Ultimate Guide to Alibaba Dropshipping


By December 27 2021

One of the biggest challenges for dropshippers is finding reliable suppliers.

You need a trusted partner that can fulfill orders and deliver a quality product every time a customer click “Buy Now.”

In this guide, we will look at one of the world’s largest directories of wholesale suppliers:

Alibaba.

You’ll learn everything you need to know about Alibaba dropshipping, including:

  • The pros and cons
  • Alibaba vs. AliExpress dropshipping
  • How to find Alibaba dropshipping suppliers
  • How to negotiate and place your first order

We’ll also reveal tips to help you vet suppliers and find winning eCommerce products.

Let’s get started.



What Is Alibaba?

Alibaba is one of the largest eCommerce marketplaces in the world. It’s a directory that helps buyers find and connect with suppliers in China and worldwide.

You can find a huge range of products for your eCommerce business, with everything from consumer electronics to full-sized fishing boats.

While Alibaba is popular with wholesale buyers, you can find plenty of suppliers that offer a minimum order quantity of one.

These are the suppliers you can partner with for your dropshipping store.

Over the last few years, Alibaba has expanded to attract more international buyers. As of 2021, the company has 240 million active international online buyers across Alibaba and its sister websites.

Pros & Cons of Alibaba Dropshipping

There’s a massive range of Alibaba dropshipping sellers, and the platform has some useful features to help you find reliable suppliers. But there are some disadvantages that you should be aware of before you start contacting suppliers and ordering sample products.

Pros

Low-Cost Products

Most suppliers are based in China, where the manufacturing cost is much lower than in the U.S. or Europe. As a result, you can find high-quality products at a very low cost.

Huge Variety of Products

Alibaba has over 5,900 different product categories, with hundreds of millions of items. So no matter what niche you’re in, you’ll find relevant products to sell on your dropshipping store.

Pricing is Negotiable

This is a fairly unique feature compared to other platforms. The price you see on an Alibaba product page is negotiable.

Before you place a sample order, you can negotiate with the supplier. While most sellers only offer discounts for wholesale orders, you may be able to reduce the cost per item and increase your profit margin per order.

Easy to Use

Alibaba is a user-friendly marketplace. It’s not as easy as SaleHoo and other platforms designed for dropship products, but you can use filters to narrow your search and find products with no minimum order quantity.

There’s also the option of connecting your Shopify or WooCommerce store to import products and streamline the order placement process.

Trade Assurance Protection

If you choose a supplier in Trade Assurance Protection, Alibaba will act as a mediator if there are any problems. For example, if the shipping is late or the product quality doesn’t meet the customer’s expectations, Alibaba will help you to resolve the issue and provide a refund if necessary.

Cons

Product Quality Can Vary

There are plenty of reliable manufacturers that provide high-quality products, but there are also some suppliers that you should avoid. This is true for most dropshipping platforms unless you’re using a directory or dropship tool such as SaleHoo’s which filters our high quality suppliers only.

You need to take time to find the right supplier and make sure you order a sample to evaluate the quality before you start selling to customers.

Extended Shipping Times

With most suppliers based in China, it can take a while for products to be shipped and arrive at the customer’s address. Suppliers provide estimated shipping times on product pages.

You need to make sure your customers know when they can expect to receive their order.

Complicated Returns Process

The returns process can be complicated for Alibaba dropshipping. First, you’ll need to open a formal claim process and reach an agreement with the seller about return shipping.

With most suppliers based in Asia, it can take a while for any returns to arrive back at the supplier’s depot and for a refund to be issued.

Trade Assurance Protection means Alibaba can help you with this process. But it can still take a long time for a refund to be issued.

Alibaba vs. AliExpress

Alibaba and AliExpress are sister companies that both operate under the Alibaba Group. While the two platforms have some similarities, there are also some key differences.

Alibaba is primarily for B2B buyers, while AliExpress is mainly for consumers.

The pricing of goods on Alibaba can often be cheaper than AliExpress, but many sellers require minimum order quantities.

AliExpress doesn’t have any minimum purchase quantities, making the platform better suited for dropshipping. But the pricing can be slightly more expensive.

