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Acquiring a business requires time, effort, and money. An acquisition can transform and grow a business overnight. But purchasing the wrong target company wastes time and resources, and causes distractions. Every acquirer must analyze, investigate, and perform due diligence to ensure that doesn't happen.
The entire process of buying a business can be daunting. However, with the proper research and attention to detail, an acquisition can lead a business to successful growth. To help acquirers, we have included 55 questions to ask when buying a business. We have separated it into categories and phases.
Business Readiness Questions
Before asking questions to the seller or target company, ask the following questions:
1. Why buy the business?
What is the goal of the acquisition? Is the acquisition’s purpose to acquire specific technology or enter into a new market? A good deal rationale will set the tone for everything else.
2. Why not build internally?
Why buy the product or service instead of building it from scratch? Is it more expensive to build from scratch? Is it because of time-to-market? A buy-or-build analysis is crucial when deciding to acquire a company, which requires collaboration with the CEO and functional heads.
3. Is the acquisition affordable?
Funding an acquisition can be tricky, depending on the acquirer's financial capability. There are three ways to fund a transaction: equity financing, debt financing, and cash reserves.
4. Can the team’s resources handle M&A?
M&A is massive and will require many people to execute the entire process. Not to mention that it could take months and, in some instances, a year to finish. Also, the people involved in the transaction will most likely juggle their day job while participating in the deal. Dedicated and capable people is a requirement for any company to execute M&A.
5. Where to find third-party consultants?
Aside from the internal team, getting outside help has its benefits, and is sometimes necessary. It is important to understand where to find third-party consultants and the costs associated with hiring them.
6. Is there a culture fit?
It's never too early to do a cultural assessment of the target company. Even at a high-level view, massive differences will be noticeable. For instance, a traditional company trying to acquire a millennial-dominated startup might have problems due to a substantial generational gap. Further diligence is required.
7. Is this the best target company available right now?
Are there any other alternative targets? Look around, it doesn't hurt to ask.
Questions about the Business’s History
Now it's time to approach the target company and ask a few questions. Before fully committing all efforts and resources, obtain a high-level view of the company and get to know the seller.
8. Why sell the business?
There are several reasons why business owners sell their companies, and some of them can be deal-killers. Knowing why a business is being sold upfront can give buyers confidence or the ability to walk away as soon as possible.
9. When did the business start?
Longevity is a good indicator of business success. The longer the business has existed, the safer it is to purchase. Chances are, they have good customer loyalty, a solid reputation, and overall stability. However, startups are often less expensive and have more potential. Business duration is a good starting indicator of the business’s quality.
10. Are there any other investors or owners?
Is the seller the 100% owner of the business? Or do they have capital investors? Are they selling their shares too? How much of the company is for sale?
11. Was there ever a lawsuit against the business or the owner?
In the business world, past or present litigation matters. It’s a good indicator of culture, values, and, most importantly, reputation. Also, litigation can open the acquirer up for liabilities. If the target company has legal problems, the buyer will inherit those problems as the new owner.
Future Business Crowth capabilities
What about the future of the business? Has the business maxed out its potential? Or can the company grow with extra help? Those are important questions during an acquisition.
12. Does the business have the potential for hypergrowth?
Often, acquirers make the mistake of ignoring opinions and the owner's vision regarding their business. But the fact is, no one knows the company more than the owner does. If they are one step away from achieving hypergrowth, they might know what to do, but just lack the capabilities or funding to achieve it.
13. Is the business too dependent on the current owner?
A business heavily dependent on the owner could cause problems, especially if they are retiring. That massively cuts the value of the company, even though the owner may not see it that way. Also, putting all hopes on one person that could walk away anytime is not a good idea. If it seems impossible to replicate the owner's role or automate the processes, think twice about buying the business.
