Do you want to start a dropshipping business, but you are torn between Amazon vs. AliExpress dropshipping? This article shares everything you need to know about dropshipping on Amazon and AliExpress.
Dropshipping is one of the ways you can make money online. For starters, this is a business model where retailers don’t have stock of the goods they are selling. Instead, whenever they get orders, they transfer the order to either the product’s manufacturer or a wholesaler who has the stock. Then the wholesaler or manufacturer handles the fulfillment. The advantage of dropshipping is that you don’t need a huge budget to start the business.
The dropshipping industry has been booming in recent years. Statistics show that the worldwide dropshipping market was worth $102.2 billion in 2018 and is expected to grow at a Compound Annual Growth Rate (CAGR) of 28.8% from 2019 to 2025.
The droshipping industry has attracted many online entrepreneurs. The main reason for drop shipping’s popularity is the fact that it’s a venture that you can start without any money. Drop shippers don’t need to have any inventory to get started. Besides, there are no warehousing costs or any logistical hassles.
Now, two of the most popular dropshipping platforms are Amazon and AliExpress. So, which is the best deal for you as an entrepreneur?
Amazon is the largest eCommerce company worldwide. As of 2019, over 150 million mobile users were accessing the platform’s app. Another interesting statistic is that 89% of buyers are more likely to buy from Amazon than other eCommerce sites. The above data tells you that, indeed, Amazon is one of the best places to establish your dropshipping business.
But the elephant in the room is, can you legally dropship on Amazon?
Well, the answer is yes. It is 100% legal to start dropshipping on Amazon. This is as long as you adhere to the strict Amazon drop shipping policy lest you have your account banned.
According to the company’s policy, you must agree with your supplier that you are the one that will be identified as the seller. In the same token, all packing slips, invoices, and external packaging should have your name and not that of the supplier. What’s more? There should be no material that identifies a third-party shipper before the order’s shipment. Lastly, the drop-shipper is responsible for all returns, and they should abide by Amazon’s policies.
For the record, Amazon doesn’t allow drop shippers to purchase products from other online retailers.
Advantages of Amazon Dropshipping
Amazon drop shipping has plenty of advantages, as discussed below.
- First, as the largest eCommerce site, Amazon has a wider reach. You can achieve huge sales now that the company boasts over 300 million active users.
- The second advantage of dropshipping on Amazon is the brand’s trust. As mentioned earlier, many shoppers are more willing to buy from Amazon than other eCommerce sites.
- Third, Amazon also has a robust logistics infrastructure so you can be sure that your customers are getting their orders on time. As you may be aware, delivery turnaround is a key purchase driver, especially among Gen Z consumers.
Another advantage of dropshipping on Amazon is Amazon Prime. For starters, this is an exclusive service that gives members several extras, including shipping. According to statistics, Amazon Prime increases sales exponentially.
Disadvantages of Amazon Dropshipping
While Amazon dropshipping has several advantages, there are also shortcomings.
- First, there is stiff competition on Amazon. The platform has over 1.9 million sellers as of 2021. So, to stay on top of your game, you might have to invest in marketing or bring down your prices now that other sellers are selling the same products as you.
- Another disadvantage of Amazon dropshipping is the strict rules and regulations. The company is known for banning seller accounts without any warnings or explanations. Simply put, Amazon is not dropshipping-friendly.
- Third, to run a dropshipping business on Amazon, you need a paid subscription, be it the Individual plan or the Professional plan. That means it’s not free to operate a dropshipping business on the platform.
AliExpress may not be the biggest eCommerce site, but it still has a considerable market share, especially in China. The eCommerce giant boasts over 150 million active users and is available in more than 230 countries and regions. That said, it is also a great destination for entrepreneurs looking forward to starting a dropshipping business. Interestingly, AliExpress has over 100 million products thanks to China’s muscle when it comes to manufacturing.
Now, the big question is around the legality of dropshipping on AliExpress.
Well, dropshipping on AliExpress is allowed as long as you follow the company’s dropshipping policy. Unlike Amazon, AliExpress doesn’t have stringent policies because the business model itself is different from Amazon’s. AliExpress aims at connecting sellers and buyers and is actually a dropshipping-oriented company. But still, there are some general terms and conditions that drop shippers must abide by.
Advantages of AliExpress Drop Shipping
Starting a dropshipping business on AliExpress has several advantages.
- First, AliExpress is a drop-shipping-oriented eCommerce platform. Even though it started as a B2B platform, today it is B2C and C2C-oriented, so it naturally favors drop shipping. AliExpress doesn’t sell to consumers directly.
- The second advantage of dropshipping with AliExpress is the low prices. As you may be aware, this is a Chinese company, and most of the suppliers are from China. Now the lower manufacturing costs and competition among Chinese manufacturers translate to lower prices.
Besides the affordable prices, most AliExpress suppliers offer free shipping. As you may be aware, 73% of shoppers say that free delivery dramatically impacts their decision to purchase an item online.
There’s also the benefit of packaging. Unlike Amazon that packaged orders using the company logo, you can opt to use custom packaging. This way, you can grow your brand.
Disadvantages of AliExpress Drop Shipping
AliExpress dropshipping has advantages, but there are also disadvantages, as discussed below.
- First, there have been many issues regarding product quality. Now that there is no quality control, there are chances your customers will receive cheap knockoffs, which will hurt your brand.
- Second, AliExpress shipments take ages to be delivered. This is especially if your customers are far away from China, where most orders are shipped from.
Slim margins are also a cause for alarm when dropshipping with AliExpress. While the prices of commodities on the platform are low, it means your margins are also low.
Lastly, the refund and returns process is hectic. In most cases, returns could take up to three months to be actualized. Again, this is something that will hurt your brand.
Verdict: Amazon vs. AliExpress
There you have it, folks, a roundup of Amazon vs. AliExpress dropshipping. So, what’s the best option for entrepreneurs looking forward to starting a dropshipping business? Well, it’s hard to call a winner as both platforms have advantages and disadvantages.
But here’s our advice. If you want a trusted platform with many shoppers, go for Amazon dropshipping. But then, you need to be very careful lest you end up losing your account. On the other hand, if you want a dropshipping-oriented platform with cheap products, AliExpress dropshipping is the best choice.
That’s it for this Amazon vs. AliExpress comparison review. Which platform is your favorite as far as dropshipping is concerned?