Alibaba Dropshipping: Is Alibaba Safe? (+ 2022 How-to Guide)

Alibaba Dropshipping
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When it comes to establishing an online business, you’ll need two things: a product idea and a supply. Next, you’ll need to source out an ideal supplier if you already have a hot product in mind and a business plan in place. In recent times, it’s never been easier to discover a manufacturing or wholesaling partner halfway around the world in our global village. However, for novice online entrepreneurs, obtaining products from other countries could be a difficult task. But then, if you’re reading this; covering all you should know about Alibaba dropshipping, you’re in luck.

In simpler terms, we’ll look at how to buy from Alibaba in this article. We’ll go over everything you’ll need using one of the most popular business directories to find a supplier for your product concept. We’ll also cover the benefits and drawbacks of doing business overseas, as well as how to buy on Alibaba and cross this new territory so you can discover the right supplier for your product idea and start selling online.

Alibaba Dropshipping: What Exactly is Alibaba?

Alibaba is the world’s largest eCommerce corporation by revenue, with a double of the 2020s $78.6 billion forecasts by the end of 2021. It’s also the most comprehensive directory, connecting buyers from all over the world with suppliers (mainly from Asia).

The Alibaba group operates three Chinese marketplaces: Taobao, Tmall, and Alibaba.com, which collectively have hundreds of millions of users and houses hundreds of millions of shops and products. There’s almost isn’t any product you need that you won’t find in its directory, which is how it became one of the most popular online buying places.

What is Alibaba’s Business Model?

Alibaba is a marketplace for companies wishing to buy big quantities of products from wholesalers at the best possible price. Because you buy directly from the manufacturer, it’s also a superior option for acquiring private label products. Because bespoke designs or logos are incorporated during the manufacturing process, you may easily receive a product with them.

Is Alibaba a Dropshipper?

In summary? Yes, Alibaba allows you dropshipping!

On Alibaba, however, finding and partnering with dropshipping vendors is a little more difficult than on AliExpress. This is due to the fact that most Alibaba suppliers are set up to sell huge quantities of goods to wholesalers and retailers, and many are unable or unwilling to sell and ship individual items to consumers in other countries.

As a result, dropshipping from Alibaba requires significantly more effort than dropshipping with platforms like Aliexpress, Orbelo, or Shopify.

On the other hand, Alibaba has a lot of unique products and suppliers that aren’t available on AliExpress. As a result, Alibaba dropshipping might be an excellent approach to set yourself apart from the competitors.

Alibaba Dropshipping: Is Alibaba Safe?

Alibaba has grown to become one of the world’s largest marketplaces since its inception in 1999. Like many other eCommerce platforms, Alibaba has a large number of respectable and trustworthy merchants. For starters, Trade Assurance, a supplier verification service, is available to protect your payments made through the Alibaba.com payment platform.

The following are some of the advantages of Trade Assurance:

  • Easy-to-use Payment Alternatives: For verified US buyers, Alibaba accepts a variety of payment methods, including credit cards, PayPal, and financing alternatives.
  • Payment Security: Keeping track of and reconciling monies with suppliers, as well as knowing when they receive your payment, is essential.
  • Better Support: If you engage with Trade Assurance providers, you can get a refund if you aren’t happy with the product’s quality.

Trade Assurance safeguards you from being conned on Alibaba or obtaining low-quality goods. During negotiation, you’ll be safeguarded from bad suppliers, despite some back and forth between the seller and Alibaba.

This isn’t to argue that working with non-Trade Assurance Alibaba dropshipping suppliers is a terrible idea. It simply indicates you’ll have to conduct an additional investigation.

Let’s look at a few things you can do to keep your money safe when sourcing from Alibaba:

#1. Ensure Your Providers Are Legitimate

Alibaba Dropshipping Shopify

Alibaba has its own verification method in place, which consists of multiple tiers. The three stages of verification offered by Alibaba are summarized in the chart above. If the suppliers have them, these verification badges will appear on product listings and supplier profiles. A decent fundamental step is to look for these verifications.

There are also independent third-party services in Asia that will visit factories on your behalf to evaluate the supplier and product quality, in addition to Alibaba’s verifications. Depending on the quantity of your order, a few hundred dollars more for extra security may be well worth it.