14. Is there someone who could run the business?
It's time to find a deal sponsor; Someone who can inherit the business forward. If the business is not dependent on the current owner, find a suitable replacement that can handle the business and its day-to-day operations. The location of the business is also crucial. If the business is overseas, and there is no willing employees to move there, that could be a problem.
Financial Questions & Valuation
Never buy a business without looking at concrete financial data. A business valuation goes beyond understanding the growth path of the target and verifying transactional elements is essential. Typically, there is an NDA in place before the seller would agree giving out sensitive financial information.
15. What is the business revenue?
How much money is generated from regular business operations? If most of the money comes from non-operating income, that means their products are not sellable, and acquiring this company might be a lost cause. This question entails getting all of the financial statements for the past five years.
16. How much profit does the business make a year?
Profit is not the same as revenue, and a business can have high revenue with no profit due to high fixed costs. It's essential to understand how profitable the business is.
17. Does the seller have any outstanding debt?
Look at the debt schedule. As the one inheriting the debt, it is important to understand each and every detail of the debts incurred by the company.
18. What are the company's assets?
Ask for a list of all the long-term assets owned or leased by the business. For the assets owned, they should provide dates of purchase to give an idea of the length and estimated usage of each machinery. It will also help understand the depreciation, condition, and remaining value of the assets. For leased property, ask for the contracts whether it's machinery or real estate.
19. How much is in the business’s bank account?
A bank account balance will give a good estimation of the business’ operating cost. There is also the matter of business continuity. Since all the salaries, receivables and payables go through that bank account, inheriting it is easier. Just put the account balance on top of the overall purchase price so that the transaction doesn’t disrupt the business operation. The treasury team should secure all the necessary signatures and forms to transfer the bank account successfully.
20. Is the business tax compliant?
If the target company is not tax compliant, the acquirer will inherit potential problems with the government. Secure the following:
21. What does the business's quality of earnings look like?
A quality of earnings report is a good indicator of a company's profitability under new ownership. This process removes one-time events from their income statement and focuses on EBITDA. (Earnings before interest taxes depreciation and amortization)
22. What is the projected sales for the next year?
Look at the trajectory of the business. Does the business have something in the works that is geared towards boosting sales? Do they have new opportunities? Do they have incoming new clients? Getting their rough estimate is an important part of evaluating their business.
23. What is the seller's asking price?
How much is the asking price? If it is unreasonable, consider walking away before wasting any more time. It’s very common for entrepreneurs to be emotionally attached to their business, which skyrockets their expectations. If it’s too low, consider sealing the deal quickly before any buyer swoops in and triggers an auction.
24. How much have similar businesses recently sold for?
Regardless of the number and what the business looks like, it’s important to know the fair market value for the specific type of business. Research or ask around how much similar businesses have recently sold to get an idea of how much to pay.
Questions About Day-to-Day Operations
Even if the numbers look good, what about the daily operations? It’s time to think about integration and company culture.
25. How many employees does the business have?
Obtain the business’s org chart and headcount by function. This will provide insight into the critical players crucial involved in day-to-day operations and the overall size of the business. This question also entails getting employment contracts. Gain access to sensitive information such as compensation, bonuses, and other details regarding every employee.
26. Have there been any layoffs or material changes to the workforce in the last 24 months?
Like it or not, culture matters. If the target company is throwing out employees left and right, that says a lot about their culture and how they treat or retain employees. Try to uncover if there are employees who left out of anger or were mistreated during their tenure, which could lead to possible lawsuits in the near future.
27. What are the products or services of the business?
Get a list of the products sold, or services provided, with a description. Knowing everything about these products will help during integration, especially in creating a go-to-market strategy.
28. Does the business have intellectual property, trademarks, or patents on their products?
Are their products special? If so, are they protected or registered? If they have no protection on a special product, then it is virtually useless because another company can copy it easily. Is it too late to register now? If their product is the deal rationale for acquiring the company, then this could be a deal breaker.
