Something big is happening in all kinds of industries, all around the world. Consider these developments:
Airbnb operates a huge room rental business but it owns no real estate. Uber operates a massive taxi shuttle service but it owns no cars. And now you can operate your own retail ecommerce business with out having to maintain any inventory or delivery trucks.
Droppshipping has emerged as the perfect complement to any ecommerce business. Your site becomes the storefront where surfers can relax and stop to shop, while the items they buy are maintained in a warehouse and delivery network far away.
Introduction to Alibaba and Aliexpress
Alibaba is often cited as China’s answer to both Amazon and eBay — containing a massive online database of just about everything people want to buy in one place. Aliexpress is the international arm of Alibaba, and it was designed to give shoppers in the US and elsewhere a taste of the ultimate online marketplace.
This is where you come in. By teaming up with Aliexpress and learning how to use their dropshipping service, you can open up an ecommerce store with a built in inventory of low priced goods and an easy way to have it delivered to the shoppers wherever they are. If you already have an ecommerce store, you can use Aliexpress to turbocharge your sales revenues and break into underserved US consumer markets.
Aliexpress is the international arm of Alibaba, and it was designed to give shoppers in the US and elsewhere a taste of the ultimate online marketplace.
The Aliexpress component will make it easy to import plenty of high-margin items into your online store, while the dropshipping component with bring the order right to the customer’s door.
The rest — marketing, promotion and customer relationship management — is all up to you.
How Can You Make Money at This?
The profit margin comes from importing items from AliExpress, mostly manufactured in China and surrounding countries at a very low cost, and then selling them to US consumers who are willing to pay a premium to get exactly what they want, when they want it.
The Aliexpress component will make it easy to import plenty of high-margin items into your online store...
Just like Amazon and eBay, Aliexpress is designed to help small business owners and ecommerce retailers to resell at market prices.
How Hard Is It to Set up Dropshipping?
The great news is the dropshipping is probably much easier than you think. There are no fees upfront, so you and your customers can experiment without taking a huge loss to learn painful lessons. You don’t have to guess about what you are getting because AliExpress will show you photos of each item, which you can then display on your site. For those who love details, you can import product descriptions directly from manufacturers.
Essentially, you become the buyer’s representative. You order products directly on the Aliexpress site and then input the address of your customer so it is arrives where and when they need it.
There are no fees upfront, so you and your customers can experiment without taking a huge loss to learn painful lessons.
Couldn’t the customer order direct from Aliexpress and cut out the middleman?
Of course they could, but the fact is that 89 percent of companies in the US compete on customer experience alone. Your business models rests on your unique presentation, the strength of your story, the way you treat customers and the relationships you build with business partners.
Use social media, blogs and video to create an online space where people want to spend time and shop for the things they need.
Be a Meaningful Specific
It may seem counter-intuitive, but the more narrowly you define your site, the more memorable you will be. Even Amazon started out as just a book store. Think deeply about the customers you want to serve and where your expertise can add value to them.
Of course you can always run more than one ecommerce store, but each one should have a specific look and feel, built around serving a specific niche.
Think deeply about the customers you want to serve and where your expertise can add value to them.
A few of the most profitable niches include:
- Cooking and baking supplies for the home-based amateur chef
- Sports supplies from local teams and fans
- Home décor items to spruce up an apartment or homes
- Fitness equipment and wellness supplements
- Everything related to the safety and pampering of common pets
There are plenty of options to choose from, but the point is to create a memorable theme so that people know what kinds of items they will find on your site.
Getting to Know Aliexpress
Let’s use the example of the cooking supply ecommerce shop named Instant Chef. The next step is to go to the Aliexpress.com site and put “Cooking” in the search bar.
The result will be something like this page, with 139,807 items for your shop.
You probably don’t want to overwhelm your customers with that many options right off the bat.
The next step is to start developing a relationship with some of the best wholesalers and OEMs in the system.
Choosing the Right Business Partners on Aliexpress
Many of the big name brands you find on this site are likely to be imitations, due to the difficulty of enforcing copyright and trademark laws internationally. To head off customer dissatisfaction and disputes, stick with items that are unbranded or not well recognized in the US. That’s just a best practice to keep in mind.
The next step is to filter the page results for items that ship for free. Right beneath the list of brands at the top of the page is a checkbox for “Free shipping” that greatly reduces the number of choices. You can widen your selection later, but lowering your upfront costs should be a priority when you are starting out.
To head off customer dissatisfaction and disputes, stick with items that are unbranded or not well recognized in the US.
How is it possible to ship items from China for free? The answer is a program called ePacket, that was developed by the mail services of Chinese and US governments in order to stimulate trade. We’ll get into the details on ePackets in a little bit but first lets narrow down the number of items you must review to get started.