#2. Follow Up With Inquiries

When you’re narrowing down your list of suppliers, be sure to ask a ton of questions about their company and products. Request a copy of their company’s license. Request a phone number and then call it. Set up a Skype call with your contact. Inquire about factory images and product samples.

Feel free to request whatever helps you feel more at ease doing business with someone halfway around the world. You may even ask your factory contact to take a picture of themselves on the factory floor holding the current day’s newspaper and one of their products.

#3. Collect Samples

It should go without saying that you should collect samples to check and verify quality before investing any considerable amount of money in inventory. Feel free to contact them using a different (fictitious) identity and email to obtain a second sample to compare.

#4. Be Ready to Walk Away if Necessary

Finally, if everything seems too good to be true, it almost always is. Be aware of prices or promises that don’t seem correct or don’t match what you’ve heard from other vendors. If something doesn’t feel right, always be willing to walk away from a deal.

Make sure to download WeChat if you're seeking new suppliers on Alibaba. You can then communicate with potential suppliers in real-time to obtain a better idea of how your dropshipping store's working relationship will go.

Alibaba Dropshipping: Benefits of the Dropshipping Model for Retailers

  • Low-Cost Business Plan

One of the main reasons to start a dropshipping business is that it does not demand a large initial expense. In fact, you can start a dropshipping business with very little money and steadily expand it over time. You can buy the things and arrange delivery when you make a sale.

  • Affordable Business to Run

Dropshipping is a low-cost business to run since you only have to buy things when you make a sale, unlike a regular retail store. You save money on storage and employees because you don’t have to deal with stock, maintain inventory, manage postage and packaging, or ship internationally. As long as you have a good and reliable internet connection, you can run anything from a PC or laptop.

  • Flexible Location

Dropshipping is a wonderful option for you if you appreciate working remotely and having the freedom and flexibility to travel whenever and wherever you choose. As long as you have a high-speed internet connection, you can run a dropshipping business from anywhere in the globe.

  • Test Out Products

Another significant advantage of dropshipping is the ability to test products and see what sells online before investing extensively in a single category or product range. This enables retailers to quickly pivot and respond to changes in customer behavior and trends.

  • Scale-up With Ease

This business model also makes scaling up and growing an internet firm easier. For the most part, because there is no manpower required to keep, verify, and handle merchandise, or complete orders and deliveries, one person can run the entire business. This makes it easier to operate with a small team or handle the full company on your own.

Aliexpress vs Alibaba Dropshipping

Alibaba and AliExpress are online marketplaces founded in China that feature third-party sellers. The following are key distinctions between Alibaba and AliExpress:

Alibaba is a platform for doing business with other businesses or as we generally put it, B2B.

But while Alibaba is geared at businesses looking to place massive wholesale purchases, AliExpress allows everyone to dropship products at retail pricing with no minimum order requirements. You can buy directly from the manufacturer and easily add a private label with your own designs or trademarks on Alibaba.

AliExpress items, on the other hand, are mainly pre-made, so customization choices are restricted, and they are usually more expensive.

Furthermore, AliExpress sellers often provide ePacket shipping, which can help your eCommerce business deliver high-quality products to clients more quickly. The shipping time on Alibaba is usually longer.

Alibaba Dropshipping: Benefits and Drawbacks

The most prevalent motive for many entrepreneurs to hunt for product suppliers in Asia, particularly China, is to take advantage of low manufacturing costs. Manufacturing costs in Asia might be far lower than those in North America and other regions of the world. So much so that if it weren’t for offshore production, starting a dropshipping business would be extremely difficult.

While lower product costs are fantastic, they’re not the only reason Asia is a good place to look for a supplier—there are a few other advantages as well:

  • Lower Manufacturing Costs
  • Suppliers are (usually) more willing to engage with small enterprises and provide lower orders.
  • There are a lot of suppliers to pick from.

Alibaba and other one-stop platforms have made it quite simple to find and buy from vendors.

Along with the benefits of buying from international vendors, there are a few drawbacks that business owners should be aware of as well. The following are some of the most significant drawbacks:

  • Some customers think of products as lower quality.
  • They operate on lower industrial and labor norms (usually).
  • There is almost no protection for intellectual property.
  • It can be tough to overcome language and communication barriers.
  • Verifying the manufacturer and visiting the site is difficult and expensive.
  • Shipping time is longer.
  • There is also the differences in business methods between cultures to deal with
  • Importing goods and clearing customs
  • Payment security and redress are at an all-time low.

