E-commerce has taken the world by storm in recent years, especially since the pandemic. More people are shopping online than ever before. With that said e-commerce sellers are certainly looking at a wave of advancements to take their online businesses to the next level. China, one of the world’s largest producers, has a strong foothold in this industry already. The country alone accounts for 40% of global sales in 2022!
Dropshipping is one of the most promising e-commerce models for entrepreneurs. Besides multiple pros that we’ll discuss in detail, entrepreneurs can reap the benefits of low risk and feasibility. Yet again, China has risen to the top of the dropshipping world, and for good reason.
If you’re new to dropshipping and wondering whether China’s market is right for you, you’ve come to the right place. We’ll cover a detailed review of dropshipping from China in just a minute. But first, let’s go through some basics.
What is Dropshipping?
Dropshipping is a type of e-commerce where you act as a middleman between suppliers and customers. The customer places an order on your online store. Upon receiving the order, the middleman simply forwards the order details to the supplier, who ships it directly to the customer on your behalf.
Dropshipping has become a popular means of selling online. For starters, sellers no longer have to worry about investing or monitoring inventory or shipping. As a result, sellers don’t have to restrict themselves to certain items due to lack of resources. Instead, they can offer a wide range of products without those worries.
So, how is this a profitable business if a supplier is fulfilling orders on your behalf? E-commerce sellers keep a profit margin on each product instead of selling it at the wholesale price. In other words, the markup that you charge on top of the wholesale price is your net earnings.
Why is China the Top Dropshipping Supplier?
Today, around 33% of the e-commerce market runs on the dropshipping model. With an influx of online shopping, sellers are more prone to connecting with suppliers than investing in self-manufactured products. Ultimately, China has emerged as the top supplier for these dropshipping sellers.
In addition, China has made some crucial legislative changes regarding foreign trade, making it easier and more profitable to start a business there compared to a few years back. On top of all that, China is also the largest exporter and trading partner for most Asian countries. Because of these reasons, the country has become a primary business hub for entrepreneurs worldwide.
Pros of Dropshipping from China
Most online sellers prefer opting for a dropshipping method from China, especially those just launching their e-commerce career. The benefits of this method are numerous, including low prices, vast product selections, low start-up costs, flexibility and scalability, a supportive environment etc. Let’s discuss each of these in detail.
Vast Product Variety
Undoubtedly, China has emerged as a market offering a vast and growing variety of products at competitive prices. This is partly due to Chinese e-commerce giants like Alibaba and JD penetrating the global market.
Nowadays, suppliers in China have expanded to almost every product type, from electronics and clothing to home goods and pet supplies. Consequently, e-commerce sellers can access an unlimited virtual universe where they can find unique items and even trendy products.
Chinese products are typically much cheaper than their counterparts from other markets such as the U.S. and Europe. There are numerous reasons for the price difference, the most significant being more resources, low labor costs, and higher competition in China.
Due to these factors, you’ll find products on Chinese wholesale websites at half the price of the same product listed on Amazon, for instance. For e-commerce sellers, this is a major bonus point. You’re saving money when buying the product. Plus, this gives you the chance to retain higher profits while still offering lower prices.
However, it’s important to note that the price difference between these markets has narrowed recently. Still, there’s a notable profit potential for sellers who choose to dropship from China from a monetary angle.
Little Capital Needed
Dropshipping itself is a capital-efficient business model, meaning that you require significantly less capital than if you source and sell products from scratch. However, this benefit gains additional points if you’re doing so from China.
One of the reasons goes back to lower product costs. Of course, that means you can test out products and add them to your selling list if they pass your checklist. Besides that, suppliers operating from China are experienced in dropshipping. As a result, you can count on them for the entire process, including production, packaging, and shipping. For most sellers, this factor is integral due to their own lack of time and money to invest in their business.
You’d think the worst thing to happen to an e-commerce seller is not having enough sales. However, another addition to that list is having too many and running out of inventory at the peak. There goes your reputation and potential customers in the long run.
Luckily, if you’re dropshipping from China, the chances of that happening is next to none. Suppliers in China are always stacked up on inventory, meaning they can handle the largest sales spikes without running out. Where you’d traditionally need to maintain inventory at all times, dropshipping in general transfers that responsibility to the supplier.
Possibility of Building Your Brand
Dropshipping from China offers entrepreneurs the possibility of building their own brand. Wait, what? If you’re confused, this means that you can climb the e-commerce ladder within no time when Chinese suppliers go the extra mile to offer branding and customization.