On the second line of filters, you can also choose to only see the suppliers who have 4 or more stars, and set a bottom limit, say $1, for the price of the items you will sell. Filtering for those two criteria reduces the items to just 12,290 options (results may vary). Now your starting to get a good feel for how much variety in product categories you will need to offer customers maximum choice at minimal overload.
Popularity and Responsiveness
Among the most critical factors in the success of an ecommerce store is trust. Can the customer trust that you will deliver the product displayed on the site in a reasonable amount of time. In your brick-and-mortar competitors, customers can touch items, examine them closely and take them home immediately if they decide to purchase it. Since you can’t offer the customer any of those benefits, you have to make up for that loss with reliability, speed in delivery and customer care.
None of that will be in your control when you are dropshipping items from a supplier far away. You have to be able to trust them to deliver the items shown in the product photos and in line with the product descriptions. There are three ways to check on that.
First of all, change the “Sort By” field to “Orders” to see who has been consistently delivering for a good amount of time. A supplier that has delivered more than 250 orders is well on its way to establishing reliability. It doesn’t matter how great an item is if nobody wants it and the supplier hasn’t sold very much of it through Aliexpress. You need to be sure that your customers are going to get what they want without delay.
A supplier that has delivered more than 250 orders is well on its way to establishing reliability.
Second, you should check to see if the supplier really deserves the 4 star or above rating that filtered for earlier. This will take some time, but a bad reputation and angry customers will cost you much more.
Click on the name of the supplier to find information such as how long they have been in business, their score for delivering items as described and how quickly they deliver.
Start out by ordering something for yourself from the supplier.
Responsiveness is also a very important measure, because customers will ask you questions and you will need answers fast. Click on the “Communication” rating to read what customers have said and what their most common complaints were. You are looking for a rating of 4.7 or above, because it they can’t answer questions quickly, you are going to have issues sooner or later.
Start out by ordering something for yourself from the supplier. Send them a message that you intend to start dropshipping and ask them not to include invoices or any other marketing materials. If you decide to use this supplier after this trial, that kind of paperwork will confuse the customer.
Getting the Pricing Just Right
You may have heard that retail is all about margins. That’s certainly the case in ecommerce, where it is as easy as a click or finger swipe to compare your prices with your competitors. There is an art to finding a price low enough to generate healthy business, but with enough of a margin to keep you in business.
For all items, you want to markup the item by 50 percent or more to pay for your administrative costs, such as the website, lost items, your time and advertising.
One technique is to limit the maximum price to $25. That way even if the customer refuses to pay for the items, you are not overexposed to loss. For all items, you want to markup the item by 50 percent or more to pay for your administrative costs, such as the website, lost items, your time and advertising. Around 60 percent markup is a good rule of thumb, but use your best judgement and consider surge pricing on popular items. Surge pricing means increasing the price when demand is high and lowering it when there is an oversupply.
Moving Items to Your Site
You now what you want to sell, who you want to work with and how much you want to charge customers. The next question is how to move those photos and descriptions to your ecommerce site.
In a separate blog, we will talk about the options for selling online, such as Shopify, Big Commerce or your own private ecommerce site. That’s a discussion for another day. When you have your site ready to go, and you have a list of items from Aliexpress, your smartest move is to start generating your own product descriptions.
This does take some time, and you may want to farm this job out to an online writing contractor service. The reason is that the product descriptions on Aliexpress are not always professional or done with US audiences in mind.
When you have your site ready to go, and you have a list of items from Aliexpress, your smartest move is to start generating your own product descriptions.
Writing original product descriptions boosts the SEO of your site and lets you target the items directly to the customers you want to reach. You’ll rank better in results and connect more successfully with your fan base.
Start small and build it up as quickly as you can. Do A/B testing to find out what kinds of descriptions resonate with your customers. You can do formal surveys or just ask them casually on social media which description sounds more appealing.
Talking to Customers About Shipping
Now let’s get back to the details on ePacket that we promised earlier. The ePacket program started nearly a decade ago, and it was meant to allow Chinese firms, especially those in Hong Kong, to have a streamlined method for shipping to customers in the US.
Two of the biggest benefits, beyond free shipping, is that returns on undeliverables are free and there is an order tracking number issued so the items can be tracked on USPS.
When ePackets arrive in the US, they are handled as first-class US mail by the post office. There are some important restrictions on package size to keep in mind.
- Maximum length is 24″.
- The total of length, height, and thickness cannot exceed 36″.
- Maximum weight is 4.4 lbs or 2 kg.