Alibaba Dropshippng: How to Buy from Alibaba

Here are some dropshipping ideas and strategies for buying goods from Alibaba safely.

Dropshipping or purchasing through Alibaba and using the directory is comparable to those of other marketplaces such as eBay using platforms like Shopify. But then it starts with looking through the product categories or using the search bar to find what you’re searching for.

There are two common methods for searching for Alibaba products to buy or dropship. You can use product descriptions to search for products, such as “dog collars,” which will return thousands of results. Alternatively, you can choose Suppliers instead of Products from the drop-down option to find manufacturers who specialize in a specific item.

What to Look Out For on Product Pages

On the product listing page of Alibaba, there are a few things you should look at and pay attention to while you’re looking for a supplier.

Unit Price

When purchasing from Alibaba, one of the first things you’ll want to consider is the pricing. For starters, FOB stands for “free on board,” and it means that the seller will cover all costs associated with getting the product to the marine port (the most cost-effective way to ship products from Asia), while the buyer will cover the cost of transporting the goods across the ocean to their final destination.

Minimum Order Quantity (MOQ)

Following that, you’ll probably want to consider the minimum order amount. A manufacturer’s minimum order quantity (MOQ) is the smallest order that they will accept. It’s worth noting, though, that this is virtually always negotiable.

Payment Options

After you’ve figured out the pricing and the minimum order quantity, you’ll probably want to know how you’ll pay the provider. There are various typical payment options, each with advantages and disadvantages for both the customer and the seller.

Let’s take a look at the most frequent payment methods and how much risk they pose to you as a buyer:

  • Upfront TT (Bank Transfer)

Risk Level: High

The supplier will receive complete payment via bank transfer before production begins. When dealing with an unknown provider, this payment method carries a high amount of risk for the buyer and is generally not recommended. If something goes wrong, you have few, if any, options for getting your money back.

  • Letter of Credit

Risk Level: Medium

A letter of credit is quite safe for both parties, but it does come with some complicated procedures and is usually only used for larger purchases ($20,000 and up).

  • Western Union

Risk Level: High

If the payment is not protected by escrow, this is a dangerous payment method for the buyer. It is not recommended for paying suppliers. Western Union should only be utilized when dealing with somebody you are very familiar with. If something goes wrong, there is no redress.

  • PayPal

Risk Level: Low

PayPal is a popular payment method among purchasers since it is low-risk, simple to use, and offers high buyer protection. Although it is a popular choice among buyers, it is less popular among providers due to issues retrieving funds, high tax rates, and the possibility of chargebacks from dishonest purchasers.

  • Escrow

Risk Level: Low

When a buyer uses an escrow service, the money is kept by a third party and only paid to the supplier when the customer confirms that their order was delivered satisfactorily. Because it protects both the buyer and the seller, escrow is a relatively safe payment mechanism for buying and selling online.

When buying goods from Alibaba for the first time, you’ll want to hunt for or negotiate with vendors who accept PayPal or another form of escrow service to ensure the best level of protection.

#2. Making Contact with Suppliers

It’s time to contact some suppliers now that you know how to better protect yourself when transacting on the other side of the world. When communicating with vendors in other countries, you’ll most likely use email or WeChat.

Suppliers will often utilize a tool like Google Translate to translate both your email and their response back to you. Remember that machine translation is still a work in progress, so expect occasional mistakes and misunderstandings.

In any case, keep your emails short, concise, well-formatted, and free of spelling problems to ensure that communication is as clear as possible. This will not only benefit the company but will also offer you more useful responses.

Furthermore, when asking questions and writing emails to suppliers on Alibaba, it’s ideal to number your inquiries so that they can easily respond to each one. As a result, the inquiries and dialogue are kept neat and tidy.

#3. Requesting a Quote

Requesting a quote (also known as an RFQ or request for quote) is a straightforward way to purchase from Alibaba. Taking a few extra minutes to plan your email, on the other hand, can make a big difference in the quantity and quality of responses you get.

When purchasing from Alibaba, consider the following questions for your email:

A. Minimum Order Quantities (MOQs)

Even if a listing specifies the minimum order quantity, you should double-check with the vendor to guarantee accuracy. Whether the MOQs are significantly greater than what you know you can pay or not, you should inquire if they are willing to lower their minimums. Ensure you let them know how much you can afford. Also keep in mind that with international suppliers, the minimum order quantity is nearly always adjustable.

