Alibaba Dropshipping: The Ultimate Business Guide

Alibaba dropshipping is one of the best ways to sell high quality products without carrying inventory. Yet, few sellers know they can dropship using Alibaba.

For most, starting an ecommerce business on a budget is challenging. But thanks to Alibaba’s dropshipping solution, finding products and wholesale suppliers is simple and easy.

This step by step guide will teach you how to get started with Alibaba dropshipping, explain its pros and cons, and share tips to help you build a successful dropshipping business.

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Table of Contents

What is Alibaba?

Alibaba is a Chinese-owned B2B marketplace that connects manufacturers and wholesalers to businesses worldwide.

Alibaba belongs to the Alibaba Group Holding Limited (AGHL), one of the largest ecommerce companies in the world. AGHL earned around $109 billion in 2021 from Alibaba, Taobao, AliExpress, and other online marketplaces.

Alibaba is the go-to marketplace for foreign businesses that buy low-cost products in bulk. The labor, manufacturing, and electricity costs in China are among the cheapest globally, making it beneficial for sellers and buyers.

Does Alibaba Do Dropshipping?

Alibaba has a dropshipping solution that makes it easy for store owners to sell products without keeping stock on hand.

However, it can be a bit challenging to find dropshipping suppliers on Alibaba as Alibaba is geared towards selling large quantities.

Selling small quantities at low margins and shipping them overseas from China can be unprofitable. That’s why Alibaba sellers generally avoid fulfilling small orders.

That being said, there are suppliers on Alibaba that cater to dropshipping sellers.

Why Use Alibaba For Dropshipping Vs AliExpress

Although AliExpress dropshipping is the easier way to start an ecommerce business, using Alibaba is the better choice for dropshipping for the following reasons:

Editor’s note: Read this post for more information on Alibaba vs AliExpress

Cheaper Product Pricing

Product pricing is higher on AliExpress as it’s set up for retailers and individuals. On the other hand, Alibaba has wholesale pricing where buyers can have margins as high as 70%.

It also helps that Alibaba charges almost no commission on sales. In contrast, AliExpress charges its suppliers anywhere between 5% to 8% per sale.

Direct Interactions With Manufacturers

Buyers can deal with manufacturers directly on Alibaba. This is unlike AliExpress, where there are more retailers and middlemen than manufacturers.

Working with manufacturers enables buyers to build relationships that can help them get bigger discounts when buying in bulk.

Customization

Private labeling allows buyers to rebrand products under their own brand name. Thus, they can develop their brand position and inspire customer loyalty without investing in product manufacturing.

Most suppliers on AliExpress generally don’t allow customizations. On the other hand, Alibaba suppliers provide buyers with various customization options such as custom labels and designs.

It’s worth noting that adding customization to a dropshipping product increases shipping time exponentially. So it’s better to stick to private labeling and customizations for larger quantities and top-of-the-line products.

Request for Quotation

Alibaba has a Request for Quotation (RFQ) feature where buyers can request quotes by filling out a form detailing the products or services they are interested in. Relevant manufacturers then reach out directly with pricing and delivery terms.

RFQ is convenient because it saves time finding suppliers. AliExpress doesn’t have this feature, so buyers have to scroll through multiple pages of suppliers to find the best one.

How Alibaba Dropshipping Works

Here’s how Alibaba dropshipping works.

You connect your store to Alibaba.
You find products to sell.
You import these products directly to your store.
When an order comes in, the dropshipper fulfills the order.

Connect Your Store To Alibaba

Create a dropshipping account on Alibaba. Next, open the Alibaba.com dropshipping center and connect your store to Alibaba using the “My Store” option.

If you have a Shopify or WooCommerce store, click the appropriate option, add your store URL to install the app, and pair the two platforms.

If your store is built with Bigcommerce, Wix, or other platforms, you can use dropshipping applications such as Spocket, Modalyst, Syncee, Dropified, or Sezam.

Note: For more information, read my post on the best dropshipping suppliers. Also, Oberlo does not work with Alibaba. It only connects AliExpress to your Shopify store.

Find Products

Browse through Alibaba’s dropshipping marketplace and find products to sell. Choose a country to dropship the products using the “Ship to” dropdown.

Click the “Add to Import List” button on the products you wish to import to your store. This creates a product import list.

Import Products To The Store

Navigate to the “Import List” menu to see all the products added. You can edit the product name, description, tag, collection name, pricing, and images here before importing products to the store.

Click “Push to Store” to import all products into your online store. This process can take anywhere between a few seconds to a few minutes, depending on the number of products pushed to the store.

