Do you dream of setting up your own online shop or import business? In both cases, the best way is to begin your research on the internet.
But how to get started?
I asked my friend and business partner Fredrik, who’s been helping Western companies import from China since 2009, to write this article for my website. Here is what he has to say!
Alibaba.com and Aliexpress.com are well known among importing businesses worldwide. Both websites are owned by the Alibaba Group, based in Hangzhou, China. The difference between the two websites can be hard to spot at a first glance, but they have two very different business models with different strengths and weaknesses. This article will help you choose which one to use.
p.s. Here you can find my review of The Official Alibaba.com Success Guide, the only book that I was able to find on the topic.
Alibaba.com key facts
- A B2B (business to business) portal that connects manufacturers – mainly Chinese – with overseas buyers.
- No built-in shopping cart system, the order terms are negotiated and confirmed via email or the built-in chat function.
- No transaction fees or commissions are paid to Alibaba.com. Their main revenue source is the “Gold Supplier” membership fee paid by suppliers. Alibaba verifies that each Gold Supplier is a legally registered company. However, this is not a guarantee of quality products.
- Focused on “made to order” goods. In practice, this means that suppliers on Alibaba don’t advertise “ready made” products but rather manufacture products based on the specifications provided by the buyer. The suppliers are basically listing reference products.
Aliexpress key facts
- A transaction based on a B2B and B2C (business to customer) platform that connects mostly trading companies – mainly Chinese – with overseas buyers.
- Focused on small volume orders of “ready-made” products instead of “made to order” products and therefore more suitable for small and medium-sized importers who can’t afford to buy a container of goods.
Alibaba and Aliexpress comparison
Minimum Order Quantity (MOQ)
A supplier needs to manufacture a certain number of units before he can make a worthwhile profit. The raw materials and component suppliers also impose MOQ requirements on your supplier, since they also need to provide a certain amount of products to your supplier in order to reach profitability. This translates into the MOQ. If you can’t reach it, the supplier won’t do business with you.
Alibaba: Suppliers tend to have rather high MOQ requirements. The reason is that they don’t keep products in stock and need to purchase a minimum quantity from their suppliers. They also need to manufacture a minimum quantity of products in order to make a profit. Many consumer products, such as wristwatches, can easily have MOQ requirements of 300 units or greater. An MOQ requirement is usually valid for a specific product, so if you want to order two different products, you need to order 2 x the MOQ requirement. This is often too much for small businesses that don’t have fairly large sales volumes.
Aliexpress: Most suppliers here offer an MOQ starting at 10 units and greater. The simple reason is that AliExpress suppliers can split up a larger quantity between many small buyers. This eliminates the issue of reaching a high MOQ requirement, but will of course affect prices.
Pricing
The price paid for a product is based on two main factors: its quality standards and the quantity you buy. The approach an importer should have with regards to pricing is very different when comparing the Alibaba and Aliexpress portals.
Alibaba: There are no fixed prices, but everything is quoted from scratch to a various degrees. You send your product specifications (colors, dimensions, materials, certification requirements, etc.), the delivery terms, and the quantity you want to buy; then the supplier gets back to you with a price. A wristwatch can cost anything from $2 to $200 USD; the pricing is a question of what quality standards you require.
Assuming that you can reach the supplier’s MOQ requirements, you will also enjoy lower prices compared to if you are ordering 10 to 20 units at a time from AliExpress suppliers.
Aliexpress: The supplier lists a product and prices for different quantities. It’s usually not up for negotiation. Prices on Aliexpress are higher compared to larger quantity orders from an Alibaba supplier.
Custom designed and branded products
Creating a brand instead of just importing random no-name products can increase the customer’s perceived value of the product, even if it’s not a well-known brand name. A brand can consist of a logo, certain colors, or design. Some importers also want to develop a completely new product or modify an existing design.
Alibaba: Most suppliers can offer custom designs and logo printing. However, developing a new product from scratch is not easy and you’ll need to have very well-drafted product specifications and graphical material at hand. This includes, but is not limited to, material specifications, components, Pantone colors, product packaging designs, product body artwork, and logo designs.
Aliexpress: Products on Aliexpress are already manufactured and waiting for a buyer. It’s not possible to send back a few units to the factory to modify their design or print a logo. Therefore, Aliexpress is not the right choice if you’re looking for custom-designed or branded products.
