. This might sound appealing, but dropshipping from China is not all sunshine and rainbows.
Dropshipping on AliExpress vs. with a dropshipping supplier
Now let’s dive into the characteristics of each option. Also, we will discuss the pros and cons of choosing a dropshipping supplier or dropshipping on AliExpress. We have collected all the most important aspects you need to consider before you commit.
Competition on the market
Dropshipping is not a new business concept anymore as it was a decade ago. There are thousands of dropshippers out there regardless of the niche you choose. This is understandable because of the low barriers of entering the business, such as the low investment and risk we discussed earlier. Many of your competitors will use the option of dropshipping on AliExpress. This is due to the competitive cost of goods on the marketplace. This will impose price pressure for the whole market, including you. If your strongest selling point is the price of your products, you are not likely to succeed in this competitive environment. But if you use a dropshipping supplier, you can have several other advantages compared to your competition.
Monthly fee packages
One of the things that many consider an advantage when dropshipping on AliExpress is that there are no monthly fees you need to pay as a dropshipper. This minimizes the initial investment needed to start your store and can help you in testing out several products and suppliers without committing to them. However, ultimately, this results in not receiving any additional benefits and support that you can otherwise get from a professional dropshipping supplier.
Speaking of, most dropshipping suppliers will require you to pay a certain monthly fee for the partnership. It is an industry-standard and it is what makes their services high-quality. By paying a monthly fee to a dropshipping supplier you can receive benefits that usually AliExpress can not provide you. This can range from around-the-clock customer service to help with your webshop and marketing strategy.
Level of control
When you are working with a dropshipping supplier you are always in full control over how things are being done. These suppliers are very transparent regarding their fulfillment process, product availability, and shipping times. This way you can always feel that you are in the driver’s seat and be prepared with answers for all claims from your customers.
In the case of dropshipping on AliExpress, you have low or no transparency at all. Your Chinese supplier will have entire control over the fulfillment process and the products shipped. This can put you in a very vulnerable position because if something goes wrong, your customers will blame only you. For this reason, if you decide to dropship on AliExpress, you need to do careful research about your supplier. The best way is to look at the ordered quantities of each product and to read both the product and supplier reviews. Although these are good indicators of what you can expect they can never give you a guarantee.
When dropshipping on AliExpress, you always have to consider the quality of the products you are reselling to your customers. On AliExpress you might benefit from the cheapest product prices, but what about quality? Unfortunately, cheap price is not the only thing customers are after, they also expect to get good quality products as well. Due to its size and number of suppliers on the platform, you can find cheap but low-quality products. Additionally, you can also run into something that is even worse, expensive but low-quality products. Again, you have to look extensively for product and supplier reviews. Alternatively, you would have to test your products before you offer them to your customers which is time-consuming. For this reason, AliExpress is considered risky for those who want to sell high-quality products, first-timers, and those who lack experience in sourcing from China.
On the other hand, when you are partnering with a dropshipping supplier, you won’t need to have such worries. When you are selling high ticket items, most dropshipping suppliers offer a quality guarantee with their products. Moreover, you can source authentic branded items from them too, that you can not find on AliExpress at all. This way you can be ensured, even without seeing the merchandise you are selling, that they will be of good quality and in line with the expectations of your customers.
Shipping and delivery times
When dropshipping on AliExpress, your products will be shipped all the way from China across the world. This results in lengthy shipping times that can vary from a couple of weeks to up to even two months. Moreover, this way you will not be able to track and trace your packages properly that can result in lost packages and, ultimately, customer dissatisfaction.
Alternatively, some suppliers offer faster shipping using FedEx or DHL but these options will be considerably more expensive. Occasionally even more expensive than the product itself. For this reason, you will have to clearly communicate the shipping times and methods to your customers. Of course, the associated cost needs to be displayed as well. Most people are not willing to or less likely to pay the shipping cost when shopping online so this could be a major drawback. If you decide to offer free shipping on your products and choose a more expensive and quicker delivery method for higher customer satisfaction, it can potentially hurt your profit margin.
Lengthy delivery time is not something that you have to be worried about when working with a dropshipping supplier. First of all, most suppliers have various warehouses across the world. As a result, you will not only have a shorter shipping time but also cheaper fees as well. Dropshipping suppliers usually partner with well-known courier companies that not only guarantee the safety of your product but also help to improve the customers’ experience. With a professional dropshipping supplier, you can track and trace all your sales to ensure your customers receive everything in a timely manner.