More recently, suppliers in China have started offering advertisements, customized packaging, and even on-demand printing. You can send them your brand logo to print on the products, try out different product packaging, or add greeting cards on each order. Dropshipping from China definitely gives sellers the chance to personalize the customer experience and stand out in the market.
China borders fourteen countries, most of which are active commercial markets. This makes it a prime location for dropshippers, who can reach a large and growing customer base conveniently.
If that wasn’t all, China has a well-developed logistics network consisting of marine, air and land transportation. The result? You can get your products delivered easily to customers around the globe without the hurdles of specified delivery locations or expensive packages.
Large and Recognised Suppliers
If there’s one thing where China has really taken the trophy home, it’s their list of suppliers. Chinese suppliers are well-known, not just locally but globally. While the names are popular enough that you can’t miss out on them, we’ve highlighted a few you can consider.
You might have heard about Aliexpress at some point in your e-commerce selling journey. This marketplace offers a wide range of products at the lowest possible prices. Additionally, it ships products to over 200+ countries!
Another runner-up in the dropshipping industry is Taobao. While this leading supplier only distributes in China, you can always get in touch with an agent who can get the products delivered to your customers.
We previously mentioned JD, so let’s not forget this trusted supplier. Another name among the largest e-commerce companies in China, JD doesn’t fall behind on product variety either. Not to mention, it’s popular for its fast and reliable shipping.
If you’re looking for a supplier that is exclusively focused on customized products, look no further than CjDropshipping. This company does it all in the customization realm – t-shirts, mugs, jewelry, and even office supplies!
When it comes to e-commerce, inventory management is an essential part of business. Without it, you’re looking at unpreventable chaos. The last thing any seller wants is to run out of stock when the demand is sky-high.
Keeping the various e-commerce demands in mind, suppliers in China offer multiple stock control methods, such as first-in-first-out (FIFO), just-in-time (JIT), and vendor-managed inventory (VMI), to name a few.
In addition to making a calculated decision regarding the stock control method that suits your business, you can also get ERP software.
With this software at your fingertips, you can analyze data and obtain future customer buying behaviors so that you can get in touch with your supplier before a sales spike prediction.
Globallyfulfill powerful ERP technology allows you to do this and a lot more on one platform!
Cons of Dropshipping from China
Like any business model, you need to go over the disadvantages of dropshipping from China before making a decision. It’s important to weigh the challenges that you might face later on rather than directly running into them. Following are some problems you’d want to consider.
Shipping time could prove to be a major problem for sellers dropshipping from China, especially when shipping to the U.S. and Europe. Although there are multiple routes and shipping companies, the long distance can cause shipping delays, even when using fast shipping options.
Other factors, such as bad weather and customs delays, can further increase the shipping time. This can be frustrating for customers, especially those that opt for quick delivery, and it’s one of the reasons sellers avoid dropshipping from China.
To tackle this issue, choose a reliable delivery provider and try to be as transparent as possible with your customers regarding delivery timeline.
It’s a common misconception amongst customers that China-made products are lower in quality, specifically electronics. While Chinese products have definitely improved in terms of quality, not many people believe that. Therefore, a lot of customers try to avoid buying Chinese products.
There may be various reasons buyers choose to go with products that are made locally or elsewhere besides China. The stereotype regarding Chinese products still has a long way to go. The best way to go about this is to add detailed descriptions about the product. This leads to the customer knowing what to expect and trusting the seller more compared to one that chooses to give no description, a vague description or tries to oversell the quality.
The pros of the dropshipping industry are many, but so is the competition that comes with it. Due to the ease of this business model, more and more e-commerce sellers are inclining towards it. It’s important to stay on track and have a realistic perception of your success metrics. Even if you have a solid plan and a winning product, the competition out there is tough.
The dropshipping market is currently booming with new sellers that have hopped onto the ‘source from China’ bandwagon. It can be more difficult to stand out from the crowd than you’d think, especially with hundreds or even thousands of sellers with the same product.
Some tips that can help you move ahead of the competitive market are to advertise better, find unique products, offer competitive prices, and provide outstanding customer service.
Dropshipping from China offers a whole range of benefits that you wouldn’t find anywhere else. However, it’s important to keep the disadvantages in mind as well. If you can find a way to get around the handful of issues that you’ll face with dropshipping from China, it’s a good choice for sellers. Consider your own business as well. Once you have your answer, shoot for the stars!