Product certification
Most of the products, for instance, electronics, toys, plastics, and food require product standard compliance in most of the markets. Different countries (USA, Canada) and markets (EU) have different product standard certificates. Many importers assume that exporting suppliers are compliant by default, but this is completely wrong. Importing products that are non-compliant is illegal and can result in having your shipment confiscated, so you better take this part seriously. Below is a list of different product certificates:
- Electronics: CE, RoHS, EMC Class A and B
- Toys: EN71
- Plastics: REACH
- Fire retardant: FR B1 and B2
Alibaba: Since suppliers provide “made to order” products, you have the option of asking your supplier to make products compliant with a certain certificate by using the materials and components that are required for compliance. Remember that not all Alibaba suppliers have the experience or knowledge required to manufacture compliant products, but there are plenty that do. The conclusion is that if you are importing products to the EU or USA which also require compliance with a standard such as CE, then Alibaba is your next destination.
Aliexpress: The products listed on Aliexpress are already produced and it’s very unlikely that the supplier has made products that are compliant with Western product standards. Compliant products are more expensive and it would make the supplier less competitive to their Russian, African, and Latin American buyers (although note that also these markets often have regulations). This group tends to be larger than American and European buyers so it does make sense for the average Aliexpress trader to not bother with American and European certification standards. This is the reason for which, if you are importing in US or EU, it will be difficult to find a suitable supplier on Aliexpress.
Quality Issues and Risks
It’s risky to import products from China. A whole industry focused on quality assurance and fraud prevention has grown in China, unlike anywhere else. Anything from small details that are incorrect in the final product to outright fraud is a possibility of this business. This costs businesses money, and while some issues can be overlooked, others force businesses into bankruptcy.
Alibaba: Far from all suppliers are qualified to take your order, especially if you want to import custom-made products or have certification compliance as a requirement. You’ll need to invest many hours in questioning your suppliers on their manufacturing capabilities. The risk of quality issues will increase if you don’t know which product specifications define the quality of the product. In other words, the more you know about your product, the more quality issues can be avoided.
Aliexpress: It’s very straightforward to order from Aliexpress, and you get what the supplier offers, nothing less, nothing more. Keep in mind that “quality” is subjective, and you should order a sample before placing a larger order. Things considered to be good quality in Ecuador or Russia (no offense!) might not be considered good quality in the United States or Italy.
Unlike Alibaba, Aliexpress provides buyer feedback directly on the site. Review your supplier’s negative buyer feedback to get a rough overview of what kind of mistakes the supplier has made.
Lead Times
Time is money and that becomes especially clear when importing from China. Below we list the different lead times you need to take into consideration when buying from a Chinese supplier:
- 1. Order preparations
- 2. Production time
- 3. Shipping time
Alibaba: It can take months before you’ve identified the right supplier, confirmed samples, negotiated prices and have a signed and stamped Sales Agreement in your mailbox. On the other hand, you can just ask a random supplier to send a digital invoice and transfer your money right away, but that’s obviously risky. The order preparations can take anything from 15 days to 6 months. The larger the order and the more complex the product is, the longer it takes.
Production time is easier to predict since it’s usually around 30 days in total, counting from the day the supplier receives the payment.
How long it will take to ship the products from China is basically a question of the mode of transport. Airfreight usually takes 5 – 7 days while sea freight takes around 4 weeks. If you’re sourcing suppliers on Alibaba, you’re likely to order fairly large volumes and in that case, sea freight is more competitive than air freight.
Aliexpress: Since the products you see on Aliexpress are already manufactured and ready for delivery, you don’t need to worry about any time-consuming order preparations and production time. Since you’re sourcing from Aliexpress, your order is probably not large enough to make sea freight a viable option. Therefore, the only lead time you’ll need to take into consideration is the air freight delivery time. The Alibaba Group didn’t name this portal Aliexpress without a reason.
Summary
We recommend Alibaba.com if…
- You can buy a few hundred units of each product
- You want to import custom designed products
- You want to import products with your own logo print or custom product packaging
- Your products are very price sensitive
- You are importing electronics, toys, plastics or any other product to the EU or USA and therefore need to comply with certain certification standards (CE, FCC, etc.)
