The aliexpress dropshipping business model is heavily reliant on suppliers.
You can lose a lot of money because of the fact that you’ve chosen a supplier who is overpriced and you’re paying more for your items then you should.
You could also lose money from purchasing poorly manufactured items that make customers ask for a refund and you can even lose money from being sued in some of the most extreme cases.
AliExpress Dropshipping Tip #1: Make sure you are in fact working with a manufacturer, wholesaler or a trading company
When working with Chinese suppliers you’re going to run into three main types: Manufacturers, wholesalers and trade companies. This may sound boring and jargony, but it is really good to know what these terms mean.
A manufacturer is exactly that, they are the company that originally created the item in the factory. Working with them usually means that you get the lowest price.
Trade company is the middleman who is working as an agent between you and a manufacturer. As a result, they often give higher prices, because of the fact that they need to make a profit themselves. You may think that you should just avoid trade companies altogether, but that’s not necessarily true. Sometimes it is better to be working with a trade company rather than the original manufacturer and sometimes due to the improved communication you can actually negotiate lower prices than if you had gone directly to the manufacturer.
Finally, a wholesaler is another form of a middleman. What they will do is they will purchase items in bulk and then they will send them to you. On Alibaba you are usually going to be running into either manufacturers or trade companies. You can find out if the company is a manufacturer or trade company by going to the company profile under business type it will tell you if a company is a manufacturer, trade company or as in some cases both. In cases that it’s both, what will mean is that they do manufacture their own products, but they act as a middleman for some other types of products that they don’t produce as well.
On AliExpress, you will often find either manufacturers or wholesalers and a really good way to figure out if a company is most likely the manufacturer or a wholesaler is to see if they are selling more than once type of brand. For example, Beiver Official Store is clearly the original manufacturer store:
Not only is it named Beiver Official Store, but they only sell Beiver branded items:
On the other hand Shenzen OKQI Technology CO
is clearly a wholesaler, they have a non-branded store name and they stock items made by multiple brands:
Neither is better than the other, oftentimes manufacturers will have the lowest prices, but on the other hand wholesalers will often have a wide selection of items. There are pros and cons for both.
Final thing to add for this tip, you can use ecommerce tools, ecommerce product research tools and dropshipping software then that would be very helpful with identifiying the right suppliers, which can be done with ecommerce tools like SaleSource.
Shopify Dropshipping Tip #1: Avoid using pictures with models
If you were using photos for your item listing that are the same photos that the supplier has provided – avoid using ones that have models in them. Why? Because there is a reasonable chance that the supplier has a ilegally stolen those photos from the actual models themselves, which is infringement of copyright.
Most Chinese suppliers don’t mind breaking copyright laws, because of the fact that it’s really easy to get away with that in China. But of course that’s not the case in the West. Usually, the original copyright holder doesn’t immediately sue, but they can eventually do that – it is within their rights. They don’t have to send a takedown notice first, but something that does happen regularly is that the original copyright holder will contact, say, Amazon. If you’re using their picture on there, they will get them to take that listing down, meaning that you can possibly get banned from selling on Amazon.
In case of AliExpress dropshipping same thing applies. You were probably advertising your product on Facebook, they will contact Facebook and get the ad taken down, which is very bad for your ad account.
Not all photos that suppliers are using that have models in them are stolen, but because of the fact that you just don’t know, it’s risky to use them. So, what I recommend is that if you want to use photos that have a model and them get a sample product for yourself and then you can take your own photos with it instead.
AliExpress Dropshipping Tip#2: Give priority to products that have multiple manufacturers
Perhaps you want to manufacture and private label your first item for Amazon and you found two items that both look excellent or maybe you’re dropshipping an item from AliExpress and you’ve found two items that you would like to run a Facebook ad for and you’re trying to decide between the two of them because you’re on a limited budget. Best thing to do here would be to see which item has multiple reliable suppliers and to prioritize that item.
Why? Because Chinese suppliers and manufacturers are often working off of small margins. That means that if they are financially mismanaged, then there is a very good chance that they will go out of business and if they go out of business, then you’re going out of business too.
In China manufacturers copy each other all the time, because there’s basically no legal repercussions for this. The Mountain Incense Holder is a great example. You can see that there are multiple manufacturers that are producing their own version of this incense holder.
We can see that there are multiple sellers that are selling their own brand of it as well. This means that if you would dropship this item in your own Shopify store and in your main supplier went away, you know that you could find another one, so that you could keep selling this item and keep making money.
AliExpress Dropshipping Tip#3: Always double-check your existing agreements
There are several advantages for working with Chinese suppliers. One of them is that they offer incredibly low prices. There seems to be a widely held misconception that Chinese manufacturers produce exclusively cheap and trashy items. That is just not true and I personally think that that’s an unfair stereotype. It is true, you will find factories in China that produce low quality items, but the same goes for the West.
The main advantage of using local manufacturers lies in the fact that there is no language barrier. When you’re working with Chinese suppliers, it is recommended that you ask very specific questions. For example, let’s say that you’re private labeling on Amazon and you want to purchase a bulk lot of items from your Chinese supplier, but you want to know what your shipping costs will be. Ask very specific questions. Never assume that they will figure out to give you this information on their own. Ask them things like what are the dimensions of each carton? How much do they weigh? How many units fit inside a box?
A lot of suppliers will not think to give you any extra information because of the language barrier. So whether you are negotiating an agreement with a supplier that you found AliBaba or a dropshipper that you found on AliExpress, get them to recap each specific part of your agreement in writing. That way you can make sure that everyone has the exact same expectations.
Shopify Dropshipping #2: Make sure your Chinese supplier attends trade shows
Not all suppliers will have been to trade shows and that’s absolutely okay. In fact, most supplies probably haven’t been to one. But if you can find one that has, that is a big bonus. It indicates that they are producing quality products. If their products were poorly produced, then they’d be unlikly to showing them off at a trade show.
This of course is very important, because of the fact that you want to be purchasing quality products that won’t break, because if they break you are going to have unhappy customers. Plus trade shows are also expensive to exhibit at, the fact that they have enough money to attend one indicates that their company is financially stable. This is important because if you find a hot selling item that has just a single manufacturer and that manufacturer goes out of business, then you have no items to sell. Manufacturing items as cheaply as they are in China means that those companies are working off of small margins. So if they are not managed correctly, then they can risk going bankrupt.
So, if you are trying to choose between which supplier to work with and you see that one has been to a trade show then that would be a legitimate factor for choosing them. So, how can you tell if your supplier has been to a trade show? If you found them using Alibaba, it’s quite simple: Just go to the company profile and see if there is any information on trade shows.
In this case, we can see that the company attended the Canton Fair in 2003-4.
Unfortunately, if you’re using AliExpress a lot of the time the original manufacturers are not listing the items for sale on there themselves. Instead, they work with wholesalers who then list it for sale. What I would recommend that you do in cases like this, is that you check to see if the original manufacturer has been to trade shows themselves. To do that you need to find the brand name of the item that you want to sell on AliExpress then go to Alibaba and do a search for that brand and see if they’ve been to the trade show.
Now again, just because a supplier has not been to a trade show doesn’t mean that there’s some sort of a scam. Going to trade shows is very expensive, making it a financially positive experience, where you make enough sales to offset the cost of attending can be a challenge. Instead, use this information to help you choose if you are stuck between two competing suppliers.
Final Words
The strong reliance on suppliers can be said to be one of the small drawbacks of the dropshipping business model, for this reason it is imperative that you follow the above suggestions and pick the best supplier for your online store. Do that and your dropshipping business will thrive.
