This article is a real-life experience from an experienced business owner that sources directly from China.
This is going to be a long post, but I’m doing it because they’re a lot of fake YouTubers and gurus selling fake and unrealistic expectations about Dropshipping business.
My story isn’t about drop-shipping, but rather about a different approach to online retail. We ordered products in bulk and shipped them directly from our own warehouse, all in the name of faster shipping to the United States.
It all began in 2019, right after the tumultuous era of COVID-19, when a shipping agreement known as ePacket, connecting the US and China, was banned. ePacket had been our golden ticket to quicker deliveries, relying on passenger planes to carry parcels. But with that option off the table, I had to rethink my strategy.
Our e-commerce venture primarily revolved around selling exquisite jewelry in the vast expanse of the United States. Initially, we sourced our jewelry from the popular e-commerce platform, Aliexpress. We’d order a batch of 500 pieces every week, ensure their quality in our warehouse, and then ship them to our customers. Each item cost us $7.80, but we sold them for a handsome $25.99, reaping a delightful profit.
However, as Q4 approached, our aspirations grew, and we aimed to expand our operations. The jewelry was flying off the virtual shelves like hotcakes, so we decided to make a major move. We ventured into the world of suppliers and sent out requests for quotations on Alibaba. Here’s what I learned on that adventure:
- Bulk Orders Mean Lower Prices: The item we were buying for $7.80 each could be procured for as little as $4.00 if we ordered in bulk. The more we ordered, the cheaper they became, eventually reaching a staggering low of $2.00 per item. It’s a basic economic principle, but the difference from $7.80 to $2.00 was truly eye-opening.
- You’re on Your Own for Quality Checks: Unlike Amazon, where quality checks are part of the package, Alibaba leaves it up to you. We had to meticulously examine the quality of our 10,000 items, and unfortunately, around 300 of them turned out to be defective. Whether they were damaged or simply of subpar quality, the responsibility fell on our shoulders. Sending them back to the supplier was an option, but the time and effort hardly seemed worth it. So, remember to order at least 10% more than you need.
- Choose Your Shipping Method Wisely: We stumbled upon a fantastic kitchen product, perfect for the American market, but there was a catch—it weighed a hefty 1.2 kilograms and was made of stainless steel. The need for speed clashed with the high cost of air cargo at $2000. The more affordable option was shipping by sea, but it meant a one-month transit time. When dealing with large items, plan well in advance and select the right shipping service to save costs.
- Negotiation Skills Matter: Don’t shy away from negotiations with your suppliers. We managed to lower the per-product cost from $6 to $4.80, a seemingly modest reduction that saved us around $3500 per order. Negotiation is the name of the game, just as in any other business.
- Stick with Suppliers Until You’re Sure: If you discover a better price elsewhere, don’t rush to shift your orders. We found a supplier offering the exact same product at nearly 20% less, and we ordered 500 units from them. Unfortunately, most of them turned out to be defective. So, always maintain multiple suppliers until you’ve conducted quality checks on all of them.
- Diverse Communication Channels are Vital: If you communicate with your suppliers through Alibaba chat, make sure you have their emails and contact details on platforms like WhatsApp and WeChat. Suppliers can go offline without notice, and having multiple modes of communication can be a lifesaver.
- Premium Shipping Through Good Relations: Don’t hesitate to request premium shipping options if you maintain a good relationship with your suppliers. Our supplier, who used to ship items via ePacket in 10-14 days, offered a premium FedEx shipping option for larger orders, guaranteeing delivery within 4-5 days.
- Choose Alibaba’s Payment Gateway: When it comes to sending funds, opt for Alibaba’s payment gateway. It’s seamless and boasts an effective grievance redressal system, making it more reliable than alternatives like PayPal or WeChat.
- Beware of Product Sourcing Agents: Product sourcing agents can be incredibly helpful, connecting you directly with manufacturers and securing customizations and better prices. However, exercise caution when selecting a sourcing agent. Not all are created equal.
And that, my friends, is the tale of my e-commerce journey, a rollercoaster ride through the intricacies of sourcing, quality control, and navigating the vast world of international commerce. So, if you ever find yourself delving into e-commerce, remember these lessons, and you might just uncover a treasure trove of success.
You can check out how to start a profitable Dropshiping business here.