29. How does the business produce products?
This question provides a detailed view of what the day-to-day operations look like. How do they acquire their product? Do they make it from scratch? Do they buy parts and assemble it themselves? Or do they just buy and sell the products? Knowing the workflow will help accurately identify key people to retain, the pieces of equipment and tools needed for daily operations, and cost synergies.
30. Are the facilities, equipment, fixtures, and vehicles in good working condition?
If the sales are great and the products are great, but you cannot produce anything because the equipment is broken, then it's all for nothing. If all the vehicles needed to sell or deliver the product don't work, how will the business operate? Replacing or repairing everything will cost a lot of money and should be deducted from the overall valuation.
31. Who are the suppliers?
While trying to understand the operation, also get the supplier list. Who are the partners in producing the product? Do they have an existing contract? What are the limitations of the contract? If a supplier wishes to stop selling, can the business still operate?
32. How does the business sell?
Arguably, one of the most critical questions to ask before acquiring a company is how does the business sell their product or services? Where do they sell? How do they deliver? How do they collect payment? Achieving revenue synergies is almost impossible without understanding the quote-to-cash process.
33. Who are the customers?
The customer list with a breakdown of revenue by a customer is another important piece of information to obtain. Who are the top clients? Do they have contracts or can they leave anytime? How many customers do they have? And most importantly, who are the typical buyers of the product?
34. How does the business acquire new customers?
What is the go-to-market strategy? How do they acquire new customers? Do they have proactive sales reps? Physical stores? Social media? And what does the customer acquisition cost? Understanding the prospect-to-customer process is also key to integration.
35. Has there been customer churn in the last two years?
How many customers has the business lost? Do they know why? Is it something serious? Or is it because of better competition?
36. Who are the competitors of the business?
Knowing the competitors will help paint the entire landscape of the industry. Understand who they are, what they are doing, and what you can do to outgrow them.
37. Does the business have any existing partnerships with other entities?
Any joint venture or partnership agreement the business has entered into must be identified, especially if they are taking a percentage of the profits.
38. Any other contracts or agreements the business has entered into?
Are there any non-operating contracts the business has entered into? Acquirers inherit contracts and obligations. It could be as simple as a promise to donate money to a certain charity every year.
39. Does the business have the proper licenses and permits to operate?
Secure necessary permits to operate the business, licenses to use special machinery, and any other government-mandated licenses. Does the business have all of the necessary permits and licenses? If they do, are they all transferable to the new owner? If not, is it possible to secure ones? Otherwise, it might not be possible to own the business after all.
40. What kind of technology does the business use?
Today, technology is crucial for any business. It's very safe to say that the target business uses technology tools. What are the tools used? Can the tools be migrated to another system? Is it necessary to upgrade their computer hardware to be at par? This information directly impacts the integration budget.
41. Will the business be the same under different ownership?
Probably the most important question in this list, what will the company look like after the sale? If the plan is to relocate the entire business, can it still continue to run properly? If a huge part of the business relies on the owner's name or personality, then it's going to be impossible to replicate.
42. Is the target company better left alone? Or integrated?
Integration is the most delicate part of the transaction. Properly assess how much integration is possible to achieve synergies without breaking the company's value.
43. Does the seller have better processes?
It is also possible that a target company has a better process. Be open to reverse integration and adapt to their processes instead of the other way around.
44. Is the seller happy about the integration plans?
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A big mistake that acquirers make is not listening to what the seller has to say about the integration plan. Remember that the seller is good at what they do. Be open to suggestions and align with their business leaders of what the company should look like after the transaction.
Purchase Contract Questions
It's time to put everything in writing.
45. How many risks are involved?
After gathering all the information, how many risks are involved? Even with the risks, is the deal still viable? Can you mitigate those risks in a contract?
46. What are the things included in the transaction?
Focus on the disclosure schedule in contracts. It contains what is and is not included in the overall transaction.
