Alibaba vs Aliexpress: Which is Best for Your Business?
Which platform is better for your business model when comparing Alibaba vs Aliexpress? What is the difference between Alibaba and Aliexpress? Which platform to choose and for what purpose? Which one is better for dropshipping and which is catered to manufactured wholesale?
In this post, you will find all the relevant information, a detailed comparison of Alibaba vs Aliexpress, and, most importantly, a piece of advice as to which platform to choose.
Are you a customer looking for the best deal? A business owner in search of the best retail platform? Or a manufacturer attempting to distribute your product internationally? In any case, you’ve come to the right place.
Both Alibaba and Aliexpress are owned by Alibaba Group, which is a tech conglomerate specializing in eCommerce, retail, internet and technology. The primary difference between the two platforms is that they use different selling schemes.
We will not go into lengthy details about the creation of the platforms or their history. I’m sure by now you’ve all heard of the miracle that is Jack Ma and his entrepreneurial spirit. Instead, we’ll go straight into comparisons of the following:
- Platform type
- Sales model
- Verification system
- Payment for platform services
- Payment for products
- Product type and quantity
- Shipping costs
Alibaba vs Aliexpress: Wholesale and Distribution
Alibaba is one of the world’s biggest E-commerce enterprises. It is based on a B2B (Business to Business) model and is made primarily for wholesaling, distributing, importing, and exporting.
The marketplace makes a profit by selling membership plans. This means that if you are planning to move your sales to Alibaba, you don’t have to worry about commissions or transaction fees that usually drive your revenue down. Find the list of membership options below:
If you are just starting your manufacturing or exporting business and you produce in relatively small quantities, we recommend that you don’t buy the premium membership right away. Start with the basic plan, or even a free trial membership, and work your way up.
Look at the platform features of each plan and see which one suits you better. For example, if you think that keyword advertising is particularly important for your business, then you might want to consider getting the standard plan. The difference in price is not massive, but with a smart SEO strategy and keyword ads, you will get your manufacturing business up and running in no time.
If you are considering a free trial plan, keep in mind that as a free member you can only do the following:
- You can post up to 50 products
- Customers can send inquiries, but you can’t reply to them
- You don’t have access to a customized website and priority ranking
Basically, free trial plan is very limited and free members cannot enjoy the same benefits as paid members.
After you decide which subscription you are going to choose, you will be asked to verify your business. This means that only registered companies with a business license can sell on Alibaba.
To be verified, you need to pay a small fee. Then, Alibaba staff will manually check your business registration papers to prove that your business is legal and you are the owner of that physical entity. Below are the supporting documents you will need:
- Company registration Certification containing company name in A&V application
- Telephone bill issues within the last 3 months under company name
- Letter of authorization provided here
One of the best features on Alibaba is that they do not get involved in your selling process. Once you are registered as a seller and verified you can start posting your products.
Another significant difference between Alibaba and Aliexpress is that prices are completely negotiable on Alibaba. You get to communicate with your clients on prices to reach your optimum profit. You can also indicate your minimum order quantity (MOQ).
When it comes to payment, both Alibaba and Aliexpress use the Escrow system for secure transactions. However, Alibaba’s payment methods are optimized for large transactions and include the following payment systems:
These are the most common methods of payment on Alibaba. There are other methods like Qiwi, Yandex etc, but they have all sorts of ramifications, so we recommend you to stick to these methods above.
Finally, when it comes to shipping and the costs associated with it, it’s completely up to you to select the method of shipping and negotiate the price with the buyer. You may also include the shipping costs in your product price, but make sure to let the buyer know that shipping costs are included.
Aliexpress vs Alibaba: Retail and Dropshipping
The primary difference between Alibaba and Aliexpress is that the latter is an online retail platform that is based on a B2C model (Business to Consumer). In short, this means that all the products and services are sold directly to consumers for their personal use.
Aliexpress caters primarily to China-based businesses with international buyers. A small portion is also located in Singapore and other East Asian countries.
The reason being very high shipping costs; if your business is located in Europe, then your profit margin will probably be very low due to transportation costs. Also, if your shipping costs go up, then your prices will generally go up as well. Since products sold on Aliexpress are very cheap, your product might not be able to withstand the competition.
Aliexpress makes money by commissioning your selling transactions. The commission fee varies in the range of 5-8% off every transaction, depending on the items and categories. Also, there is an annual service fee of $1,500. Go to aliexpress.com to find which category your product belongs to.
The registration process on Aliexpress is fairly easy. There are three things you will need for verification:
- VAT (Value added tax) identification number – an identifier used in many countries for value added tax purposes
- Company operating license
- ID number of company legal representative
Estimated process time of your registration is only two days. After your business has been verified, you will be ready to start selling. Unlike on Alibaba, you can’t negotiate the price of your products with consumers, so the price has to be fixed.
Payments. Aliexpress primarily has consumer type payments such as:
There are other less common payment methods as well. What’s convenient about their payments is that they use the Alibaba Escrow system. This allows for the payment to reach the seller only after the consumer received the order safely. This eliminates any unnecessary confusions and conflicts on the marketplace.
Shipping costs vary on Aliexpress and you can set your own shipping price that will satisfy you. Aliexpress generally recommends free delivery without a minimum purchase amount on the national territory. However, if you export your products internationally, you will have to charge your customers for shipping.
Dropshipping! Is that the word you were looking for all along? Well, here you go. Keep reading if you want to find out which one is better for dropshipping Alibaba or Aliexpress. Dropshipping is a retail fulfillment method whereupon a store doesn’t keep the products in stock. Rather, what happens is the store sells products by purchasing items from a third party and has it shipped directly to the customer.
What’s the point?
You can make profit by sitting at home and making deals online without having to worry about storage, shipping and other maintenance processes.
Why is dropshipping so convenient?
It doesn’t require much initial investment and you won’t lose any money if your product doesn’t get bought because you don’t have it in stock! Aliexpress does not have any costs or fees associated with dropshipping. Try using Oberlo to set up your Shopify account and start dropshipping from Aliexpress as fast as today. Learn more about Shopify’s key features.
Alibaba vs Aliexpress: Note for Customers
If you are a customer looking to purchase something for a fair price, Alibaba and Aliexpress are both the right destinations for you. However, if you want customized products or private labels, Alibaba is more suitable for that purpose. Negotiate your prices, look for the best quality to cost ratio. If you want premade products, whether for your own use or for dropshipping, go to Aliexpress.
Customized products or private labels in big quantity 🡪 Alibaba
Premade products in any quantity 🡪 Aliexpress
Alibaba vs Aliexpress: Comparison Table
If you’ve reached the end of this article, then you’ve probably already decided which platform suits you better. Here’s a little side by side comparison for your convenience.
Good luck in your endeavours!
If you enjoyed this Alibaba vs Aliexpress comparison or would like to suggest another topic for discussion, please let us know in the comment section below.
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