A dropshipper can learn to overcome various challenges when running a dropshipping business. However, one particular area of the business model will likely give you more headaches than the others — logistics.
Updated at Nov 7, 2020.
Despite the initial success, when you try to scale up your sales volume to more than ten orders per day, you will start to experience these recurring pain points:
- Slow shipping time
If you have used AliExpress suppliers before, you will find that they often provide little help whenever issues arise with delivery. Or worse, some even resort to using a different shipping method than the one you have requested without your consent.
Prolonged shipping time is the number one factor that contributes to poor customer satisfaction and retention.
- Jacked-up prices
Most sellers on AliExpress are middlemen. That means, they order products from suppliers and resell those to dropshippers at a premium. The price difference could have been your profit instead.
- Lack of inventory control
Furthermore, because they don’t keep a big inventory, their stock level is unpredictable and can lead to fulfillment problems when you make large orders.
Therefore, it is not uncommon to hear AliExpress sellers refund dropshippers’ orders because the sellers have run out of stock.
- Bad packaging
AliExpress suppliers often ship in simple and plain packaging to minimize processing time and cost. As a result, it can make your customers feel uninspired when receiving their packages, discouraging them from ordering in your store again.
Also, some suppliers like to insert promotional material in the Chinese language into the packages, giving your customers a rude shock.
You are likely not able to find a regular supplier who is willing to work out these issues with you, as you are just one of their many customers. In that case, you may want to consider looking for a shipping agent to take charge of your shipping and logistics.
What is a shipping agent?
Also known as a dropshipping agent or fulfillment agent, a shipping agent is someone who coordinates with suppliers and courier services on your behalf — making sure that your customers’ orders are fulfilled timely and without surprises.
With a shipping agent, the order fulfillment process goes like this:
- The shipping agent takes the orders’ details from you.
- He picks up the ordered items from the suppliers.
- Then, he sorts and packs the orders as per your specifications. This includes consolidating different packages for the same customers, removing original invoices, and inserting branded receipts.
- Finally, he ships the packages to their destinations with fast shipping methods.
It’s worth noting that some shipping agents have their warehouses and inventory. This provides you more stability in case the suppliers don’t have any stocks available for ordering. This also serves as proof of inventory for when you need to open an account with third-party payment processors, or when being investigated for going beyond the payment processing limit.
There are also shipping agents who, in addition to fulfilling your orders, help you source products that you can sell. They may be called sourcing agents.
In fact, our product research tool uses weekly order data provided by our sourcing agent connections to reveal which products are being increasingly ordered by dropshippers—winning products that are not yet saturated.
Comparison: AliExpress supplier vs Shipping agent
Now, you might ask: what is the difference between a AliExpress supplier and a shipping agent?
Here are some of them:
|Product sourcing||To maximize inventory turnover, a supplier is more interested in promoting particular products from their catalog to you, which may not be sellable.||They don’t have a vested interest in promoting specific products. If they do sourcing, they will help you to find the best products and suppliers.|
|Prices||Marked-up prices as some sellers are dropshipping.||An agent can negotiate competitive pricing with their suppliers as they order in bulk. They often charge you a fixed fee per order. You also get volume discount.|
|Ordering||By using a dropshipping app that automates the ordering process to some degree, it can still become daunting to process batches of orders every day.||By using a CSV file, an agent can fulfill up to 100 orders per day at one go, without any problem. You can choose to pay the agent with a single payment transfer for a whole batch of orders. |
Some bigger, more establish agents develop their in-house Shopify app to automate the ordering further more.
You won’t have any visibility or control over the order fulfillment process because you have delegated it fully to the supplier. As a result, you won’t be able to avoid issues that may arise out of it.
|An agent acts as your business partner, giving you more visibility into the fulfillment process—from knowing the inventory level right down to the shipping line they use to ship your products.|
|Processing time||An AliExpress seller typically takes 2-5 days to process your order and uses shipping methods like ePacket or AliExpress shipping to deliver your order in 20-40 days.||
A shipping agent usually takes 1-2 days to process your order and uses faster shipping methods.