47. Is the seller willing to help during the transition?
In some instances, like a carve-out, acquirers require help from the seller to transition the business. A transition service agreement must be secured before the deal closes. However, even if it's a stock acquisition, sometimes, the owner needs to stick around for 90 to 100 days. Is the owner willing to stay for a little longer? Put it in writing.
48. Is the seller willing to sign covenants to protect the business?
As the previous owner, the seller knows all the business's trade secrets. Can they promise not to compete against it after the transaction? Will they share the secrets of the business to other companies or competitors? Also, other employees might have a deep loyalty to the owner and follow them wherever they may go. Protect the business and put covenants such as NDAs, non-solicitation, and non-compete clauses in the contract.
49. What are the things that the seller is willing to represent and warranty?
Reps and warranties are crucial for any transaction. These are statements of fact that the seller made to attract buyers. If any of them turn out to be false, reps and warranties allows the acquirer to claim damages. The most common example of this is the legality of the business. If the business turned out to be illegally operating, then reps and warranties can cover the damages. List down all the things the seller is willing to represent and warranty.
50. What are the other items needed to close the transaction?
Signing and closing right away rarely happens, and acquirers must identify other closing requirements to close the deal. The most common ones are regulatory approvals from the government, shareholder approval, and third-party approvals such as landlords' permission to transfer the lease, or the money if doing debt financing.
Miscellaneous
At this point, all that's left is to sign the contract. But before you do, here are some final questions to ask before signing a deal.
51. Was the seller nice during negotiations?
During negotiations, was the seller pleasant to work with? If they are unbearable, it might be an indicator of future culture clashes that will disrupt integration.
52. Is the target company socially responsible?
Not everyone cares about ESG, but it is slowly becoming a new trend globally. If this matters, then look at their ESG initiatives and identify if there is alignment on values and goals.
53. How will the deal be announced?
Announcing the deal can make or break the transaction. A poor announcement can scare all the employees and cause them to leave. The same can be said for newly acquired customers. Plan with the communication team carefully and get support from the target leadership.
54. Is everyone on the deal team happy about the transaction?
M&A is a massive undertaking that requires a huge team to finish. Having worked on the transaction, the deal team’s opinion matters. They are the ones that were in the trenches working with the target leadership and discovering the risks first-hand. If they think this is not a good purchase, talk to them about it before proceeding to sign the contract.
55. Are you happy with the company?
Last but not least, are you happy with the transaction? At the end of the day, the buyer has to be confident and satisfied with the purchase.
Mistakes to Avoid When Buying a Business
We have provided 55 questions to ask when buying a business to prevent owners or corporate development from acquiring the wrong business. However, even with the right target, pulling off M&A is an arduous task. Statistics show that over 50% of deals fail due to inefficiencies in the process and framework. Here are mistakes to avoid when buying a business:
Lack of integration planning
Asking the questions above will help identify if the company is a good purchase. However, what happens after is a different story. Most transactions often include integration planning, but not early enough. To make matters worse, some teams start integration planning after signing the purchase agreement. And in some instances, the people that created the integration plan were never involved in the diligence process. These are all recipes for disaster. Integration planning needs to start as early as possible. The earlier, the better.
Working in Silos
M&A requires a considerable amount of people to complete. If those involved in the transaction work independently from one another, it will cause problems that will destroy the value of the business. Try using Agile M&A, a framework focused on collaboration and communication between teams, centered around integration planning with the deal rationale in mind. Learn more about it here:
Lack of commitment from the leadership team
Before conducting M&A, there needs to be a fully committed deal sponsor, someone who will inherit the business after the deal is closed and will take responsibility of running its daily operation. If no one will take ownership, the newly acquired business will be in jeopardy.
Understaffing the Deal Team
Never understaff the deal team just to save a few bucks. An extra one to two people can make all the difference between a burnt-out team and a well-oiled machine.
Recap
Buying a business is life-changing if done correctly. The list of questions to ask when buying a business is a good starting point to identify readiness and the target company’s quality. However, don’t feel limited by the above set of questions. Feel free to ask more specific questions, depending on the type of business and industry of the target company.
