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.
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.
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.
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.
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.
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.
Hey anyone there to kindly help me w/ shipping problem.. Under Alibaba Shipping, they provide for shipment per piece of the product.. I dont know their definition of per piece.. If i order 50pieces of shoes and the shipment price is US$ 13 per piece, does that mean each pair of shoes is $13 or it’s the whole package of shoes that is $13..
Furio Fu says
Hi, ask Alibaba or your supplier
Many sellers or factories on aliexpress and alibaba have their own websites, they provide more lower price on same products because you needn’t pay charge for intermediary/agent like Alibaba or Aliexpress. For example, you want to import woman’s goods, you can select ginkia.com not alibaba and aliexpress in order to save lots of money.
Natalie T. says
Thank you for the article! Just one question: when I order from AliExpress, are there any hidden costs like import fees, taxes, duty, etc or is it just like ordering from Amazon where I order, pay for shipping and that is it? (I am located in Canada).
Tuan Bui says
Hi Furio Fu,
I ordered products on alibaba then chosed shipping method by fedex ie. does fedex fee cover the custom cleanrance and others tax at destination port?
Furio Fu says
Ask Fedex, we don’t know what contract you signed.
B2B buyers in North America must become aware of this fraud perpetrated by organised crime in Asia. Ask the Fraud Unit in any large police service in North America about how many such reports they have taken: Even two companies that have long dealt with each other have fallen prey to this. The Chinese seller’s email gets “hacked” and the fraudsters intercept email back and forth between buyer and seller, often setting up domain names on Internet similar to each so that email addresses can be created that at first glance appear to come from each company. This goes on for weeks or months as the deal comes to fruition. Then one day the buyer in N.America receives an email from their “seller” explaining about how a bank audit or some such BS has forced them set up a new bank account to transfer often huge amounts of money into. This account is, of course, set up by organised crime by someone using fake ID. Eventually, buyer and seller end up accusing each other of fraud. The moral of the story is PERFORM YOUR DUE DILIGENCE. If you receive new banking information from an existing seller (or even a new one) then take the time to confirm – not by email – but by phone or fax. And always scrutinise the email address of the seller to make sure it is identical to the one you’ve used long ago.
Furio Fu says
Fraudsters are everywhere, not only in Asia. As you said, perform your due diligence, always!
I ordered a pair of sun glasses from a supplier and the payment was done by visa card.
The delivery address is San Pedro Ivory Coast West Africa.
What i want to know will be supplier be able to dleiver the items and if in case it is not delivered what will happen to the amount which is paid to the supplier.
Please could you give me some information on this.
Ndem Godlove says
Thanks for your comment sir
But despite the fact that this guys give different shipping methods I just which to know how this goods come right to my door steps. Who handles it along the way and all the like
Thanks for your great post.
I am creating a system for people to import any products at the wholesale price without worrying the MOQ.
I am wondering if you can provide me some feedback. Thanks in advance.
People who import products on Alibaba.com usually feel difficult to meet the Minimum Order Quantities (MOQs) set by Alibaba sellers. I create a browser extension What-are-Worth-to-Buy (wawtb, and a website wawtb.com to solve this problem.
The browser extension wawtb enables importers to claim how many piece of products they need. Multiple importers may claim the same product and we call them the product’s candidates. When the total number of claims made by the candidates exceeds the product’s MOQ, wawtb notifies each candidate to order the product on wawtb.com.
wawtb.com is a group buying site. It aggregates the orders of each candidate and parchases on Alibaba.com. Later, wawtb.com dispatches the received products to each candidate.
i want to start a small bussiness of memory cards…in Bangladesh.
Do i need any license to do so….Plz hel
Brenda Colmenares says
I’m kind of confused about how AliExpress markets itself now. Almost anyone can order 1 product at AliExpress so using AliExpress to purchase goods for resell purposes will not be ideal in the future. AliExpress now is more like an online shopping mall and the supplier under it are the retailers. Soon as AliExpress becomes known to people this way, the individual buyers, who have no intention of buying in bigger quantities and just wants to avail of the good price, will just go and search the items directly there.
Being able to buy 1 product is good to check the item without spending too much, but on the other hand. A buyer with no intentions to buy more items for resell purposes can also take advantage of this concept. That is just my take.
Furio Fu says
Aliexpress is B2C, like Amazon or eBay. To buy as a wholesalers, you can head to Alibaba