B. Pricing for Samples

It is critical to verify samples for quality. You’ll want to inquire about sample pricing as soon as possible. Some suppliers may adjust the full retail cost if they receive a lot of sample requests, while others may offer samples at a discounted rate or even provide samples for free if they believe you’re a serious buyer.

C. Production Pricing

How much do your items cost per unit? This is one of the most critical things to ask. Many suppliers on Alibaba may give you a price range ($2–$3 per unit, for example), but you’ll want to know how much each unit will cost you.

D. Production Time

Knowing how long it will take to deliver your order is crucial, and depending on your specific industry, timing is crucial.

E. Terms of Payment

A ton of suppliers will demand that new businesses pay for their entire order in advance. It is crucial to understand this because inventory is a significant cost for eCommerce firms. You should also inquire if they offer payment plans on future orders.

Here’s an example of an email template you might want to use as a guide when contacting Alibaba’s international suppliers:

Hi,

My name is John, and I work for XYZ Corporation.

Widget A has piqued my curiosity, and I’d like to place an order for it. But first, I’d want to ask you a few questions:

What is the minimum order quantity for your company?

Do you give quantity discounts at what levels and what is your unit cost?

What are the terms of payment for new customers?

And before placing a full order, I’d like to order a sample of Widget A. Could you please provide me the sample cost, including shipping costs, to:

John Doe

80 Spadina Avenue, 4th Floor

Toronto, Ontario M5V 2J4M5V 2J4M5V 2J4M

Canada

Thank you very much.

John,

XYZ Corporation

www.xyzcompany.com

416-444-4444

As you can see, the sample above is short and to-the-point, with the purpose of ensuring that both parties are a good fit at a high level.

#4. Negotiating

You can start negotiating with suppliers once you’ve started talking to a few of them and have a solid concept of their prices, MOQs, and payment terms. As we said earlier in this Alibaba dropshipping guide, minimum order sizes are nearly often flexible; all you have to do is ask. Remember that a successful negotiation makes both sides happy, so push a little but not too hard.

#5. Weighing Your Options

After you’ve narrowed it down to a few suppliers, the subsequent step in learning how to buy on Alibaba for droppshipping is to consider all of your possibilities. Keep in mind that you’ll want to think about more than just price, MOQ, and payment terms when doing so. Make careful to consider how well and fast each supplier responded. As communication with your supplier becomes more important in the future, you’ll want to be sure you get started on the right foot.

What Attracts Shopify Dropshippers to Alibaba?

#1. Ready to Ship Products

‘Ready to Ship’ products are a collection of ready-to-ship items. You can buy things with set prices and shipping fees in this instance. So basically, within 15 days following the ‘Order Date,’ these products are available to ship.

#2. Alibaba Trade Show

Before buying, vendors and buyers can have a one-on-one talk and negotiate at a trade exhibition. On the one hand, it allows retailers to show off their wares. On the other hand, it enables purchasers to assess the legitimacy of these merchants. Plus because the epidemic makes in-person gatherings difficult, Alibaba chose to conduct Virtual Trade Shows.

The distinctive characteristic of this trade fair is that it is an invitation-only event aimed at American manufacturers. More information about this virtual trade exhibition can be found here.

#3. Alibaba Personal Protective Equipment

Alibaba had gathered a group of high-quality mask vendors under which shops could get their PPE (Personal protective equipment,) from a single source. In reality, during Covid-19, Alibaba collaborated with appropriate government authorities around the world, making it feasible to bulk order PPE during times when supply was limited and demand was high.

#4. Trade Assurance

As a dropshipper, Trade Assurance ensures that you will not lose your peace of mind. Alibaba will either provide you with a suitable product quality or a refund if the shipment data or product quality differs from what you agreed on.

As earlier mentioned, here are some of the advantages of Alibaba Trade Assurance.

  • Payment Security
  • Protection for the Buyer
  • Customer Service Guaranteed

#5. Pay Later

Pay Later is a useful function that allows you to borrow up to $150,000 in credit if you need to make a short purchase. This option allows you to pay back the loan in six months.

Note: It is presently unavailable, however, it may be reintroduced by the end of the quarter.