Here’s a breakdown of the main differences between Alibaba and AliExpress:

  Alibaba AliExpress
Type of Marketplace Business-to-Business Business and Consumer
Minimum Order Quantity Some Sellers Require Bulk Purchases No Minimum Order Quantity
Cost Per Unit Generally Lower Generally Higher
Product Availability Some Products Need to be Manufactured Ready to Ship
Shipping Negotiated with Supplier Usually Free ePacket Shipping
Custom Products Yes No
White Label Yes Yes

Alibaba is mainly used by businesses looking to buy large quantities, but it still has some great products for dropshipping.

You just need to spend a little more time finding the right products and suppliers.

If you want to learn more about AliExpress dropshipping, read our guide to find out how to get started with zero startup capital.

How to Dropship From Alibaba (Step-by-Step)

Now, let’s take a closer look at how to dropship from Alibaba.

In this section, we’ll go through the process of sourcing products on Alibaba step by step.

Step 1. Start Your Product Search

The first step is to head over to Alibaba and use the search bar at the top of the page to search for your product idea.

You can use the options on the left sidebar to filter your results and find suppliers that are a good fit for dropshipping.

Using the “Ready to Ship” option and setting a minimum order value of one can help you find suitable dropshipping products.

It’s also a good idea to select the “Trade Assurance” and “Verified Supplier” options to narrow your search for a reliable supplier.

Step 2. Check the Minimum Order Quantity (MOQ)

Once you’ve seen a potential dropshipping product for your store, click on the product listing for more detailed information.

You want to make sure the minimum order quantity is “1 Piece.” In the example below, you can see supplier is willing to sell single products:

You should consider the listed price and shipping cost alongside the minimum order quantity.

Many suppliers list shipping as “To Be Negotiated.”

This means you’ll need to discuss shipping costs directly with the supplier. Generally, the cost of shipping on Alibaba is slightly more than on AliExpress.

Step 3. Create a Shortlist of Potential Suppliers

Don’t rush into negotiations with the first supplier you find.

You’ll be able to negotiate a better deal and save yourself time by creating a shortlist of potential suppliers.

Look at the different options available and create a shortlist based on:

  • Customer reviews
  • Pricing
  • Verified Supplier
  • Trade Assurance

At this stage, it’s a good idea to have a range of options.

You may find that the lowest-priced supplier is cutting costs in production or making up for the lower price with shipping or other additional fees.

Once you’ve compiled a list of 5 or more suppliers, it’s time to reach out and see if the supplier is willing to provide a dropshipping service.

Step 4. Contact Potential Suppliers

Alibaba’s on-site messaging feature is the easiest way to reach out to suppliers.

Once you’ve made initial contact, you can exchange contact information and speak to the supplier directly via phone, email, or WeChat.

The more established suppliers will have sales teams that are fluent in English. However, for smaller suppliers, communication can be more challenging.

You can avoid anything being lost in translation by using simple, short, and clear sentences.

Create a bullet list of your questions like the examples below:

  • What is the minimum order quantity (MOQ)?
  • What is the cost per unit?
  • What is the estimated shipping time to the United States?
  • What are your payment terms?

You should also ask the supplier about sending a sample product to your address. Sometimes the cost of the sample is less than the standard cost per unit.

Step 6. Agree on Payment Terms

Payment terms can vary from supplier to supplier. It’s important to choose a supplier that is open to your preferred payment method.

Alibaba provides multiple options, including:

Banks Transfers

Most suppliers won’t ship an item until they receive payment. This means a bank transfer isn’t well-suited to dropshipping.

An alternative is to use a service like Wise that provides faster transfers with cheaper transaction fees.

Alibaba Trade Assurance

With Trade Assurance, Alibaba will hold the money in escrow and release the funds to the supplier when the buyer has received the product and is happy with the transaction. While this does offer additional security, it can slow down the process and is not ideal for dropshipping.

You can use Trade Assurance for a sample product, but it’s not well suited to placing customer orders.

Credit/Debit Cards

Credit and debit card payments are faster than Trade Assurance and bank transfers but usually involve additional fees that could hit your profit margins.

