Dropshipping is one of the easiest ways to start an ecommerce business, and a dropshipping platform is one of the easiest ways to get a dropshipping business started! There are a number of different platforms that are available to businesses, but we’ve noticed that a lot of ecommerce entrepreneurs aren’t entirely sure what dropshipping platforms are good for.
We know the ins and outs of these platforms because we regularly help businesses transition away from dropshipping platforms to establish sustainable supply chains.
Our specialty is direct-to-consumer (DTC) China fulfillment.
What We Are Going to Cover
- What dropshipping platforms are and how they work
- Pros of using dropshipping platforms
- Cons of using dropshipping platforms
- Tips and watch outs for using them correctly
What Dropshipping Platforms Are and How They Work
Along with the rise of dropshipping, platforms started popping up to offer dropshippers specially designed services.
A dropshipping platform is an online portal where services specifically designed for dropshipping businesses are offered. Typically, dropshipping platforms:
- Offer an extensive catalog of products that are available for fulfillment
- Have no required MOQs
- Use an app that can integrate into your Shopify store and help you fulfill orders
- Similar services as working with a private agent if needed as well (e.g. sourcing new products, pre-stocking)
Notable examples: CJ Dropshipping, Eprolo, Wiio, Spocket, Zendrop.
Dropshipping platforms like CJ and the rest mentioned above are usually consolidated businesses with their own warehouse and a sizable staff.
Why Isn't AliExpress a Dropshipping Platform?
Aliexpress is not considered a dropshipping platform because it is not a consolidated business with one warehouse. Aliexpress is really just a collection of many sellers throughout China using the website as a selling platform. Think of Aliexpress as an international version of eBay in China. Individuals and businesses may use the platform to sell.
Pros of Using Dropshipping Platforms
Dropshipping platforms make it super easy to get started with dropshipping for a beginner! You just have to install an app, browse their products, and import available listings into your Shopify store.
In this way, I would recommend them over Aliexpress for entrepreneurs who are totally new and just want something to get going.
Their catalog can be vast (particularly CJ!) – not nearly as vast as Aliexpress, but you’ll probably find most “winning products” on there. Generally, they hold stock of their catalog products, and don’t require committing to stock upfront.
There’s a lot of benefits that your business can take advantage of when looking at these kinds of platforms:
- Good way to easily fill up your general / broader niche store with cross sells, upsells etc.
- In fact, some of our clients work with platforms on the side for this purpose!
- Better communications and service compared to AliExpress – they tend to staff agents who speak decent English.
- These platforms have solid factory connections given their volume, and generally have more clout over managing them on quality etc. vs Aliexpress.
- More selections of shipping options, including special lines, etc. Some of these platforms offer US / EU warehouses as well, which leads to fast shipping times.
- Many of them constantly recommend new hot selling products.
- They do offer services that private agents offer (more on this later).
Cons of Using Dropshipping Platforms
The main thing to consider with these apps is they are designed with beginner dropshippers in mind. More experienced store owners might outgrow these quickly and/or feel limited by their functionality.
In addition to the above, I urge you to consider the following points:
- The downside of having a catalog of winning products means you’re competing directly with other dropshippers. When you’re starting out dropshipping, product recommendations may seem amazing and helpful, when in reality this just creates more competition.
- To counteract this I would suggest you use the recommendations as inspirations and ideas, but realize that if you sell those specific products, you’ll be competing with other dropshippers on the platform.
- Stock numbers may not be completely accurate, especially if multiple dropshippers are selling the same products!
- This means that listing cross sells from these platforms without a careful eye on their stock may cause delays and hurt your main products.
- The Agents tend to be more literal “customer service – very responsive, but not necessarily experts, and may require layers of management approval to resolve more complicated issues.
- Given how spread out their client base and agents are, even with their factory connections they still might not have the resources (or prioritization) to really manage factories the way private agents can.
- Local warehouses tend to be much less well-stocked than China warehouses, and prices can sometimes be expensive when shipping from the local warehouses. Many times they don’t actually operate the local warehouse, but are working with warehouse partners, so they don’t really have full control.
Private agent type services usually are lacking vs just using a private agent to begin with. It teally comes down to almost completely different business models:
- Dropshipping platforms optimize for a high number of dropshippers with on average lower order volume per dropshipper. This is the bread of butter of how they make money.
- Private agents usually optimize for higher order volume per client, with far few clients…meaning much more resources and attention for each client, especially as they scale.
Dropshipping platforms are decent at low to medium volume (10s to hundreds of orders per day), but if you’re really scaling to 7-8 figures, just find a private agent.
Or, even better, begin the transition away from dropshipping and build a sustainable supply chain using China fulfillment. EcommOps is a China 3PL with a warehouse in Shenzhen, great factory relationships, and we ship DTC around the world in only 5-8 days.
Tips and Watch Outs for Using Dropshipping Platforms Correctly
Their business goal is overall volume of orders per day. It doesn’t matter quite as much if the dropshippers actually scale up their business and achieve great success themselves. Think about it this way…5000 orders per day might mean either:
- 50 clients X 100 orders per day on average
- 1000 clients X 5 orders per day on average
Either of these options achieves the same goal. Their processes and technology are really optimized for this.
Their focus on more quantity of dropshippers, less so on scaling is not necessarily bad. It makes them a great for for newer to intermediate dropshippers.
I would urge you to consider them a potential steppingstone between Aliexpress and working with a private agent, especially if you don’t have the constant volume to be able to work with a good agent and want a simpler to use platform than Aliexpress.
In some ways Aliexpress is better, IF you put in the homework (see next module)
- There are some real gems in Aliexpress sellers that are going to be way better than platforms, and even many agents.
- HOWEVER, dropshipping platforms can be way easier to use!
Some general tips for working with a dropshipping platform:
- If you want to be more certain of stock, then stick to their catalog products where they have available stock (though be careful not to scale too hard as they could still run out)
- If you are trying to scale, then utilize their pre-stocking service if they have one.
- Usually this means you have to invest in some cost of the stock, without the shipping, and shipping gets added after. Doesn’t sound exactly like dropshipping anymore? Well, you want to build a real business when you scale, right?
- Try to use special lines, eg Yunexpress, or whatever they think are the more reliable lines, even if it costs a bit more.
Some “watch outs” for working with a dropshipping platform:
- If you have a winner that is not in their catalog, and you want to protect it, do NOT have them source it…there is a good chance it will end up in their catalog at some point.
- Keep an close eye on stock levels in catalog products as you scale. Their stock levels might be more accurate than aliexpress, but realize that many other dropshippers could be using the the same stock and it could run out fast
- Manage your expectations. Don’t have too high expectations in terms of more complicated customizations, or requests in general, especially when interacting with their agents.