Once the process completes, go to “My Products” to set pricing updates, chat with suppliers, and configure other settings. You’re now ready to sell the products.

Fulfill Orders Automatically

When you receive orders on your store, they will automatically sync with your Alibaba.com account. Click on “My Orders” to pay suppliers.

Suppliers then ship the products to the customers directly. You can track orders or cancel them, request refunds, and confirm deliveries through “My Orders.”

Note: You don’t need a website to dropship with Alibaba. You can still buy and sell dropshipping products on Alibaba. Having a website and connecting it to Alibaba automates the whole process.

How To Dropship With Alibaba

To dropship from Alibaba, you need to find a niche and validate the product with your target audience. Start by checking out online marketplaces like Amazon to understand the average selling price of the product you plan to sell.

Once you’ve figured it out, it’s time to open an account with Alibaba.

Here’s a step-by-step tutorial on how to dropship with Alibaba.

Step 1: Search For Suppliers

Head to the search box in your Alibaba account to find the product.

Use the “Products” dropdown to find products and suppliers. Avoid using the “Suppliers” dropdown as that will limit your filtering options.

Narrow down the suppliers by using the filters available on the left-hand side.

Check the “Trade Assurance” supplier type even if you don’t wish to use the service. Suppliers that accept the buyer protection terms in the Trade Assurance program are more likely to be authentic.

Check the “Ready to Ship” and “Paid Samples” checkboxes to narrow down the list further. Using these two filters increases the likelihood of finding suppliers who dropship.

Skip these two filters if you want to customize the products as suppliers offering fast dispatch are unlikely to offer customization.

Next, type 1 in the Minimum Order filter as suppliers on Alibaba generally have high minimum order requirements (MOQs).

Step 2: Check Product Details

On the product page, review the pricing and MOQ. If you see “1 Piece (Min. Order),”, the supplier will probably dropship.

The pricing will be expensive for quantities up to 25 or 50, after which you’ll see a considerable price drop. This pricing does not include shipping costs unless specified.

Step 3: Make A List Of Potential Suppliers

Not all suppliers will meet your standards or be willing to dropship. Compile a list of potential suppliers to give yourself more options as you negotiate pricing.

Do a background search on all the suppliers and check if they meet the following criteria:

Participate in the Trade Assurance program.
Offer MOQ of 1.
Have reasonable pricing.
Have good reviews and ratings.

Step 4: Contact Suppliers

Contact suppliers by clicking on the “Contact Supplier” button. You’ll be using Alibaba’s messaging platform that works like email.

You can also ask for the supplier’s WeChat ID 一 China’s top instant messaging app, where you’re more likely to get faster responses.

It’s worth noting that there’s a 14 to 16 hours time difference between the US and China so some suppliers may reply slowly.

You should also be prepared for communication challenges. To minimize them, use language translation tools such as Google Translate.

Even if the supplier speaks English, it’s best to avoid lengthy sentences with complex words. Stick to short sentences with simple words.

Your first message shouldn’t be too long, and your goal should be to find out if they dropship their products to the countries you plan to sell them.

Here’s an email template you can use to inquire about dropshipping:

Hi,

My name is Jane Doe. I am from XYZ Company and we are based in California, United States.

We are interested in partnering with you to dropship product ABC.

*insert Alibaba product link*

Our customers are in the United States and the United Kingdom.

Could you please answer the following questions:

What is your MOQ?
What is the cost per unit?
What is the shipping time to the United States and the United Kingdom?
What are your payment terms for new customers?

I would also like to order a sample. Please send me the cost for the sample product and shipping to the following address:

Jane Doe,
XYZ Company,
123 Street, Los Angeles
California, United States

Please also let me know your WeChat ID.

Thank you.

Jane,
XYZ Company
www.example.com
416-000-1111

You should also avoid using links to Gmail, Whatsapp, Facebook, and Dropbox in the email, as these services are banned in China. Also, avoid attaching large files to the email or message as the internet speed in China isn’t the best.

Step 5: Decide On The Payment Method

Alibaba supports multiple payment channels such as credit cards, online transfers, and Paypal. Here are the four standard payment methods rated from safest to least safe:

Alibaba Trade Assurance

Trade Assurance is an ESCROW service where the funds are released to the supplier only when the buyer receives the goods as per the agreed terms.

Alibaba’s Trade Assurance provides buyer protection from faulty products and fraud. It also gives buyers confidence in knowing that their money is handled through a 3rd party escrow service.

However, Trade Assurance costs the supplier money and delays the reception of funds. As a result, the supplier may not prefer this mode of payment.