You must complete the following steps in order to join up for Pay Later:

  • Fill up the blanks with basic information about your company.
  • Connect your company’s checking and savings accounts. (They require something they can rely on)
  • Provide your contact information.
  • Verify your identity and wait for Alibaba to run a test on your eligibility.
  • If you’re qualified, you will be able to use credit to pay for your products now and then actually pay later.

#6. Payment Terms: Net-60

The new means of doing business as a dropshipper is Alibaba’s ‘Payment Terms.’ The payment method is only available to qualifying companies in the United States.

These authorized companies are able to make orders with any Alibaba participant and obtain an invoice. Dropshippers will then have a total of 60 days to repay the outstanding balance.

The advance payment is determined by the conditions of the supplier’s contract, although the common market ballpark figure is 30% of the total order value.

However, it’s worth noting that Alibaba Payment Terms is an invitation-only program open only to US-based registered firms with an EIN (Employer Identification Number).

How to Integrate Alibaba with Shopify for Dropshipping

Do you want to simply dropship Alibaba products on Shopify? In that instance, Importify may be able to assist you by allowing you to import desired products from Alibaba to Shopify. Here’s a quick guide on how to do it correctly.

  • On Importify’s home screen, go ahead and click on alibaba.com.
  • Locate the product you want to sell and click on it for additional information.
  • On the left hand side of the product page, click the red color ‘add’ button.
  • A window will appear with all of the editable product details. You can customize the title, product description, and photos that appear on your Shopify product page.
  • As you scroll down, you’ll see options to adjust the cost, variants, and organization information. Most individuals hardly include information about their company, but I recommend doing so because it adds credibility.
  • When you’re finished, select “Add to your Shopify” from the drop-down menu.
  • You’ll receive confirmation that the product was successfully added.

To see the product, go to your Shopify import list or click the view option. Furthermore, simply click the edit button if you want to make more changes to the product.

So there you have it! The product has now been successfully imported into your Shopify store.

The Advantages and Disadvantages of Dropshipping Alibaba Products on Shopify

Before making a major decision, we assess the advantages and disadvantages. We should also do the same thing if we want to learn how to dropship Alibaba products on Shopify. So let’s look at the advantages and disadvantages.

Dropshipping Alibaba Products on Shopify Has Its Advantages which includes;

  • Manufacturing costs are really low (save on this for marketing your store)
  • Navigation through the web store is simple and intuitive.
  • There is a huge selection of options and products to pick from.
  • ‘Virtual Trade’ events provide a plethora of networking chances.
  • With the help of Importify, it would be simple to integrate.

Drawbacks, on the other hand, include the following;

  • Customer service is poor and slow.
  • It’s possible that overcoming the language barrier will be a challenge.
  • Shipping and waiting times are longer.

Is Dropshipping Alibaba Products on Shopify a Good Idea?

Based on my research and experience, I believe Alibaba can help you take your Shopify dropshipping to the next level even though it may not entirely be the best option. In the end, how well you take risks and leverage gains determines the success of any business.

However, when you combine Alibaba with Shopify and the correct buyer protection, you may reduce those risks significantly.

What else must you do now that the risk has been reduced? A significant piece of advice from my perspective is to not take Alibaba’s features for granted.

Alibaba Dropshipping FAQ

Does Alibaba offer dropshipping?

In summary? Yes, Alibaba allows you dropshipping with any platform including Shopify!

On Alibaba, however, finding and partnering with dropshipping vendors is a little more difficult than on AliExpress. This is due to the fact that most Alibaba suppliers are set up to sell huge quantities of goods to wholesalers and retailers, and many are unable or unwilling to sell and ship individual items to consumers in other countries.

Is Alibaba or AliExpress better for dropshipping?

Your choice of marketplace will be influenced by the things you sell. Alibaba is a better option if you need bespoke items and a more wholesale approach to purchasing and pricing. AliExpress dropshipping may be the preferable option if you wish to acquire ready-made products in any quantity.”

Is AliExpress dropshipping illegal?

Yes, it definitely is. Dropshipping is totally legal, but there are a few legal considerations to keep in mind while you establish and run your online business.

Can I connect Alibaba to Shopify?

Yes, you can import and connect Alibaba to Shopify for dropshipping. This is achievable with the help of ShopMaster(shopmaster.com).

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