Do you think consignment is a market segment with no sales? Then you are very wrong. I’ll tell you why.
In 2022, the size of the consignment market will reach $221 billion. That figure is expected to grow to $932 billion by 2030. (Credit: Vantage Market Research)
With this rapid growth trend, are you still skeptical about this segment? Business-to-business websites such as Alibaba have boosted the delivery business.
What do you need to know about Alibaba Consignment?
What is consignment?
Consignment is a term you’ve probably heard a lot. You may be wondering what exactly it is.
Is that right? Let me explain what consignment is.
“Consignment is a process where the store owner only sells the product and does not store it in a warehouse. The forwarder is responsible for the shipment and fulfillment of the order.”
Alibaba consignment
That’s the simplest definition I understand.
How does Alibaba Consignment work?
Alibaba is one of the most popular B2B e-commerce marketplaces. But the best part is that Alibaba delivers the goods.
How does Alibaba Consignment work
You can complete the order without actually storing the product. How do you do that?
Find a delivery provider on Alibaba.
Import products into your Shopify store or other sales channels.
Sell products and fulfill orders by having your Alibaba suppliers ship directly.
Is there some complicated science involved? Consignment from Alibaba has evolved to achieve millions of product sales.
Let’s learn more about Alibaba’s consignment.
Why is Alibaba consignment a good choice for enterprises?
I often ask myself, why is Alibaba consignment great? The reason is simple.
● Access to huge inventory
If I want to buy clothes, Chinese people are very creative. They have a lot of designs. This attracts customers. Moreover, due to the wide range of products, sales often occur.
In addition, everything from clothing to shoes, from beauty products to home appliances is available on Alibaba.
● Lower costs and higher profits
Alibaba’s suppliers sell products at lower prices. For example, I studied sports shoes yesterday. Aliexpress suppliers are charging $20 for a pair.
Do you know the price on Alibaba? That’s a 200% reduction. At $5- $7 per pair, you can make up to 200% profit on retail sales.
● Consignment is very simple.
The Alibaba fulfillment Center will handle transactions from A to Z. You find a shipping supplier – import the product. And then sell.
It’s cool and easy. Alibaba shipping Agent to further meet your needs.
The advantages of Alibaba consignment
You may be wondering why I mention Alibaba so often. Is it really beneficial to cooperate with Alibaba?
That’s true. Here are a few reasons to choose it.
● Eliminate inventory pressure
Starting to ship on behalf of Alibaba means handing over inventory management to suppliers. The manufacturer has extensive production capacity and manages your products in a nearby warehouse. Delivery is made only upon receipt of an order.
You don’t even have to leave your seat.
● Low initial cost
It doesn’t take a huge amount of money to start Alibaba’s consignment business.
Costs range from $10 to $10,000 to suit any budget. Consignment requires a higher pricing strategy than direct sales. Moreover, Alibaba’s wholesale prices further ease the financial burden.
You make a sale, your profits increase, and you invest again.
● Global coverage
Alibaba is in more than 220 countries. Impressive, right?
This global reach means you can sell products from the US to Europe while resting at home. This gives you access to a variety of clients, increasing the likelihood of working with large clients.
● Wide range of products
Alibaba is not limited to a specific market, it offers various types of products. You may find some products that you never thought of.
With a wide selection of products that inspire creativity, you can impress customers with new and quality designs that drive sales growth.
● Easy setup and management
Alibaba’s delivery service is extremely convenient. For example, you simply open a buyer account, explore all the products, and import them into the Shopify store.
What’s next?
Make a sale. For each order, simply have the supplier complete the shipment at the specified address. You just sit back and watch the results.
The disadvantages of Alibaba consignment
Alibaba should not be relied on alone to deliver goods. Negative factors may change your decision.
Here are some negative points about Alibaba:
● Long transit time
Shipping on any platform requires customer satisfaction. Customers always focus on shipping time because they want to receive the product as soon as possible.
In contrast, Alibaba’s suppliers are B2B and have longer shipping times. In addition, the shipping time from China to the United States takes 5-10 days. Customers can’t wait that long.
