Dropshipping is a unique form of online business.
It mainly takes advantage of a huge amount of retail platforms available on the Internet.
Dropshipping is a way to run a storefront without any need to keep constant inventory.
The question of this article is simple – how to gain maximum profit when dropshipping from China?
Without further ado, let’s jump straight into the topic.
How dropshipping works?
Before we start building perfect schemes of dropshipping from China, we need to figure out what exactly dropshipping is?
Speaking simple, dropshipping is the process of buying and reselling items.
But, you are earning not on speculation, e.g. you’re not buying 500 products and then listing them on some website with the hope to sell all of them at once.
It would not be a smart move for several reasons.
Firstly, it is quite a sizable and risky investment.
If the product you are looking for costs you 5 USD per unit, it is about 2,500 USD you have to pay.
The final sum can be lesser, but still, it is a big amount of money.
Also, let’s not forget that you have to pay for the shipment of goods to your premises.
And there is additional hassle connected with storing your products and keeping track of them.
Finally, you have to sell such products for more than 5 USD per item (about 10 USD to make it somewhat profitable).
And let’s not even think about the situation when these products do not sell at all eventually (which happens quite a lot with rookie entrepreneurs).
Dropshipping is used to avoid every above-mentioned flaw.
You place some products on the website before even ordering them, at the prices which you see as profitable.
When someone reaches you for the purchase, you redirect such order to your wholesale partners.
They will deal with delivery, while you’ll be sitting in your room counting money.
It is a wholesaler’s business to keep his inventory and store it properly.
And he also takes all the responsibilities connected with the order fulfillment and timely delivery.
The only thing the drop shipper might deal with is the regulation of some customer service issues (like dealing with delays, damaged goods, etc.)
Pros of dropshipping
So, after we’ve dispatched the dropshipping process by pieces, let’s talk about its benefits.
Here are six reasons why you should look towards the possibility of being in the dropshipping business:
# 1. Easy to begin
The first and the most alluring benefit of dropshipping is that it is very easy to start with.
Two things you have to do is to find yourself a reliable supplier and sell his items to third persons.
There is no need of using some kind of physical store or warehouse when you start dropshipping.
Dropshipping also does not require you to have a big bag of money, to begin with it.
Sometimes you even don’t have to spend at all, because you will be operating with money from your buyers.
# 2. No warehousing options needed
As it was already mentioned above, there is no need to put up your warehouse, as well as to organize some kind of space to sell goods.
You only have to promote and successfully sell some items, while your suppliers will take care of these part of things for you.
# 3. Stressless process
Dropshipping is quite a stress-free process.
There is no hassle connected with delivering your goods when you have suppliers who offer high-quality services.
There is also no obligation for you to gather, pack, and ship products.
You can forget about the inventory tracking procedure.
The obligation of taking care of handling returns and inbound shipments will also be on the side of your supplier.
# 4. Sell as much as you want
When it comes to dropshipping, you can sell as many times as you want in a day.
The thing is that there is absolutely no pressure for you in the case of delivery processes.
You can take as many orders as you wish in a day without the need of going through the complicated shipping procedures.
# 5. Your company benefits from the success of your supplier
If you find good partners that show good performance, you can start to promote your business’ integrity and quality service.
But in fact, you’ll profit from the quality of your dropshipping partners.
It adds to the level of performance that you give to your customers.
In a way, it’s making yourself look good without doing much.
# 6. Limitless choice of goods
Finally, let’s not forget about the choice of products that can become available for you if you find the right shipping partners.
You can work with as many goods as you wish without the need to worry about making mistakes, delays or any type of inconveniences that come with it.
You don’t need to deal with only a few types of products because of such issues.
No matter how many products you display, as long as you have a great supplier, you’ll be just fine.
Cons of dropshipping
It would be a lie telling that the dropshipping process has no cons at all.
Like in any other case, this type of international trade can be quite challenging if you do not follow some key principles and use profitable strategies.
Let’s have a look at the disadvantages of the dropshipping to make you fully prepared for this business model.
# 1. Your supplier is a moving force of your business
It is not always a downside, but you have to remember that dropshipping is fully centered around the quality and stability of your supplier.
So, if your partner works flawless, you’ll both make your money without any problems.
But this is, of course, quite a rare situation.
Even the most qualitative supplier can eventually become unreliable which will make a huge impact on your business processes.
Another thing is that you are 100 % dependent on your supplier’s product choice.
For example, when you start to cooperate with some sellers, he has all the needed goods in his inventory which sell perfectly to your customers.