PayPal

Most suppliers accept PayPal for small orders. However, Paypal is not preferred as dishonest buyers can file chargebacks even after receiving products in good condition.

PayPal also charges a hefty transaction fee, which suppliers may not be comfortable paying. However, as a buyer, PayPal offers the best protection.

Credit and Debit Card

Alibaba supports payments from major processors such as MasterCard, American Express, and Visa. Suppliers generally don’t have any issue with this payment mode as they receive the funds almost immediately.

But it can be an expensive payment mode for buyers and can eat into their margins.

Bank Transfer

Transfers to suppliers based in China are made with Telegraphic Transfer (T/T payment).

Bank transfers are slow and, thus, not suited for dropshipping. As a buyer, it’s also quite risky to pay the total amount in advance to the seller. However, suppliers themselves won’t recommend this method for small orders.

Step 6: Negotiate Terms

Once you have a short list of suppliers, you can start negotiating with them. Negotiating with suppliers is an art. But here are a few tips and tricks to help you master supplier negotiation:

Be confident in your communication: If you show you’re a first-time dropshipper, the supplier may not be as interested in doing business with you.
Ask relevant questions: Don’t ask questions that you can find on Google. Do your background research and read guides on buying and sourcing from Alibaba suppliers before negotiating with them.
Offer to pay extra: If you find a supplier with a minimum order requirement of 5 or 10 units, you can offer to pay a higher price for a single unit. The supplier will likely accept your offer if it makes financial sense.

Step 7: Select a Supplier

After you’ve ordered samples and negotiated terms with suppliers, it’s time to weigh your options and select an Alibaba dropshipping supplier.

If you’re unsure which supplier to finalize for your order, look at how and when they reply to your emails. Prompt communication is essential when you are dropshipping products from China.

You can also check if the supplier offers customization or private labeling. Even though you might not need customization right now, you may decide to build your brand in the future.

Is Dropshipping From Alibaba Safe?

Buying from Alibaba is 100% safe as long as you buy from Alibaba suppliers using Trade Assurance 一 a free service that offers buyer protection for orders purchased through Alibaba.com.

Trade Assurance covers two scenarios:

Products that are not dispatched according to the agreed schedule.
Products that don’t meet the quality standards.

Here are the Trade Assurance eligibility requirements:

The supplier must be a Trade Assurance supplier.
The order should be placed on Alibaba.com.
The payment must be made using Alibaba’s payment platform.

Should there be any issue with the order, buyers can file a dispute and request a refund within 30 days of delivery. Alibaba investigates the claim and requests documents when necessary.

If the seller refuses to cooperate with Alibaba, buyers receive a refund directly. Thus, Trade Assurance protects buyers from scams and unsafe products.

However, this doesn’t mean suppliers that aren’t in the Trade Assurance program are untrustworthy or deceitful. It means buyers need to be more careful when buying from those sellers.

Is Dropshipping Via Alibaba Worth It?

Dropshipping from Alibaba is 100% worth it for validating a product for sale before you decide to make a bulk purchase and you can make over 100K with this business model.

Claire Carpenter, a student in my Create A Profitable Online Store Course, makes 6 figures dropshipping ebike conversion kits from Alibaba.

Because you don’t have to spend any money upfront for inventory, you can experiment with many different products to test the market.

Then, you can place a larger order of your winning products at reduced wholesale prices. Overall, Alibaba dropshipping should be an intermediate step towards launching your own private label products.

How To Vet An Alibaba Dropshipping Supplier

Here are 4 tips for vetting suppliers before placing an order on Alibaba:

Use Verified Suppliers

Alibaba has a verification program where suppliers get badges based on inspection and customer feedback. This verification badge is located on the left side of the product pages.

There are 3 main types of verified badges:

Gold supplier: These suppliers pay a fee to be verified as businesses with commercial or industrial operations.
Verified supplier: These suppliers are thoroughly inspected by third-party institutions.
Trade Assurance supplier: These suppliers accept payment via Alibaba.com’s payment platform.

Having either badge doesn’t guarantee product quality or a seamless buying experience. However, these ratings are an excellent first step in narrowing down suppliers.

Buyers can also look out for specialty tags given to suppliers based on performance such as…

Environmentally compliant
Repeat buyers choice
Good reputation supplier

Ask Questions And Verify Documentation

Buyers can contact the suppliers before proceeding with their orders. Make sure you ask for the business details, license, and any other information not available on Alibaba.