We recommend Aliexpress.com if…
- You buy 10 – 100 units per product
- Custom design, logo printing and custom product packaging are not important to you
- Your products are not that price sensitive
- You are not importing products to the EU or USA or your products don’t need to be compliant with any certification standard (but these products are quite rare)
- You need your products right away
Fredrik Grönkvist is the Co-Founder and Limited Partner of ChinaImportal.com, an information services company which provides start-ups and small businesses with an online system for managing sourcing and production in China and other Asian countries.
Disclaimer
This article is provided only for informational purposes only and neither the author nor any companies and/or service providers mentioned in this text make any representations as to the accuracy, completeness, currentness, suitability, or validity of any information in this article. This article only represents the views of the author and is not endorsed by any company and/or service provider mentioned in this text.
i just wanted to know if i would have to pay extra for shipping in india……..i wanted to buy a dungarees worth 1699INR …if yes…around how much more money will it cost………?
Very informative article. I would like to make sure that I understand, however, are you saying that if I am in the United States, that I should not use AliExpress to purchase goods? Also I was wondering if you ever hear of Tradetang and have a recommendation one way or the other on the legitimacy of that site? Thanks for your help in understanding.
The Real Person!
The Real Person!
Hi Traci, it’s quite simple: US is an highly regulated market and the traders that are on Aliexpress rarely sell products compliant with US regulations.
Nope, I never heard of Tradetang!
Can you explain more about this:
“You are not importing products to the EU or USA OR your products don’t need to be compliant with any certification standard”
I live in Canada and plan to use the dropship method rather than have the
products delivered to me here–I’m not understanding, sorry.
The Real Person!
The Real Person!
Hi, Canada’s normatives are very similar to USA normatives. We can’t recommend Aliexpress for Canada
I ordered somr micro sd cards using aliexpress from seller beijin chen. They turned out to be junk. I’m out $20 USD but won’t use aliexpress again. Ripoff.
Good day sir,i am new to the import business,plz can i ask for a list or names of verified suppliers who supply to Nigeria,.im interested in importing some products ,but i must confess im scared of what my fellow Nigerians do online.
The Real Person!
The Real Person!
Hi there, please visit Chinaimportal.com and send inquiry there! At SDC we don’t provide any sourcing service
Bashir
Your fellow Nigerians are not the only people that are importing products from aliexpress as it is the largest world online shopping mall. I ve been importing laptops from this site and its been successful so do not spoil the names of your fellow nigerians like me and others. Hopes you understand
Hello sir. I saw your comment and I am from Cameroon looking forward to importing electronics from aliexpress and reseling in my country. Since your as my neiboring country has tried importing some things. How is the experience and do u pay any custom charges beside aliexpress shipping fees. With due respect u can feel free to contact me through my email [email protected]
Thanks so much sir
Wonderful article! How can I make my payment? Am from Nigeria, is it through master card or visa card? Thanks.
Hi Furio I thank you vry much with all you post. There is some one sending me a post that there is a sacret asian company that sell goods for give away price Original items like samsung galaxy S4 for $80, Nokia lumia 710 for $63, macbook laptops for $200 to mention a few and it is not alibaba, aliexpress, dhgate, or dealextreme and u can buy even it is one of the item. Do have any idea of this
. This same person has an ebook to sale all his information. Thanks
Hi Furio
Thanks for great article. After went through the comment, one thing that I dont see is tax/tariff. I plan to order stuff from alibaba and ship to the US worth about $500, I want to know how is the tax works. The seller ask me pay for the shipping cost $90 for express shipping. Is this shipping cost cover everything like custom fee, etc. Thank you for your advice.
The Real Person!
The Real Person!
It depends on the Incoterm: if it’s DAP or DAT, then it covers everything. If it’s CIF (usually it’s CIF) than you’ll pay duties and other American taxes once the goods land in US. Ask to your supplier what Incoterms he’s offering to you.
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Very good article. Thank you so much. I’ve used AliExpress in the past but now looking for my own brand, so I know to use Alibaba instead.
The Real Person!
The Real Person!
Yes, on Aliexpress you only find wholesalers so no one would be able to rebrand the goods for you
Great article. I buy from aliexpress all the time with no issues.