After some time your supplier can decide to change his manufacturing priority and start producing other goods which do not fit the requirements of your business.
If you want to avoid such a situation, try to work with several suppliers or make your favorite seller more interested in doing products exclusively for your purposes.
# 2. Dropshipping is a tricky process
Some of our readers might have decided from previous paragraphs that dropshipping is just a piece of cake to deal with.
This business is indeed easy to start with, and you can avoid a lot of issues connected with delivery processes.
But it doesn’t mean that you have to do nothing to gain your profit.
In practice, dropshipping involves a lot of complications.
Even if you have the most reliable suppliers under the belt, there still can be a lot of troubles, especially if you are dealing with a wide assortment.
The most hassle situation happens when one buyer wants to order multiple goods from various sellers.
This will complicate the process of packing the order up and delivering it.
# 3. Shipping issues
Let’s be fair: no matter how good the service of your drop shipper is, there is still the possibility of everything going wrong.
They can have a staff that doesn’t do a good job on your buyer’s order, or the couriers and shipping companies can have problems during the delivery.
The thing is you can’t predict such issues to happen: in the better part of cases they are not only unpredictable but also unintentional.
However, you still have to regulate such problems among your clients.
# 4. Huge variety of shipping costs
If you are doing business with several sellers at the same time, it also brings a lot of confusion connected with shipping costs.
Each of these suppliers can have their unusual rates and you need to count them before calculating your prices.
This process can be even more complicated when it is a rush order.
# 5. Dropshipping only
Dropshipping is a great idea for a business, but it is also quite limited.
Opening a simple store can give you more flexibility and the possibility to cope with all kinds of customers.
For example, you can have a client in your area who wishes to see your goods in real life.
Or, you have a client who wants to get his goods ASAP.
In both cases, it would be practically impossible to solve them as a dropshipper.
# 6. Absence of physical samples
As we’ve already mentioned above, there will be inquiries about the looks and feel and things that involve touching the product in real life.
If you don’t have physical samples it could cause a loss of sale or hesitation to purchase the product for those clients who prefer to stay picky.
Is China a good place to seek for dropshipping partners?
Now, when we’ve figured out the key points of dropshipping, let’s speak of its tendencies in China.
You may already assume that this article would not see the sunlight if the dropshipping from China wasn’t a good idea.
The main reasons why you should try Chinese dropshipping partners are as follows:
- Chinese suppliers offer the best prices in the vast majority of situations.
- Despite low prices, the quality of Chinese goods is above average or even better.
- There are tons of shipping companies in China, so finding a good carrier should be quite easy.
- Because of huge manufacturing capacities, Chinese sellers can offer you all imaginable products for a reasonable price.
- Here, you can easily find originally branded goods or well-made copies of such products.
- Because of high competitiveness on the market, each Chinese supplier tries to provide the best services to its customers.
China became the biggest manufacturing and trading giant in recent years, so it is not a big deal to find reliable sellers here.
However, there are still some disadvantages when it comes to dealing with Chinese suppliers:
- The vast majority of Chinese suppliers prefer to deal with wholesale orders, which is not the option for you.
- Speaking of prices, they are also dependent on the order quantity.
- China is a big transport hub that is connected with all countries across the world, however, it still takes a lot of time to deliver goods from here.
- There are a lot of scammers and counterfeit products in the Chinese market.
Even though such flaws might cause you some troubles, they can be easily avoided with the help of a trustful sourcing agent, or with a strong analytical approach towards your partner’s selection.
Top Chinese platforms for dropshipping
There are a lot of sellers in each country that can help you to establish your dropshipping model.
However, Chinese manufacturers can offer you better prices and wider assortment, which are hard to beat.
Logically, there are also lots of Chinese online platforms that were created exclusively for dropshipping purposes or at least have some suppliers who can help you with it.
Let’s have a short look at some of them.
# 1. Chinabrands
The first reason why Chinabrands is winning our first spot is because of its wholesale pricing policy.
You can buy single items and still achieve a good price because of the integrated supply network of key manufacturers and agencies under the Chinabrands belt.
Another great thing about Chinabrands is a high-quality description of each product that can be found on this platform.
Chinabrands support team creates informative product details and take precise high-definition photos of the product to help its customers by picking only the needed goods.
Finally, let’s mention the professionalism of the Chinabrands QC team.
The maximum prerogative is accorded to the product quality of every displayed item.
This work is performed by highly trained, professional QC technicians who handle and perform every wee bit process of internal quality check mechanisms and procedures.
Suppliers can’t negotiate on quality with these specialists, so if some product is not showing good features, it would be banned from posting on the website.