Alibaba doesn’t have any restrictions on how or when to contact suppliers. Buyers can take advantage of this by video-calling the suppliers and virtually inspecting their factories.

Buyers can also Google search the company’s address and verify the supplier’s location.

Check The Supplier’s SOPI

SOPI stands for Supplier Online Performance Index and is a data-driven rating based on a supplier’s performance on Alibaba.com.

SOPI performance is measured in terms of transaction volume, product popularity, service quality, and presentation quality.

There are six levels (0-5), with level 5 being the highest. Each level is represented with a matching number of diamond icons.

Buyers can find a supplier’s SOPI on product pages, company profile page, and search results.

Ask For Samples

Asking for samples is customary, even if you’re dropshipping and not buying in bulk. It’s best to get a sample to verify the quality of the product before investing in the inventory.

Follow Your Gut

Be prepared to walk away if you feel anything suspicious about the transaction. If the pricing or quotes sound too good to be true, then it’s better to end the deal.

Pros And Cons Of Alibaba Dropshipping

Like any other marketplace, dropshipping from Alibaba has its own pros and cons.

Pros

Low manufacturing costs: The primary reason to buy from Alibaba is for cheap pricing. Prices are significantly lower than in North America.
More product selection: There are more than 5900 product categories on Alibaba. Buyers can also request to tweak designs as per their liking when ordering in bulk.
Large database of suppliers: Alibaba has more than 2.8 million suppliers. There are multiple suppliers producing the same product with similar quality. So it gives buyers more options during negotiations.
Customization: Alibaba suppliers provide customization by adding designs, logos, embroidery, and labeling with no minimum order requirements. The pricing is also low, but buyers can expect a discount when buying in bulk.
User-friendly UI: The Alibaba website is easy to navigate, and the ordering process is seamless. Sellers can visit the supplier’s company profile page and download reports of their third-party inspections.
Rigorous verification process: Alibaba takes background checks seriously. They have programs where a third-party institution does vendor assessment. Alibaba also has a buyer protection program called Trade Assurance which refunds money to buyers upon delayed shipping or inferior quality.

Cons

No Intellectual Property (IP): Alibaba has a massive IP protection problem. It is not uncommon to find counterfeit products on Alibaba. Buyers should avoid buying products with trademarked brand names and characters. Anyone selling such items will be subject to legal action in their country.
Long shipping times: One of the biggest drawbacks of ordering from overseas is the long shipping time. Most suppliers on Alibaba ship the products in cargo ships, which takes around a month to deliver. However, buyers can pay extra for air freight.
Different manufacturing standards: Products made in Asia have different sizing. For example, a size 6 in the US is different from that in China. Buyers should make sure that they are direct in their instructions and give detailed simple product descriptions when communicating with suppliers.
Time-consuming return process: Although the return process isn’t necessarily complicated, arranging a return from the customer to China can be expensive. Applying a high margin on products helps you absorb losses incurred from such returns.

Alibaba Dropshipping Next Steps

The next step after dropshipping from Alibaba is to make a list of your top-selling products, buy your winners in bulk and get lower pricing.

The best part about dropshipping from Alibaba before buying wholesale is that you can develop a relationship with the manufacturer directly.

As your business grows, you can import the goods to a warehouse in North America or use Fulfillment by Amazon (FBA) to outsource inventory management and order fulfillment. FBA will store and ship orders received from Amazon as well as other marketplaces.

Dropshipping is a stepping stone in the world of entrepreneurship and ecommerce. Alibaba’s dropshipping solution gives you everything you need to build a successful dropshipping business.

Frequently Asked Questions About Alibaba Dropshipping

Can You Dropship From Alibaba To Amazon And Ebay?

Yes, you can dropship from Alibaba to Amazon and eBay. However, both of these marketplaces have specific requirements for selling products on their platforms.

For example, Amazon and eBay prohibit any mention of suppliers or manufacturers.

Let’s say you’re using Amazon dropshipping or Ebay dropshipping using a vendor from Alibaba. The packaging or the contents inside the carton shouldn’t have Alibaba or the vendor’s information.

You need to make sure you follow Amazon‘s and eBay‘s dropshipping policies, or else you will get banned.

Is Dropshipping Dead?

No, dropshipping isn’t dead. In fact, it continues to be a popular way to sell products online.

Google Trends shows the interest in the term “dropshipping” is at an all-time high. It’s predicted that the open market valuation of the dropshipping industry is expected to reach almost $560 billion by 2025.

Several other statistics show that dropshipping isn’t dead in 2022. Every year this becomes a hot topic for discussion. But the dropshipping industry continues to thrive.

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