The most important thing to remember is to have a strategy behind the acquisition.
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Alibaba is a global marketplace for entrepreneurs to source products from suppliers, in bulk, at competitive prices.
Like any online marketplace, however, it’s essential to understand how Alibaba works. Most importantly, you should know how to stay safe when working with new suppliers on Alibaba’s platform.
This post will walk you through the ins and outs of Alibaba, how to buy from it safely, and how to use it for a dropshipping business.
Before buying from Alibaba, be sure to check the most recent information and safeguards for protecting your purchase.
Alibaba is a Chinese-owned global wholesale marketplace. It’s one of the largest marketplaces in the world, generating $129 billion in revenue in 2023. With 200 million products from more than 200,000 suppliers, mostly based in Asia, Alibaba offers a huge directory for business buyers looking overseas.
Alibaba has a sister marketplace, AliExpress. While Alibaba is a B2B website for businesses that want to buy products in bulk, AliExpress is for consumers looking to buy individual products.
Alibaba has been around for a long time. It’s a publicly traded company listed on the New York Stock Exchange. Its marketplace has a good reputation in the global ecommerce industry, and based on user reviews, a majority of suppliers on Alibaba are reputable and trustworthy.
However, it’s important to remember that you’ll be dealing with independent manufacturers who use the platform, so it’s up to you to vet each one that you do business with.
While Alibaba has safety features to protect users (such as its verified suppliers program), there are bad suppliers on the website. You need to follow best practices to protect yourself when making an order.
Alibaba is a wholesale marketplace for buyers looking to purchase large quantities of products at the lowest price. You can use Alibaba to negotiate directly with manufacturers, order custom products, add branding to private label products, and achieve significant cost savings by negotiating repeat orders.
Ecommerce store owners can also use Alibaba to find and communicate with suppliers who offer a dropshipping relationship.
For businesses looking to stock their inventory or set up dropshipping, Alibaba works like this:
The exact steps for using Alibaba differ depending on whether you want purchase products or dropship them. Next, let’s look at how Alibaba works for these two use cases.
If you want to stock your store’s inventory with ready-made or customized items, here’s how you can find a supplier for your ecommerce business.
Alibaba’s platform works like many other online marketplaces. Use the search bar to explore thousands of products across various categories.
From the homepage, you can filter your search results by products, manufacturers, or suppliers.
Once you’ve performed a search, use the filter tools in the sidebar to find suitable Alibaba suppliers for your needs and shipping location.
You can filter suppliers and manufacturers by a number of factors, including:
Pay attention to a product’s number of orders and reviews, as well as a supplier’s ratings. Ensure suppliers are reliable by vetting testimonials from other buyers.
Consider placing a sample order for a first-hand look at product quality and supplier reliability.
When you’ve found an item you’d like to buy from Alibaba, there are a few things to look at on the product’s description page.
Minimum order quantity is the smallest order a manufacturer is willing to accept. In the example above, the minimum order is 50 units, shown in the top-right of the screen.
As you place larger orders, the cost per item charged by a supplier often goes down. Multiply the unit price by your order amount and add shipping costs to get an idea of your profit margins for a product.
Your next step is to negotiate a deal with the supplier. This is your chance to ask for more information about the product, request any customization, and agree on shipping fees.
Negotiating is a big part of the Alibaba shopping experience. You talk directly with the supplier to get the best deal for you and your customers.
There are several ways to communicate with Alibaba suppliers. Once a relationship is established, many suppliers talk with buyers through the popular Chinese messaging app WeChat.
You can use Alibaba’s inquiry form to reach out to suppliers. To find it, click the Contact Supplier button on a supplier profile or product listing.
In the form, you can introduce yourself and your business, as well as ask specific questions about products, pricing, minimum order quantities, and any other details you need. Keep your language simple and clear, as many suppliers use translation tools to understand your message.