# 2. AliExpress
AliExpress is maybe even more well-known than Chinabrands.
It operates as an online network that connects world-wide buyers to minor enterprises in China.
It is compared to Amazon by some people, but in our opinion, it is more similar to eBay in that both individuals and sellers can showcase their merchandise on a similar basis.
However, the major lack of AliExpress lies in the fact that it is restricted to Chinese mainland buyers and non-Chinese businesses to trade on this platform.
Another thing is that you have to depend on the AliExpress store rating mechanism and reviews as there is very little info present regarding each store.
# 3. DHgate
DHgate functions exactly like AliExpress interlinking global buyers with enterprises in China.
They provide you buyer safeguards and maintain an escrow process wherein the payment is passed from the purchaser to the vendor only after the buyer receives his product.
How to choose your platform?
We strongly advise trying all three above-mentioned platforms.
You never know where you find a reliable supplier with needed products.
All three platforms contain interesting items, unique sellers and can offer you various discount proposals.
So, you can start your research right by just visiting these platforms via provided links.
If you want to find more platforms for dropshipping from China, please check the video linked below.
How to find and choose Chinese products for dropshipping?
Finding the right products for your dropshipping business can be quite a tough process if you do not know how to start.
The thing is that your ultimate goal should be not only to find needed items.
What is more important, you have to find the right niche in the economical world.
In practice, the easiest way to begin a dropshipping business is to find a hot market:
- What are people interested in right now?
- What trends are big?
- What is the hot item at the moment?
Basically, you need to find a market where people spend a lot of money and which they are passionate about.
Note: it is recommended to search for a niche that is interesting for you as well.
A good understanding of your business will give you a strong advantage among your competitors.
When you find the preferable field for your activities, you have to ask yourself about the problems which your items will solve for your customers.
As you may know, this is an important rule in economic science: each product is solving some kind of issue in the client’s life.
So, when you are looking for the products on the Internet, try to think of their ability to solve real problems.
Try yourself: think of some difficulties which you have in your life.
Do you need new accessories for your gadgets?
Or do you need some helpful tools for your kitchen/household?
These are examples of small but significant issues that happen in the everyday life of every human.
If you try to listen to what people tell about such struggles, you’ll hear their needs, even if they are spoken indirectly.
You need to be empathetic to their needs and work to understand them correctly.
Finally, use your online store to provide your customers with problem-solving tools.
Remember, the product is just a commodity that can be easily replaced with something similar or cheaper.
People wish to achieve something more significant than a product in their pocket.
In any niche, it is important to offer something of value other than just an item.
As an example, if you are selling cookware, add a recipe book to each order.
If you want to build long-lasting relations with your customers, you have to provide real value for them.
So, to determine what kind of niche fits you better, you should:
- Search a hot market.
- Ask your clients about their needs.
- Try to fulfill such a need with some kind of products.
If you can’t come up with your ideas, you can find hot markets using AliExpress’ Bestselling page.
How to go through the order fulfillment process?
Speaking of the fulfillment process, multiple options can give you some strong advantages which were discussed previously.
But it also brings a couple of questions: for example, how do you know which supplier to choose?
There are a few different methods which you can use in your working scheme:
#1. Choose a single supplier for the vast majority of orders
The simplest method is to find one reliable supplier which can fulfill all your orders.
Just in case, you can also find a couple of spare sellers who can come up when the emergency arises.
You can add your main supplier’s email address as a recipient for all new order confirmations, automating the whole fulfillment process.
# 2. Choose the supplier based on shipping properties
China is a big country, with lots of economic hubs where you can find reliable manufacturers.
And there are tons of shipping lines in each big city, so the shipping rates and the delivery time might slightly vary.
So, you can try to choose the supplier with the fastest and cheapest transportation options.
# 3. Choose the supplier based on the item availability
If your store contains a large assortment, you’ll most likely need to choose the supplier due to the availability of one or another item.
Needless to say that when doing it manually, it complicates your life a lot.
There are automated platforms like Ordoro, but your suppliers have to provide data feeds to run it correctly.
# 4. Choose the supplier based on price
This sounds easy, but in dropshipping, it is quite frequent when several suppliers give you practically the same price on some items.
While searching for the best price, do not forget to consider potential delivery fees, real-time shipping rates, and supplier pricing under the chosen currency.
Note: You can try to achieve the best price by contacting the suppliers and showing them the prices of each other.
Just don’t try to do this too early: if you’re asking for discounts as a newcomer, the only things you’ll achieve are declines and tense relations with sellers.
How to deal with returns in dropshipping?
