Alibaba is classed as the Amazon of the Far East, only much cheaper – as it’s wholesale! With this is mind, many people across the UK are using the Alibaba website to source products, drop ship them to the UK and sell on Amazon UK, ebay or their own websites, or even all three.
This is a great way to cost effectively sell on line and make some money. However, there are some hidden costs to sourcing your products from Alibaba as we will explain below.
Minimum Order Quantity
When you see the prices on Alibaba you may be shocked at the low cost of the items listed, without seeing that there is a minimum order amount to buy to get the items at that price.
Known as the MOQ, if this is set to 1000, it means that you have to purchase 1000 of that amount per order. If you see an item that you think would sell really well in the UK, that for example costs £5 per item, you would have to buy 1000 at a total cost of £5000 so you would have to invest in the product and be confident you can sell all you buy.
If you want to buy individual items at less risk, but more cost, Alibaba has a retail site called AliExpress that doesn’t have a minimum order amount, however the cost is higher than you would have seen at the Alibaba wholesale site. You would therefore sacrifice much, if not all of your margin so we think AliExpress is a non-starter for business.
If you are new to shipping in quantity from overseas, the process may be unknown to you! Many people would assume it is the same as ordering something from Amazon with a fixed price delivery fee. However, buying in larger quantities (freight) is a longer process involving many different aspects if you are doing it by yourself, these include registering yourself and getting an EORI number to be able to import into the country.
The easiest way around this is to contact a Freight Forwarder (such as ourselves at K&L Freight) who can take care of your shipments and all paperwork to ensure the process runs smoothly.
The shipping type you will want to use will most probably depend on the quantity of goods you have ordered. If you are ordering a small amount of items ie. a box of goods, a courier service may be well suited to you, as it will be picked up and dropped off at your desired location. However, this service is not cheap at a per item level so with a larger number of items you would be better with a freight service.
Freight is designed with larger quantities in mind and there are two main types of freight – Sea Freight and Air Freight. We don’t recommend using the postal service incidentally as you will not know when your shipment will arrive and sometimes they don’t arrive at all.
Sea Freight From China
To ship via Sea freight is much cheaper for large quantities but can take much longer in transit. You will probably be wondering what is the transit time by sea from China? The answer is that it varies as China is a big country.
Ships from the top of China, from ports such as Dalian can take 6 weeks. Those from the huge manufacturing area of the Pearl Delta in the South on the other hand (the area that surrounds Hong Kong) typically take 24 days or so.
Air Freight From China
Air freight is much more expensive than Sea Freight, but your goods arrive much quicker. At K&L Freight we can even split orders, initially sending a small amount of goods by Air to arrive quicker a followed up by the rest of the stock arriving a few weeks later via Sea Freight.
Taxes & Duty
Depending on the type of goods you are importing into the UK, you may have to pay duty on your goods as well as 20% VAT on the entire process of buying, shipping and insuring your goods. Again, a good freight forwarder will be able to help you with your with tax and duty responsibilities so that you don’t pay more than you need to and at the same time are compliant with the rules and regulations enforced by HM Revenue & Customs.
You would be amazed how many companies pay more duty and tax than they need to, just through lack of knowledge of import procedures. K&L Freight have years of experience in importing from China so fully understand all tax, duty and compliance requirements that will be needed and are in a fantastic position to work with importers to ensure a smooth end to end process.
Is Alibaba Worth It?
Alibaba is a great place to find and source products, however it is not as cheap as you may initially think. Using the site properly will mean that you have some extra work to do, much of which you could outsource to K&L Freight who will work with you to calculate the optimum way of sending what you order. To use Alibaba on your own will leave you with a high start up cost as well as dealing with Shipping and Taxes to sort out.