It can help to number your questions so suppliers can easily reply to each one. This keeps communication organized.
For larger orders, another way to initiate conversation is to request a quote.
When you request a quote (often referred to as RFQ) for a product, all suppliers of that item can send you pricing information. Using RFQ, you can save time sourcing and easily compare multiple supplier responses.
To start an RFQ, hit the Request for Quotation button on Alibaba’s homepage. You can ask for quotes for products you’ve previously browsed, write out requirements, or upload documents detailing product specifications.
Taking a few minutes to plan your RFQ or inquiry can make a big difference to the quality of replies you receive. Be simple and clear, but don’t be afraid to give detailed information, such as:
An RFQ is more than just a quest for the lowest price—it’s a tool to engage with potential suppliers and find a reliable partner.
You’ll need to think about how best to pay your overseas supplier once a deal has been reached. Alibaba supports multiple payment methods—each with pros and cons for the buyer and seller.
Trade Assurance is Alibaba’s escrow service. It holds your payment and only releases it to the supplier once you confirm satisfactory receipt of your order. Trade Assurance can be used with credit card payments and wire transfers, and is a good option when starting out on Alibaba.
PayPal is a user-friendly option that offers good buyer protection. However, it’s less favored by suppliers due to difficulties in withdrawing money, tax rates, and the risk of chargebacks.
A letter of credit can be safe for both parties but involves complex procedures. It’s generally recommended for larger purchases ($20,000 and above).
Unless you use trade assurance or another form of escrow, bank transfers can mean the supplier receives full payment before production starts. This carries a high risk for the buyer and is not recommended when dealing with an unknown supplier with limited recourse if something goes wrong.
Western Union is another risky payment method for the buyer and is not recommended unless the payment is protected by escrow.
Effective dropshipping using Alibaba requires a slightly different method:
Head to Alibaba’s dedicated dropshipping portal. This will show you suppliers who are open to fulfilling individual orders, eliminating the need to meet minimum order quantities.
Next, connect your online store to Alibaba. This integration allows you to push product information from Alibaba to your store, keep that information updated, and synchronize store orders.
If you’re using Shopify for your online store, this process is simple and can be done by installing the Shopify Alibaba app, or by connecting through the My Store tab on Alibaba’s dropshipping portal.
Use the search bar to find dropshipping products that align with your niche. Again, you can refine search results with filters.
To find a profitable dropshipping niche on Alibaba, you’ll want to use the search functions to look for products with high consumer demand but low retailer competition.
Free tools like Google Trends can help you see product popularity over time. Steady interest is a good sign of a profitable niche, but you’ll also need to make sure there’s a workable profit margin.
Once you’ve found products to dropship, add them to your import list. The Import List tab makes it easy to manage the products you want to sell online and sync them with your online store.
When you add products to your list, you can customize their titles, descriptions, images, and pricing. This information will be pulled to your online store and is visible to your customers.
With everything set up, orders made on your Shopify store will be visible in the My Orders tab.
From the My Orders tab, you’ll be able to:
When it comes to shopping on Alibaba, safety is paramount. It’s important to know how to protect yourself and ensure you’re dealing with reliable suppliers.
Here are five key strategies to help you navigate Alibaba safely and confidently.
Alibaba has its own verification program that authenticates high-quality suppliers.
Verification is based on inspection by third-parties and feedback from previous customers.
Verified suppliers are confirmed to possess all the necessary paperwork and licensing. An audit team also inspects the supplier’s facilities to assess the company’s operating conditions. They look at:
If a supplier is verified, you’ll see a widget on their landing page. Verified widgets can take the form of banners, pop-ups, or a tab on the supplier’s storefront:
These sections contain information about the supplier’s performance history, as well as links to inspection reports and factory tour videos.
There are three types of verified suppliers on Alibaba:
Looking for these verification badges is the first step to assessing whether a supplier is ready to ship for you.