As you may know, each store has to have some kind of return policy.
In the case of dropshipping, it becomes quite tricky to figure out the most optimal solutions because your suppliers might have different policies on their side.
If they have a 45-day return window, it gives you a lot of space when dealing with returning issues.
But some Chinese suppliers have strict rules in this matter, and a single supplier might be the reason why you’ll also have a strict policy.
When your client requires to return a product, the process will look like this:
- a client contacts you to apply for a return;
- you contact your supplier and require an RMA (return merchandise authorization) number from him;
- the client sends the product back to the seller, mentioning the RMA number on the shipping documents;
- the supplier returns the money or sends appropriate goods to your client, with some kind of bonus;
- you refund your client or wait until the replacement product will arrive.
Despite the simplicity of the paper, the return process might involve a lot of complications.
# 1. Return charges
A lot of Chinese sellers include fees for return processes.
Even if your seller charges for it, we do not recommend to redirect them to your customers.
Such things seem quite outdated and unfriendly.
Instead of this, you should calculate your prices including possible return fees.
# 2. Defective items
You have to use a special approach when dealing with the return of defective products.
Some dropshippers prefer not to cover shipping costs when their customers return such items.
In some way, this might come from the idea that they haven’t manufactured products so they are not liable for its defective properties.
We, however, recommend to be more polite and compensate such shipping fees.
This would be a good approach if you are interested in the creation of a reputable enterprise.
If the defective product is inexpensive, you should probably avoid the hassle for your customer to ship it back and just send him a replacement.
# 3. Dealing with the angry client
Let’s not forget that when your customer gets products that are defective or simply doesn’t correspond to his expectations, you get quite a confused and most often angry person to deal with.
Which is more important, such a person will never go back to you as a customer, if he doesn’t get some kind of compensation for his troubles.
You have to create a reasonable return policy, provide your clients with bonuses and propose discounts for their next purchase.
# 4. Your supplier may be unreliable when it comes to returns
Some suppliers won’t pay for shipping when replacing defective items or even pave away the possibility of return.
Needless to say that such suppliers might be avoided from the very beginning, but every dropshipping veteran will tell you that finding a good one can be an everlasting issue.
Even if you find a reliable seller, no one guarantees you that he’ll not change his assortment with time, close his business or simply become unreliable.
In any case, it doesn’t mean that you have to think about your customers in the first place.
So, even if your supplier lets you down, try to find a similar item or simply pay your customer the whole order price from your pocket.
If you’ll be smart and have a good choice of suppliers, such situations won’t happen frequently.
Note: if the customer wants to change a non-defective item for money, the better part of companies will oblige such clients to pay the shipping costs.
If you want to stand out among the masses, you can offer free returns.
Bear in mind that this might be expensive if you won’t calculate your prices correctly.
Also, you’ll have to deal with clients who order products just for fun (you’ll be surprised, but there are a lot of such customers).
How to deal with shipping procedures?
When you dropship internationally, you have do deal with various restrictions and limitations, such as:
- various rules for weight and length in different countries;
- additional charges from suppliers;
- extra hassle while resolving problematic orders due to higher shipping fees;
- additional costs for shipping large, heavy or dangerous goods.
Also, you have to correctly calculate shipping rates, which can become a tough procedure.
When you are dealing with several suppliers who ship from different locations, it’s difficult to accurately calculate shipping rates for each order.
There are three ways of how you can calculate shipping rates for your products:
# 1. Real-time rates
Using this approach, you’ll calculate shipping rates using the total weight of purchased products and the final destination.
This method is quite accurate but you have to keep in mind the rates of each partnership warehouse.
# 2. Per-type rates
Using a per-type method, you’ll set an average rate for each product type.
For example, all small packages would be shipped for 5 USD, while larger orders would be shipped for higher rates (10 USD and above).
# 3. Flat-rate shipping
In this case, you’ll charge a single flat rate for all orders, regardless of product type, weight, and final destination.
You can also offer free shipping for all your customers, but this requires good pricing strategies from you.
Please, check the next video guide if you want to learn about duties and taxes while dropshipping from China.
The best way to end this article is to remind our readers that there is no single formula of prosperity when it comes to dropshipping from China.
There are other things which you have to consider, like promotion of your store, dealing with taxes, monitoring the market and your nearest competitors, etc.
However, even if you do everything correctly, but fail to choose the right niche, all your efforts can become meaningless.
You should be ready for changes on the market and in the minds of your customers, as well as for issues connected with international tendencies.
But we believe that if you have a good idea and a strong understating of it, there is only diligence which you have to put in the mix for 100 % success.