What is Dropshipping? AliExpress Dropshipping Explained
What is Dropshipping? It is an e-commerce business model where you can sell products without maintaining any inventory of the products. The seller can directly order the supplies, and the supplier ships it to the customer's address. Here the seller pays the wholesale price to the supplier, whereas the remainder goes to the seller.
Gone are the days of brick & mortar stores as online selling platforms have become a great success. With the availability of the internet to everyone and falling prices of internet data, this online business model inevitably is going to grow in the future.
Steps to start a dropshipping business:
To start a dropshipping business; you need to:
- Select your product line;
- Choose the right supplier/Marketplace. It is going to be critical for the smooth running of your business. (Ex – Aliexpress);
- Get Your GST Registration done;
- Select an Online Platform (Ex- Shopify);
- Start Listing the products and promote your website;
Advantages of Dropshipping
- Less Investment Required – It is way cheaper than starting a brick & mortar shop. Also, if it fails, you don't have to incur huge losses;
- Easy to start – With the availability of Aliexpress dropshipping, Shopify platform, and plugins like Oberlo, it has become a fairly simple process;
- No inventory to maintain – It used to be one of the biggest hurdles in the past, which has been taken off by this concept of Dropshipping;
- Low operational costs – As you do not require transporting the product, operational costs have become smaller;
- Freedom of choice with new products – As no inventory has to be maintained, you can experiment with selling new products without the fear of incurring huge losses;
What are Dropshipping Business's Pain Points?
Dropshipping business is attractive, but it comes with its challenges. Some of them are:
Low-Profit Margin – To compete in the digital market, you need to keep competitive pricing for your products. Therefore, the profit margin is smaller. Yes, you save the money of maintaining the inventory, but the profit is smaller too.
The whole earning now depends on the conversion rate and your brand.
Competitive Marketspace – With the spread of high-speed internet, the number of dropshipping businesses has increased exponentially. Therefore, there is cut-throat competition in the digital space too.
Supply Chain Management – Supply chain management is one of the most significant challenges in dropshipping businesses because you don't have control over the supplier, which can bring bad experiences for the customers. Now, these bad experiences hamper your brand image.
Many obstructions challenge you at every step of these businesses, from delayed deliveries to return policies.
Brand building is difficult in these businesses as people focus on the product's brand, and you are just a seller. Next time they might go to another seller for the same brand of product. Therefore, it is necessary to work on providing a remarkable customer experience.
So, as you can see, making a name in these businesses can be a tough nut to crack.
Suggested reading: 8 Ways to Improve Customer Experience on Mobile
Aliexpress is a marketplace where you get to choose from millions of products. It is one of the most popular market places. You can import the product images, description, etc. directly to your website.
There are a vast number of suppliers on Aliexpress whom you can associate with for delivering the order to customers. They ship it directly from their store to the consumers as per the dropshipping model. This makes it a straightforward, fast, and uncomplicated marketplace. Also, for new e-commerce businesses, it has a low risk if starting from Aliexpress. All this makes it one of the most popular platforms.
Pros of Aliexpress Dropshipping
Easy product Import – Once you join Aliexpress, you can add your account to the shop master. Shop master is a dropshipping solution that makes importing the products and their requirements easy, along with many other dropshipping processes.
Accurate Monitoring – With the use of a shop master, the monitoring of price and inventory happens through the API of Aliexpress. Therefore, the accuracy is spot on when compared to web scraping.
Recommends Project – One of the outstanding features of Aliexpress is it recommends the sellers' products according to their import behavior and history.
Markup & Margin – You can set your profit, prices by yourself. It gives flexibility to the seller to adjust the prices as per demand.
Discounts – Aliexpress provide discounts based on your monthly GMV. It divides the sellers into A, B & C levels. Discounts are offered based on that.
Sync Tracking Numbers – Sit back & Relax, Shop Master auto syncs all the tracking numbers.
Product Diversity – There are millions of products from which you get to choose. You don't generally have to look for multiple marketplaces because of the enormous product base of Aliexpress.
Getting Started with Aliexpress Dropshipping
Let us see step by step the process to get started with dropshipping with Aliexpess.
- Start with setting up an online store/website by utilizing platforms like Shopify, woo commerce, etc.
- Using apps like Oberlo, start importing products and sync your Shopify store with Aliexpress to notify you about inventory updates and changes in price from your suppliers.
- Once you get an order, contact your supplier and place the order to be directly delivered to the customer's address.
Tips to Select the Best Suppliers
Don't always select the lowest price – it's essential to understand that with the price, the product's quality also goes down and can hamper the seller's reputation in the long run.
You also need to research thoroughly before selecting a supplier. Pay attention not only to the prices of the products but also the variations in their quality. The latter can be very subtle, so it's important to learn to differentiate them.
Another risk with a low price can be duplication of products. This happens a lot in the digital market because the copy of a product looks exactly like the original product. The difference can only be understood with the usage and durability in some cases. Therefore, it is very critical to understand and analyze your suppliers.
Look for the Feedback of the Suppliers
Before selecting a supplier, you must read the reviews and read a lot of them. See how much positive reviews a supplier has, read between the lines and understand the work ethics and commitment of the suppliers.
Moveover, read the negative feedback to understand any area of the supplier's inefficiency, compare it with the other suppliers, and select the best from them; This is one of the critical steps in selecting the right suppliers.
Check for Communication Fluency & Responsiveness
Communication with the supplier is essential because you will have to contact suppliers throughout the selling process. Therefore, it is necessary to check on the clarity, responsiveness, behavior of a supplier.
You must test the supplier by making a situation and analyzing their response. If the supplier sends a casual, generic, or automated response, then it is a red flag. A supplier who takes the situation seriously also gets involved and makes sure it is resolved.
Test Order Samples from the Suppliers
Once you have shortlisted your final 2-3 suppliers, order from them to check
- Delivery Time
- Quality of Service
Suppliers, you must avoid any association with
Sells products directly to the customers – wholesale suppliers generally do not sell directly to the consumers. If they are selling, it must be at a smallr cost. This can hamper your brand image if it comes out to the consumers.
Monthly payments – if your supplier demands a monthly fee, this can mean that you are not dealing with a dependable wholesale supplier. It can be a directory.
Pre Order Fee – most of the suppliers have some pre-order fee that can be for picking and packaging products. If a supplier doesn't take any pre-order charge, it may be a scam.
Minimum Order size – this is common when working with a wholesale supplier. They do take an advance payment of say some units of products upfront and, in turn, fulfill the order as they come. If they do not have any advance order size, you better test the genuineness of the supplier.
These are some of the most critical details that might help a beginner understand dropshipping, its pros & cons, how to choose a supplier and which platform to choose. Hopefully, these tips will help you get going with a successful business strategy.
John Davier is content marketing guru at MailMunch. He's passionate about writing content that resonates with people.