You can filter suppliers by verified status when you search, or check for the verified logo on manufacturer profiles.
Trade Assurance is Alibaba’s free service for protecting payments and ensuring you receive the goods you order.
The service helps create a secure trading environment by protecting buyers’ orders if a supplier fails to meet the basic requirements of on-time shipment or quality of products.
When you’re ready to place an order, look for suppliers that support Trade Assurance. They’ll have the Trade Assurance icon on their profile, and you can filter search results by whether a supplier accepts Trade Assurance terms.
After negotiating with the supplier, you can place a Trade Assurance order. During this process, you’ll specify your product requirements, payment methods, and shipping details in a digital contract.
Your payment is then protected (held in escrow) by Alibaba until you confirm that you’ve received the goods as described in the contract.
If there’s a dispute between you and the supplier, you can claim a refund with Alibaba:
Buyers in most countries can also return defective products locally for free.
Ask suppliers questions about their business and products. Look at reviews from other merchants to gauge their track record.
Buyers can check a supplier’s background by clicking Company Profile on product listings. The business information contained there often includes:
If you like the look of a supplier, try to get on a call with your contact.
Feel free to ask for whatever makes you feel more comfortable doing business. Does your supplier need to make efforts to be sustainable? Do they need to be able to provide custom packaging or branded invoices?
You should get samples to check and verify product quality before you invest any significant amount of money into inventory. Many retailers will request additional samples under different names and email addresses to check product consistency.
Finally, if a supplier’s offer seems too good to be true, it probably is. Be wary of shipping promises that seem fantastical or prices that differ significantly from other suppliers. Always be willing to walk away from a deal if it doesn’t feel right.
One of the main reasons why retailers and dropshippers look for suppliers on Alibaba is to take advantage of low manufacturing costs.
Costs of manufacturing in Asia can be significantly less than in North America and other parts of the world, which is good news if you want to start a dropshipping business.
While cheaper product costs mean higher potential profit margins, Alibaba does come with pros and cons that you need to be aware of before developing an online business around this marketplace.
Sourcing wholesale goods via Alibaba suppliers is safe and reliable, both for retailers and dropshippers. As long as you follow basic safety practices, Alibaba offers a potentially profitable way to expand your business.
Remember: If a deal feels too good to be true, just walk away. There are usually a hundred other suppliers you can find with a few clicks. Happy sourcing!
Illustration by Pete Ryan
Alibaba does support dropshipping. While Alibaba is primarily a wholesale marketplace, many of its suppliers offer dropshipping services. This means they will ship products directly to your customers on your behalf. Alibaba even has a dedicated dropshipping portal to connect you with suppliers.
Anyone can order through Alibaba, whether they’re an individual or a company. Alibaba lets you order bulk products from international manufacturers.
There is a possibility you may get scammed from a supplier on Alibaba, similar to threats of fraud on other online marketplaces like eBay and Amazon. You should take the precautions described in this article when vetting Alibaba suppliers, such as looking for the Verified Supplier logo.
Alibaba and AliExpress are both online marketplaces of third-party sellers. The difference between Alibaba and AliExpress is that Alibaba is primarily for business-to-business transactions, while AliExpress is designed for consumers.
With Alibaba, you buy directly from the manufacturer and can request custom product designs. AliExpress items, on the other hand, are usually pre-made with limited customization options, and are typically more expensive.
Sellers on AliExpress also tend to offer ePacket shipping, which can help your ecommerce store deliver high-quality, validated products to customers, faster. Alibaba shipping times are typically longer.
The products you decide to sell online dictate which marketplace is better for dropshipping. If you want wholesale or custom white-label goods, Alibaba is a better option. If you want to dropship ready-made products without a minimum order, AliExpress dropshipping may be better for you.
Shipping from Alibaba can be expensive because of the distance that purchases must travel. Since each supplier has its own shipping costs and delivery times, you may be able to lower shipping costs by negotiating with a supplier.
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