PayPal

PayPal is another fast option for paying suppliers. It also comes with some additional buyer protection.

You may find that some sellers do not offer PayPal as a payment option due to the fees involved.

Make sure you know the payment terms offered by a supplier before you agree on terms and start promoting products on your dropshipping store.

Step 5. Select a Supplier

Once you’ve received sample products, it’s time to choose a supplier for your dropshipping business.

The most important aspects you should consider are:

  • Cost per unit
  • Product quality
  • Payment terms
  • Shipping times
  • Communication

Pricing and shipping times are important but don’t overlook communication. A reliable dropshipping supplier is a big factor in the success of your eCommerce store, so good communication is vital.

We’ll go into more detail on choosing a supplier in the next section.

When you’re happy with the agreement, the final step is to add the product to your store and start dropshipping.

If you need some help getting started, check out our guide on how to start a dropshipping business. You’ll learn how to put the foundations in place for a profitable eCommerce store in 5 simple steps.

How to Find High-Quality Manufacturers for Dropshipping on Alibaba

Look for Verified Suppliers

One of the best ways to make sure you are dealing with a legitimate seller is to look for the Verified Supplier badge.

You’ll find this badge on product pages and the seller’s profile page. You can also filter product search results to exclude unverified suppliers.

To qualify as a Verified Supplier, the seller must undergo an authentication process, including an on-site inspection.

This means you can ensure that the seller is a genuine business with a registered address.

You can also see free supplier inspection reports for all Verified Suppliers on Alibaba.

Ask For a Business Address and Contact Information

If a supplier is a legitimate business, they should be able to provide a business address and contact information like a phone number and email address.

You can call the phone number to verify it is registered to the right company and speak to the supplier directly.

Check the Supplier’s Reviews and SOPI

Like buying from any other marketplace, reviews can provide insight into the quality of the products provided and the experience other buyers have had with the seller.

Alibaba sellers in China are also rated using the Supplier Online Performance Index (SOPI).

This index rates suppliers from 0-5 by judging aspects like product quality and presentation and metrics like transaction volume.

The SOPI levels are displayed as diamonds next to the supplier’s name on product pages.

The higher the level, the better the supplier.

Look for Global Gold Suppliers

Alibaba offers sellers the option of paying to become a Global Gold Supplier. These suppliers pay a fee and undergo independent on-site verification.

While buying from a Gold Supplier doesn’t guarantee products will be high quality, it does reduce the risk of losing your money to a scam seller.

If you can’t find the product you’re looking for on Alibaba, take a look at our list of the best places to find wholesale dropshipping suppliers. You’ll find hundreds of millions of dropshipping products in these directories.

Tips for Alibaba Dropshipping

Vet Suppliers

If you take the proper precautions, there is a very low risk of being scammed by a fraudulent supplier.

One of the biggest red flags for Alibaba dropshipping suppliers is pricing well below the cost per unit offered by more established sellers on the platform. If the low price seems too good to be true, it probably is.

When something doesn’t feel right, move on to a different supplier.

Do Market Research To Find Products To Sell

Before you spend money on samples and add a product to your eCommerce store, you need to make sure there is customer demand.

That’s where market research comes in.

Using Google Trends, you can see the interest in a product over time.

You can see if there is growing interest or if the trend is coming to an end and people are starting to lose interest.

Keyword research tools can also help you determine interest and the commercial potential of an Alibaba dropshipping product.

Once you’ve determined customer interest, the next step is to check the pricing of competing eCommerce websites.

This will help you to see the potential profit margin.

If there is a reasonable profit margin and good interest, you’ve found a potential winning dropshipping Alibaba product.

Order Sample Products

One of the key steps before adding a product to your online store is to order a sample from the supplier.

This gives you hands-on experience of the product before you start selling it to your customers.

There are a few key questions you should ask yourself when comparing samples from multiple suppliers:

  • Does the product match the description and images?
  • Is the product good quality?
  • Is it easy to use?
  • Does the packaging look good?
  • How long did shipping take?

Step into your customers’ shoes and think if you would be happy with the product if you paid the full retail price.

