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Alibaba + Shipbob - The ideal dropshipping formula? (4)

03-27-2021 06:09 PM #1 bigwhitebird (Member)
Alibaba + Shipbob - The ideal dropshipping formula?

Hi all,

As I'm exploring the dropshipping world I stumbled upon an interesting product. While I can dropship the product from Aliexpress for $16 per unit with 4 weeks shipping time, there is a more attractive alternative.

If I buy 300 units from Alibaba it will cost me around $2.70 per piece. Including the cost from Shipbob & shipping, it will total around $11 per unit. This will not only increase my margin but also allow me to offer faster shipping from the US. Is this too simplistic and am I missing something? Otherwise, this seems like a far better alternative than dropshipping via Aliexpress.

03-27-2021 06:22 PM #2 jeremie (Moderator)

Quote Originally Posted by bigwhitebird View Post
Is this too simplistic and am I missing something?
This increases your margin, but the trade-off is that you take a financial risk. If you can not sell the 300 units, you will loose your investment.
If you already have made some testings and know that you can sell the 300 units without trouble, that is a better deal.

03-29-2021 04:18 AM #3 vortex (Senior Moderator)

Quote Originally Posted by bigwhitebird View Post
Hi all,

As I'm exploring the dropshipping world I stumbled upon an interesting product. While I can dropship the product from Aliexpress for $16 per unit with 4 weeks shipping time, there is a more attractive alternative.

If I buy 300 units from Alibaba it will cost me around $2.70 per piece. Including the cost from Shipbob & shipping, it will total around $11 per unit. This will not only increase my margin but also allow me to offer faster shipping from the US. Is this too simplistic and am I missing something? Otherwise, this seems like a far better alternative than dropshipping via Aliexpress.
Basically what @jeremie said. What I used to do was use aliexpress to test products, then once I found a winning product I would go to Alibaba and source in bulk.

Another thing to keep in mind is warehouse storage costs. I'm not familiar with Shipbob, but most warehouses / fulfillment centers will charge you storage fees. Just something to factor into your estimates so the storage fees won't cut into your profits too much.

Another thing to watch out for: Many manufacturers will offer a discount if you purchase in bulk. While this may be tempting, do NOT buy more than you feel you can sell. If you're only running a small campaign on FB right now selling 10 units/day and doing 50% ROI, you may be tempted to purchase 5k units thinking you'd be able to scale the campaign and maintain the same ROI until the 5k units are sold out. In reality when you start scaling, ROI may not hold, CV may not hold, audience may get saturated faster than you've planned, and other unexpected things may happen. Therefore, try to scale more gradually, and instead use your free time and budget to test more products.



Amy

03-29-2021 12:07 PM #4 matuloo (Legendary Moderator)

Quote Originally Posted by bigwhitebird View Post
Hi all,

As I'm exploring the dropshipping world I stumbled upon an interesting product. While I can dropship the product from Aliexpress for $16 per unit with 4 weeks shipping time, there is a more attractive alternative.

If I buy 300 units from Alibaba it will cost me around $2.70 per piece. Including the cost from Shipbob & shipping, it will total around $11 per unit. This will not only increase my margin but also allow me to offer faster shipping from the US. Is this too simplistic and am I missing something? Otherwise, this seems like a far better alternative than dropshipping via Aliexpress.
This is the right approach, generally speaking. But what Amy and Jeremie posted is of very high importance. There are both pros and cons with this approach.

Also keep in mind that when shipping from US, you might be subject to stricter regulations when it comes to product safety and guarantees.

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