Defective items and returns
This leads to the second main issue when you are considering dropshipping on AliExpress. When choosing an AliExpress supplier you will be selling generic, non-branded products from China to your customers. As non-branded products hold a bigger risk and you do not have quality assurance you have to factor in defective items. We are not saying that China only makes low-quality goods. But when you dropship straight from China you will definitely have issues occurring. Unfortunately, if a customer needs to wait long weeks to receive the order and finally receives it defective, that is definitely not good news to you and to your reputation. When your customer demands a return, unfortunately, the return process is nearly impossible when you are dropshipping on AliExpress. No customers will wait out the time until their return arrives back to China and they receive a replacement product.
Because of this, you could end up with the defective products coming back to your home instead of being sent back to your supplier. This means that you will have to pay for these items out of your own pocket which quickly cannibalizes into your profit margin.
In contrast, when you are working with a dropshipping supplier, you have a much better outlook when it comes to returns. Dropshipping suppliers accept returns within a certain time period after the purchase has been made, for two main reasons. One being when your customers want to return an item due to them choosing the wrong size or product. The other is when they want to return because the product is defective or the wrong size has been sent. In the first case, your supplier might charge the customer the return fee, but in the second case, it is all free for the end-user.
Moreover, your dropshipping supplier ideally has a warehouse close to you or to the location of the market you are targeting. This means quicker turnaround times, cheaper and easier returns. When partnering with a dropshipping supplier you do not have to fear your reputation being demolished over returns.
Profit margins and returns on your investment
As we mentioned above, you will face huge competition when dropshipping on AliExpress. This will result in a price war with your competitors. You can not price your items much higher than your competition because the world of the internet has made it easy to compare prices across retailers. Also, if you price your products too high, you can easily lose your credibility. Not to mention that you have to factor in the returns which will directly harm your income. All these can negatively affect your product margin that looked great at the beginning.
In the case of partnering with a dropshipping supplier, you can avoid all this. You can be fairly sure that your planned profit margin and reputation will stay intact while conducting business. Due to the quality and authenticity guarantees that you receive from these suppliers, you can lean back and not worry about the quality of your products. Even if something goes wrong, you can always rely on them. You can trust in their return policy and your good partnership to smooth things out as quickly as possible.
Additional perks and advantages
If you are playing with the thought of dropshipping on AliExpress you have to say goodbye to additional perks. As a customer on AliExpress, although you will have the chance to direct message a supplier that can quickly turn into a frustrating conversation. Their response times tend to be relatively long. Also, most of these small businesses can not afford personnel with a high level of English proficiency. This will make communication rocky and you will not always be able to get your message across.
Furthermore, from AliExpress suppliers you will not receive quality product pictures and SEO optimized product descriptions. This can significantly increase your time and energy invested in your store. AliExpress also does not offer direct integration with your eCommerce store. If you do not want to add products one by one manually, you can use a third-party application to do so. Although, this will not portray updated stock levels so you have a chance to selling something that is out of stock at your supplier.
If you decide on partnering with dropshipping suppliers you will have the chance to access many perks to enjoy that will make your life easier. Most of these suppliers will provide you with professional product images and SEO-optimized descriptions to upload to your store. This will help you to reduce your time spent on your shop while still maintaining a clean and consistent design. Moreover, dropshipping suppliers can provide you with plug-ins for your eCommerce store to integrate across several platforms. These plug-ins will not only help you integrating products easier, but they will automatically update availability and send the placed orders directly to your supplier. This can potentially speed up the process of selling and you will be able to make money even while asleep.
As this article showcased, you can come across many tripwires when dropshipping on AliExpress. This can result in more pressure on you and on customer service in order to preserve your good reputation. We would definitely not suggest sourcing from AliExpress when you are just starting or having a fairly new business. Once you have an established eCommerce store and a great reputation, you can consider adding items from AliExpress to your mix. But to stay on the safe side, it is better if you do not source all your products from China. Because as appealing as it is at the first sight, it can seriously harm your profit margin and reputation.
When you are new to the dropshipping business you should rather find a reliable dropshipping supplier that can lead you along the way to your success. Keep in mind, a trustworthy supplier will always be your best ally when doing business. So, it really worths the time and money to invest in one and establish a long-standing relationship.