Negotiate With Suppliers

One of the most significant differences between Alibaba and AliExpress is the option of negotiating with suppliers. You can negotiate unit price and shipping costs.

Before negotiating, you should compile a shortlist of potential suppliers and compare the pricing to get a benchmark unit price.

As a dropshipping store, you have less negotiating power than a buyer willing to purchase a large volume of products. But there is always an opportunity to increase your margins by securing a better deal during negotiations.

Alibaba Dropshipping FAQs

Alibaba is a safe marketplace to source products and connect with manufacturers. But like all marketplaces, there are good sellers and bad sellers.

The platform does provide lots of features to help buyers perform due diligence and find reliable and trustworthy suppliers.

You can also use Trade Assurance as an additional security measure. The escrow service protects payments until the buyer confirms satisfactory delivery.

However, if you do want to prioritize safety and trustworthiness, you might want to consider a directory like SaleHoo Directory instead that vets and filters our trustworthy suppliers so that you are only selling high quality products with low return rates.

Yes, you can dropship products with Alibaba. But the process is a little more complicated than using AilExpress.

Most of the suppliers on Alibaba are manufacturers looking to sell large volumes of products to wholesalers and retailers. The marketplace is set up for these business-to-business transactions.

However, you can still find suppliers willing to sell items individually. It takes more time to find dropshipping products, but the pricing is generally cheaper than AliExpress.

Dropshipping from Alibaba can be a lucrative business model. Many entrepreneurs make money by dropshipping Alibaba products.

The price per unit is often lower than other marketplaces. This means you can increase your margin on each product and make a larger profit.

One of the issues with Alibaba for dropshipping is that the shipping options provided by many Chinese suppliers are often designed for high-volume buyers.

You will need to negotiate shipping costs with the supplier for single products and request items be sent by ePacket to ensure fast delivery.

Alibaba provides several different payment options, including:

  • Bank transfers
  • Credit cards
  • Debit cards
  • PayPal

For most buyers, PayPal is the preferred payment method as it offers fast transfer of funds and some buyer protection.

You can also use Alibaba’s Trade Assurance escrow service for additional protection. Alibaba will keep your money secure until you confirm delivery and are happy with the order.

Dealing with returns is one of the most frustrating parts of selling online.

Because most dropshipping products on Alibaba are shipped from China, it can be challenging to return the item to the supplier for a refund.

The best way to avoid returns is to be highly selective about the suppliers you choose to work with. Make sure you discuss the returns and refunds process before you order a sample or start selling to your customers.

Alibaba’s Trade Assurance does provide some protection against fraudulent sellers. When you order samples, it’s a good idea to use this service.

But even with Trade Assurance, you can expect to go through mediation before you get your money back. It’s also important to document the conversations you have with suppliers during negotiations and take photos of any issues with the product when it arrives.

Here’s an Alibaba buyer describing their experience with the refund process:

As explained above, you need to make sure you have proof to show Alibaba that the product doesn’t meet the agreed expectations.

Delivery times can vary according to the supplier and the customer’s location. Most Alibaba dropshipping suppliers are based in China, so the product could be in transit for 7-14+ days.

You can reduce the time it takes for customers to receive their orders by choosing products that are “Ready to Ship.” These products can be shipped as soon as the supplier receives payments, instead of having to be manufactured first.

It’s important to be upfront about estimated shipping times and not overpromise your customers. Shoppers are willing to wait if they know when the product they ordered from your online store will arrive.

However, when a product doesn’t arrive on time, people become frustrated and complain.

Sourcing Dropshipping Products on Alibaba

Alibaba isn’t the easiest place to get started with dropshipping. You can find quality products at low prices, but the platform is designed for B2B buyers. It requires more time to set things up and find the right suppliers.

AliExpress is generally more suitable for dropshippers and can be automated to directly import to your Shopify store with tools like SaleHoo Dropship.

And if you’re looking for high-quality products from pre-vetted suppliers, the SaleHoo directory should be at the top of your list.

You’ll find 25+ million products from 8,000+ certified suppliers. And you can get instant access with a 60-day full money-back guarantee.

 

 

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