Alibaba.com and Aliexpress.com are well known among importing businesses worldwide. Both websites are owned by the Alibaba Group, based in Hangzhou, China. The difference between the two websites can be hard to spot at a first glance, but they have two very different business models with different strengths and weaknesses.
Alibaba.com key facts
A B2B (business to business) portal that connects manufacturers – mainly Chinese – with overseas buyers.
No built-in shopping cart system, the order terms are negotiated and confirmed via email or the built-in chat function.
No transaction fees or commissions are paid to Alibaba.com. Their main revenue source is the “Gold Supplier” membership fee paid by suppliers. Alibaba verifies that each Gold Supplier is a legally registered company. However, it’s not a guarantee of quality products.
Focused on “made to order” goods. In practice, this means that suppliers on Alibaba don’t advertise “ready made” products but rather manufacture products based on the specifications provided by the buyer. The suppliers are basically listing reference products.
Minimum Order Quantity
Suppliers tend to have rather high MOQ requirements. The reason is that they don’t keep products in stock and need to purchase a minimum quantity from their suppliers. They also need to manufacture a minimum quantity of products in order to make a profit. Many consumer products, such as wristwatches, can easily have MOQ requirements of 300 units and greater. An MOQ requirement is usually valid for a specific product, so if you want to order two different products, you need to order 2 x the MOQ requirement. This is often too much for small businesses that don’t have fairly large sales volumes.
Pricing
The price paid for a product is based on two main factors: its quality standards and the quantity you buy. The approach an importer should have with regards to pricing is very different when comparing the Alibaba and Aliexpress portals.
There are no fixed prices, but everything is quoted from scratch to a various degree. You send your product specifications (colors, dimensions, materials, certification requirements, etc.), the delivery terms and the quantity you want to buy; then the supplier gets back to you with a price. A wristwatch can cost anything from $2 to $200 USD; the pricing is a question of what quality standards you require.
Assuming that you can reach the suppliers MOQ requirements, you will also enjoy lower prices compared to if you are ordering 10 to 20 units at a time from AliExpress suppliers.
Custom designed and branded products
Creating a brand instead of just importing random no name products can increase the customers perceived value of the product, even if it’s not a well-known brand name. A brand can consist of a logo, certain colors or design. Some importers also want to develop a completely new product or modify an existing design.
Most suppliers can offer custom designs and logo printing. However, developing a new product from scratch is not easy and you’ll need to have very well-drafted product specifications and graphical material at hand. This includes, but is not limited to, material specifications, components, Pantone colours, product packaging designs, product body artwork and logo designs.