● Language barrier
If you’re an American seller, do you know what the real problem is?
That’s the language problem. You may not understand Chinese. Google Translate is not always effective at providing accurate translations.
Therefore, you may run into difficulties at this point and lose deals with scammers.
● Quality control issues
If 95% of Chinese suppliers provide quality products, another 5% May have problems. These could be scammers and cause panic in the market.
Since you ship directly from the supplier to the customer, there is a greater chance of low quality products. This may prompt customers to leave negative reviews on your profile. As you already know… Customers will not buy again.
● Competition from other shippers
Today, five out of ten sellers are forwarders.
This directly affects the sales volume and competition between forwarders. Nowadays, you need to rank higher in search engines to get more sales.
Fierce competition has reduced sales and affected business.
How to find a reliable delivery provider on Alibaba?
Don’t choose suppliers randomly. Always keep that in mind. 99% of scams are caused by the negligence of forwarders. If you don’t pay attention, there will be complaints later.
So how do you ensure safety?
Here are some tips for finding reliable suppliers.
● Search for delivery providers on Alibaba’s apps or websites.
Always use Alibaba’s apps or websites. Alibaba offers an Android or iOS app to make it easier for buyers. You can try using it.
For desktop users, Alibaba has a website. You can browse products and suppliers.
● Apply filters for a more suitable selection.
What is your goal? Do you need a clutch surface manufacturer?
Let me give you an example.
Open the Alibaba website or app.
Search for “clutch face material”.
You will see a large number of products. But Alibaba provides the filter.
At the top of the page, filter suppliers based on features, trade guarantees, validation status, and positive reviews.
Alibaba offers more than 20 filters to refine your search. With this approach, you will find the best supplier based on your needs.
● Check supplier information.
Don’t land blindly. Observe before you get off the bus. There might be mud. I’m sure you don’t want to step in the mud.
It’s the same thing here. Find out before working with suppliers. Alibaba displays company information. Check their:
Transaction history
Customer ratings (e.g., 5/5)
Check out their products.
Check the status, whether it is a “gold supplier”, a verified supplier, or both.
Check how much money the supplier has made so far.
You can view all previous records. All of these factors will help you find a top supplier to start your Alibaba consignment business.
● Read customer reviews.
Customer reviews show:
Supplier customer support.
Product quality.
Whether the supplier is reliable.
A business transaction.
Most importantly, customer satisfaction.
Reading customer reviews is a real skill. You’d better be able to screen out the scammers from the top suppliers. This way your trade will be more secure.
It is best to check:
Read all the one – and five-star reviews.
Evaluate the company’s underlying problems. For example, a negative review is about delayed shipments.
Determine if the supplier is right for you.
If a supplier’s delivery time is 10 days, and your customer wants to receive the product within 3 days, leave the supplier. Move on to the next one. Therefore, being clear about your needs can help you find the best supplier.
● Verify the supplier’s business location
Some vendors use VPNS to commit fraud. They claim to be in China when in fact they are in the United States. They don’t have a factory and only tell you the address.
When you look at their factories in the field, there are actually no factories at all.
So what to do?
Verify suppliers. Either hire a purchasing company or work with a Chinese resident to determine if the factory is real.
There is a key point here.
Alibaba-verified suppliers and gold suppliers have been tested by the Alibaba team. That means they have actual production facilities. Therefore, you can also choose these suppliers to trade with.
How to negotiate with suppliers
It is common for buyers to fail at this point. The reasons are obvious. Some buyers are reluctant to communicate, while others can’t even handle and prioritize.
But negotiating can help you win the right deal. Here are some tips to know when negotiating.
● Set a budget for each product you want to sell.
Rushing results in waste.
Have you ever heard that phrase? This is very applicable when you are in the rush to seal a deal.
Before you buy, sit down and understand the budget for each item.
For example, you expect sneakers to cost between $10 and $20. Instead of rushing to choose a $10 or $20 sneaker, check the quality first. Consider all factors in advance for better sales later.