- Cost of the item must not exceed $400
This shouldn’t be a problem based on the type of ecommerce store you choose and the items you list for sale. Two of the biggest benefits, beyond free shipping, is that returns on undeliverables are free and there is an order tracking number issued so the items can be tracked on USPS.
You have to let customers know up front, however, that the delivery times can be long. In a world of same-day or two-day shipping items, it can come as a shock to see Aliexpress items with a delivery time of 7 to 20 days (sometimes more). An expected wait is much better than an unexpected wait, even if it drives away some customers who don’t want to wait. That’s better than cancelled orders and furious emails.
The order tracking program will allay many of their concerns, but it definitely helps if you make careful planning part of your brand identity. Then your customers will see longer delivery times as a mark of quality rather than merely an inconvenience.
Back Office Administration
A rookie mistake is to set up your ecommerce site and then expecting everything to go according to plan. Those with a bit more business experience are more likely to expect everything to go wrong eventually, so they prepare with backups, records and recovery plans.
Retailing on the web is complex and dropshipping from suppliers on the other side of the planet adds another layer of complication.
What customers want is not perfection but concern. They want to know that you know where their items are, how to replace them if they don’t live up to expectations, and how get items working when customers aren’t sure how they are supposed to work.
What customers want is not perfection but concern.
In addition to your online inventory database, with stats on important numbers like sales revenues and cart abandonment, you should maintain a database of orders, with who ordered what, the order date, the expected delivery, and a link to the original listing.
The Full Experience
As the beginning of this blog, we talked about how the customer experience is king. Consumers are increasingly voting with their wallets for brands that treat them well. With that in mind, it makes sense to experience your ecommerce store as a customer would and think about what you would want to see.
Customers will judge the quality of your business by the quality of your layout, design and images.
You might first hear about the store by a recommendation from a friend or a paid social media ad. When you first visit the site, you are looking for evidence that other shoppers have used it and love it.
Social proof, in the form of case studies, testimonials and video walkthroughs, are the best tools for assuring customers they have come to the right place.
The next thing you would do as a new site visitor is scroll around, looking for something to catch your eye or advice on what to buy. Make sure your navigation is simple and the images are attractive. Customers will judge the quality of your business by the quality of your layout, design and images.
The customer should be funneled to a few key purchase options.
The copy on this home page must have the same standard of high quality as the images. Have a professional writer look over the wording and ad copy on the site, to make sure it is both formatted to SEO and sounds like familiar language to your target audience.
Your blogs are another potential entry site, but they can be a bit less formal and filled with quirky characteristics. Your home site is the store front, but the blogs will be the charming sales attendant that makes you want to hang around and chat.
The customer should be funneled to a few key purchase options. They may not buy first time around, but they should want to put some items in a cart and bookmark the page. Make it easy for them to do both, either on a computer or a mobile device.
Finally, you should do everything you can to reduce the time from cart to confirmation. Allow them to purchase as a guest, even though there should be an option to create an account for additional savings or special offers.
Make sure your ecommerce piece accepts as many payment types as you can reasonably afford to support — not just credit cards, but online currency like PayPal and mobile currency like ApplePay.
The last piece that the customer experiences is actually the most important stretch of all. That’s the order confirmation, shipping time estimate and email confirmation with tracking number.
Allow them to purchase as a guest, even though there should be an option to create an account for additional savings or special offers.
The internet is full of shady deals. Do all you can to assure the customer that you are reliable. Show the confirmation on screen, with details on the purchase. Tell them onscreen what to expect next. Write a personable and enthusiastic email form letter thanking them for the business and test out the shipping information to make sure it comes through professionally.
Lastly, leave the customer with a positive message and a way to contact you with any questions.
The Dream of Lower Risks and Higher Returns
Dropshipping with Aliexpress makes it easy for anyone to become a business owner, with lower risks and greater returns than ever before in the history of American retail. That’s quite a statement but the evidence is all around you.
Costs are low and risks are low. If the niche you chose as the focus for your site is too narrow, you can expand the branding and inventory categories at any time. If you want to move on, it’s simple to shut down the site and try something new without the obligations that come with employees and real estate.
What matters most is how much you prepare for the unexpected and how you treat customers when that happens.
The vastly different economies of US consumers and Chinese suppliers make this the perfect sector for people like you to prosper by bringing them together.
When you add in the low to no cost of dropshipping, with all the infrastructure of delivery built into it already, you have a recipe for a turnkey business. All you have to do it supply the customers, through marketing, word of mouth and unforgettable customer service.
Manage your entire business from a laptop — at home, on the road, or even on the beach. What matters most is how much you prepare for the unexpected and how you treat customers when that happens.
The sooner you get started, the sooner you can become the next expert at figuring out what US consumers want and which trends will define the future of retail.
Have any questions about dropshipping? Drop us a comment below!