AliExpress is for wholesale purchases only, but now the question is, what should you be buying or buying from wholesale? There are three types of buyers on AliExpress, each with their own business model. These are retail arbitrage, private labeling, and product customization, all of which are at least partially focused on selling Shopify products.
All three are very different and before ordering products through AliExpress it is important that you decide which business model suits your needs. Let’s start with the simplest of retail arbitrage.
Retail arbitrage means buying products from China and elsewhere in the world and basically turning them over for a profit. For example, you buy a blender from China through a supplier on AliExpress and you pay $ 30 for that blender and of course you buy more than one so let’s say you buy 20 for a total of $ 600 with dropshipping Chrome extensions. You then turn around and flip these products over on Amazon or Ebay for $ 40 each, which brings you a net profit of $ 10 per sale.
If you sell all 20 you have just made $ 200. It’s very simple, nothing more is possible. There are no barriers to entry, the places where you can sell these products are somewhat limited and since arbitrage is so easy anyone can do it and as a result we have a lot of competition which means your earning potential is pretty limited. Arbitrage is a good place to start, but if you are really serious about starting your own business and wanting to build a brand, private labeling is definitely the way to go.
Private labeling sounds tough, but it’s really easy. It essentially consists of adding a label to an existing product. The only difference or extra layer of work you have to do is you have to create a logo and send it to your supplier. Then he brings that to your product and packaging. Once your product has arrived, you can sell it on whatever platform you want, but now you can also sell it under your own brand on your own website. When you go to Amazon, you will find that a lot of people are selling the exact same product, but the brand’s label is different. This is because they are using the services of a private label. You’re selling the brand, not necessarily just the product.
Private labeling isn’t difficult, it’s just extra work, namely creating a logo and communicating this to your supplier. You will find that in addition to selling on platforms like eBay, Amazon Etsy and others, you can also sell on your own website because now you are setting a brand, not just a product. If you find the right niche, your competition should be limited and you will make more money from it.
The final model we’re looking at with this product customization is using AliExpress to source products, but they all also use it to find suppliers who can make products for them. This takes a little more experience as you have to work closely with your suppliers to define exactly what you need. Once the design is final and it obviously takes some of the hard work and communication, the supplier will make the product and give you the line of products that you can sell on all of the different platforms.
You can also sell these products to department stores or large retailers, or you can wholesale them to other companies. Product customization isn’t easy, especially if you’re a beginner, but once you get it you can sell it anywhere you want. Your competition should be virtually non-existent or very limited and therefore your profit margins will be much higher compared to other business models
Before deciding what to do, you should first choose the right business model for your needs. If you have no business experience then start with arbitrage and you will learn a lot quickly and pretty much it takes to run a business and how the supply chain works online trading. Once you are familiar with product sourcing and supply chain management, look for ways to improve products through product customization.