● A clear understanding of your expectations for quality, transit time and pricing.
In the negotiation, you should set:
Define quality control. Evaluate quality control before, during and after production.
Discuss shipping time. Explicitly ask the vendor if they provide a tracking ID.
Negotiate to lower the price. For example, you can buy $10 sneakers in bulk, and the price may drop to $7 or $8.
● If you are not satisfied with the terms, be prepared to walk away from the deal.
Not satisfied with the terms? Don’t be too picky.
Reject the deal outright. Keep looking. Find new and better suppliers. Deals with new suppliers are more favourable.
Payment methods on Alibaba
Alibaba offers a variety of payment methods. You can trade with suppliers and pay in the following ways:
● Wire transfer
Have you ever heard of wire transfer? It’s a form of bank transfer. You can send money from your own bank account to the supplier’s account.
Advantages include:
Transaction fees are low, up to $40.
There’s no third party involved.
Disadvantages include:
It takes 3-7 working days for the account to arrive.
● Letter of Credit
When you use a letter of credit, you set up a payment channel. The financial institution will not release the money to the supplier until you receive the product.
Advantages include:
Very secure payment option.
You need to confirm the payment before it reaches the supplier’s account.
Disadvantages include:
Transaction fees are higher.
● PayPal
PayPal is one of the simplest payment methods. You add an account and pay the vendor. The process is not complicated, no additional pressure.
Advantages include:
Easy to pay.
In case of any fraud, refund quickly.
Disadvantages include:
You may face currency exchange issues when dealing with US dollar transactions.
● Western Union
Western Union is also a popular method of payment. Most Alibaba trade assurance providers use this method. You can send funds worldwide.
Advantages include:
Included in the Alibaba Trade Guarantee.
Payment is very convenient.
Disadvantages include:
Slow payment.
● Custody payment
Custodial payment systems allow the buyer and seller to have a third party involved. The buyer can only release the money after receiving the item. If you haven’t sent the price yet, it’s easier to open a dispute.
Advantages include:
100% secure payment options.
Widely accepted.
Disadvantages include:
Once the money is released, the refund process is complicated.
How to set up your consignment store
Shopify or eBay are in high demand, and Amazon isn’t far behind in this segment – thousands of sellers ship on Amazon’s behalf.
Before you can sell on Amazon or Shopify, you need to have a store. A store is like an online store where you will sell.
How do you do that?
Here’s a step-by-step guide to help you launch your first item.
● Choose a shipping platform, such as Shopify or WooCommerce.
WooCommerce or Shopify? Which would you choose?
WooCommerce is a website builder. You can buy a domain name and buy a hosting plan from a well-known provider like Bluehost, SiteGround, or Hostgator. Select your hosting plan.
Then use WordPress and WooCommerce to build your website. This has the advantage of having a uniquely branded website where you don’t have to pay anything to a marketplace like Shopify.
Shopify is similar to Amazon’s platform. But here, you can access different subscription plans to build your store using Shopify. The base plan starts at $25 a month.
You can subscribe and start building the store. Hiring a professional web developer is a good idea. They will help you create a more professional website with all the features.
● Create a product catalog.
What will you be selling in the store? Product, right?
So why wait? Create your product list. If you use Alibaba to send to Shopify, then beautify your store. Upload the product and add a description. Use SEO techniques to get better rankings in search engines.
● Set up your shipping and payment methods
If you have completed the above steps, it is best to set up your shipping options.
How will you ship your product? How would you like to receive payment? In this step, you can decide every detail.
I have a key concern about transportation. Since you are not a fulfillment provider, you should ask your provider what shipping services they will provide. For example, if the supplier offers UPS standard shipping, update this information on your product page.
You can add the estimated shipping time and cost given by the supplier. At this point, you have to be very careful.
You should provide the shipping options provided by the supplier.
For payment, you can add whatever works for you – no need to worry too much about the payment options of the shipping provider.
● Promote your store
Don’t you want to get higher sales when you ship on Alibaba.com?
I have some practical advice.