Hi Furio
Thanks for the article. I’m a young professional that is looking to practice my entrepreneurial skills rather than spend my life working at the corporate ladder. Presently I and researching and investigation all options and elements of the trade.
It appears that Alibaba/AliExpress are the most prominent. Can you please suggest any other sites that perform a similar function? I understand that these will likely be less reputable however despite that, significant opportunity can arise.
Another thing, an earlier post was made suggesting the following article for information on this business model.
[Link Moderated]
Are you familiar with similar pieces or have you written your own?
Thank you in advance.
The Real Person!
The Real Person!
Benjiamin,
I deleted the link because
1. I think that the owner of the e-book requires you to optin to his newsletter in order to get the e-book link so you can’t publish it (it goes against his copyright)
2. That e-book is totally useless cause all he does it’s to tell you to open a website, list some incoterms and general stuff about shipping and then post photos of people that became rich importing from China using its empty system. Sure, and I’m Santa Clause : )
Here you find the best resources to import from China (check the 3 websites at the end): http://www.saporedicina.com/english/doing-business-with-china/
The Real Person!
The Real Person!
p.s. just saw the link you refer at on an earlier post. I’m going to delete it too.
Great article, you can’t imagine how helpful it is to me right now!! I am looking to do business with a company on Alibaba to manufacture a piece of jewelry. I’m nervous about the quality as I would like it to be a bit more upscale than the pictures of their products reflect. Can I tell them the materials I want them to use?
The Real Person!
The Real Person!
Hi Beth,
if you are serious about manufacturing your jewellery in China, head to Chinaimportal.com. You can start from this article: http://www.chinaimportal.com/blog/import-jewellery-from-china-in-5-steps/
Very useful article. Thats exactly what I was looking for! Now I can start trading :-)
Thanks!
The Real Person!
The Real Person!
: )
Very well explained in detailed, better than the information posted on Alibaba website. Many thanks.
The Real Person!
The Real Person!
: )
Pls how can define the original product when ordering for aliexpress and how to import from Us and EU
I have noticed that this guy will only answer you if you feed his ego. Thank him so much for his geniusnes, and he will answer you. Dont believe me, look trough ALL of the comments here…
The Real Person!
The Real Person!
Incorrect.
I’ll only answer if 1.) You ask something that wasn’t ask before AND 2.) You want to import decent quantities as a business and not one jacket or one smartphone as a private citizen (this article was written for small businesses, not for private citizens).
But don’t believe me, just look through all the comments : )
The Real Person!
The Real Person!
Also, sometimes I just miss comments… this websites gets many comments every day and I have limited time to answer. It’s written nowhere that I shall reply to everybody!
Pls how can i know the original item why ordering from aliexpress
Thank you for this helpful article. I also have question.
I am registered on one of these sites and already trading a little with China. Everything is going well but right there I also have account which is providing my primary business. It is tour operator. People from one of these two sites calling me and asking to upgrade in something like a gold member etc.
But I am not sure that in any of these sites people can sell tours for 1000-1500€ excluding flight ticket, per a person. Am I wrong?
The Real Person!
The Real Person!
Hi Andres, Alibaba and Aliexpress are websites for trading companies and manufacturers selling hard goods; I’ve never heard of a tour agency on Alibaba so I don’t think it’s the right choice for you
Thanks for that Furio it is exactly what I though and what I wanted to hear. They make pressure on me to upgrading for 699$ but I wont just because travel packages and tours are product different than coffee wholesaler for example. .
I ‘ve been studying and reviewing aliexpress for the past 4 months, reading both positive and negative feedbacks, chatting with some of my selected or preffered sellers and communications has being great. I ordered for a laptop yeterday and my order is yet to be shipped with effective communication with my client.
Thanks for the review!
The Real Person!
The Real Person!
: )
Thank you for this great article. I have been buying from Aliexpress since 2010 and total value of my purchases till date stand at $15,178.51 for about 70 orders in number. With a very effective escrow service in pIace, I think aliexpress.com is a great place to shop. I have never been scammed. Aliepxress recently cancelled one of my orders when they found that that supplier has suspicious motives.
It is wise though to buy mainly(or only) from suppliers with positive feedback rate of over 95%.
Once again thanks for this article.