Use social media. FACEBOOK and INSTAGRAM are great sites with billions of users. You can promote your products for free. Sometimes influencer marketing can lead to higher conversion rates, although there is a fee to pay.
Try digital marketing. Digital marketing can increase your sales. You can hire digital marketing experts and let them know your goals. They will try different paid and free methods to bring you more organic traffic.
Use PPC advertising. PPC ads only charge when a product is clicked. For example, you set a price of $1 per click. When a buyer clicks on your AD, you will be charged $1. This will be charged whether you complete the sale or not. These advertisements are more effective in promoting the store.
Turn to SEO. SEO is the best strategy. It’s 100% free. You need to do your research. Use multiple tools to extract hot keywords. Then boost your store’s ranking in search engines. You will get more sales.
Manually upload products
Are you thinking about how to ship goods on Alibaba? No problem, you need to import the product.
How does it work?
Here are the steps.
● Obtain products from Alibaba suppliers
Select the products you want to sell. You can visit the supplier’s store, check prices, and get products.
Extract product details, record key points, write product features. You can also copy and paste to reduce the amount of work.
● Upload them to the store
Have you obtained the details? Let’s upload them.
In Shopify or WooCommerce, you can upload products manually. From start to finish, you need to get the product information from the supplier and upload it in the following way.
Add a product title.
Write detailed product descriptions.
Add advantages and features.
Upload pictures.
It would be nice to have a video of the product.
● Take product photos
If you don’t have a product photo, why worry?
Work with an experienced photographer or use a professional company to take photos of your merchandise. Make sure the photographer has:
Years of experience.
Excellent track record.
High quality camera.
Taking high-quality pictures increases the viewer’s interest. Therefore, you should use high resolution pictures.
Doing 360-degree photography is a game changer here. Try taking photos from different angles.
● Add video
Most sellers don’t add videos. I think it’s one of the biggest problems I’ve investigated, it reduces sales. Sellers who upload videos increase their sales chances by 50%.
I don’t think anyone wants to miss this opportunity.
Hire a photographer and set up a great theme to record 4K video. Describe your product in detail in a video.
In this way, you are more likely to sell.
● Optimize product list
Optimization with keywords and good descriptions is key. You should know the pain points. As a result, you can view a large number of product reviews from other vendors.
Find out how customers react, what they like best, and what they want in the product.
Adding all the key features to the description will attract the attention of the buyer. And you already know the results.
Order fulfillment process
The order fulfillment process begins when you beautify the store, offer discounts, and give offers. More details here.
● Customer order
Suppose you have a seller’s shop on eBay. First, customers will browse your products and read their descriptions before deciding whether to place an order with you.
When the customer places an order, you need to start fulfilling the order.
● Get customer address
Before the customer can pay, Shopify or eBay needs an address for shipping. If the customer already has a default address, that’s great. Otherwise, the customer must add a shipping address.
● Know your suppliers
Now is the time to contact your supplier and let them know that you have received your order.
There are two options here.
Perform at one’s own discretion. You can hire a delivery service to arrange the delivery of products from suppliers to customers.
Please ask the supplier to fulfill. Suppliers can also fulfill orders. You need to remind the vendor of the customer’s address.
Choose the method that is easier for you.
● Get the tracking ID
The tracking ID is the code for your order tracking. Through it, you can know where your product has been delivered.
The customer is very concerned about their delivery. To reduce their concerns, you should get a tracking ID from the supplier, update it to the shipping page, and let the customer track the order.
● Send orders
The next step is delivery. Your delivery service will transport the product from the supplier to the customer.
Keep in touch with your buyers. Make sure they get the order. After that, you can confirm and request a true evaluation of the product.
Product returns and handling are some of the key issues here.
Conclusions
Alibaba’s direct sales through Shopify is a key issue, bringing in thousands of dollars in profit. Developing better sales strategies is critical.
Before starting an Alibaba shipping Shopify business, it’s important to prioritize finding products. Make sure the products you sell are of high quality and offer faster shipping. These tips will ultimately help you succeed.