Some of them even use a separate direct shipping line that is faster than ePacket.
Some own overseas warehouses and can ship your orders from there if they are nearer to the destination addresses.
How to find a shipping agent?
There is no shortcut to finding the right shipping agent. People you meet online who claim that they are a shipping agent are likely not the best you can find.
You can do the following:
- Ask for recommendations. You may want to ask fellow dropshippers who are already considered veterans in this industry for their agent’s contact. If they’re up for it, they can share with you the most reliable shipping agents you can find.
- Visit trade fairs. When you tour a trade fair, you get to expand your network and meet some of the best shipping agents in the industry.
Or, you can simply refer to our shipping agent directory below.
|Name||Location||USA warehouse||MOQ^||Subscription fee||Custom packaging|
|China||No||No||Need to request for info||Yes|
|China||No||Need to request for info||Need to request for info||Personalized logo|
|China||No||No||Need to request for info||Yes|
|China||Yes||No||Free. Processing: $2 per item.||Yes|
|China||Yes||No||Free. Processing: $1 per item||Yes|
|China||No||No||Free. Processing: $2 per order||Yes|
|China||Yes||No||Need to request for info||custom packaging inserts|
|China||No||No||Free. Processing: $2 per item||Yes|
|China||Yes||10 orders per day||Free||white label / print on demand|
|China||Yes||No||Start for free||No|
|China||Need to request for info||Need to request for info||Need to request for info||custom packaging inserts|
|Hong Kong||Yes||Need to request for info||Need to request for info||Yes|
|Netherlands||No||No||Need to request for info||Yes, but with additional fees|
|USA||Need to request for info||No||Free||No|
|USA||Warehouse in designated locations||No||Free. Starter, $1 processing fee per order; Enterprise, reduced processing fee||Yes|
|USA||Yes||Need to request for info||$396 per annum||Yes|
|Italy||No||Need to request for info||Free||Private label, personalized packages and customized cards|
* recommended for better support
^ except ordering from factories which always have MOQ
It does take time to find a good shipping agent. Thus, it’s essential to evaluate any agent you are looking to work with first. He/she will be your business partner for a long time, after all.
Criteria for evaluating a shipping agent
Now, here are some criteria you can refer to when evaluating a shipping agent:
1. Minimum order quantity (MOQ)
Do they require you to have a minimum order quantity per day? Your store must meet this requirement. Otherwise, it would be difficult for them to order in bulk from their suppliers to save costs, and as a result, the shipping agent won’t allow you to use their service.
2. Agent fees
A shipping agent usually adds a markup to the supplier price and charges the total to you, while keeping it below the average selling price on AliExpress for the same product. The markup is the agent fee.
You should ask your agent to disclose their markup percentage and any additional fees associated with his services, e.g. warehousing cost.
3. Order processing
You should question them about their quality control (QC) process. Specifically, how do they perform QC check on the goods they receive from suppliers? The QC process is central to guaranteeing your product quality and reducing the return rate.
Besides their QC process, you may want to enquire how they allow you to customize the product packaging. There are different levels of customization — from just printing a simple branded logo on the box, to adopting a fully customized package design.
Next, how fast can they process your orders? A typical shipping agent’s order processing time is about 1-2 days. Their efficiency at processing orders will help you minimize any shipping delay.
What is the typical delivery time to your targeted countries, during flat and peak seasons? For example, it should take less than ten days for an agent to ship an order to the US.
If they claim to have a warehouse, ask for its location. Is it near major ports, so that your goods can reach the custom faster? Do they have warehouses in your targeted countries, where you can then use domestic shipping to deliver the goods to your customers?
To have a better understanding of their logistical capability, you can ask your agent to give you a virtual tour of their warehouse. It’s good to check if their fulfillment workflow is highly automated.
5. App integration
Usually, a shipping agent takes orders using templated CSV files. Some agents might provide a separate app that integrates to Shopify seamlessly, saving you the trouble of doing daily export of orders and daily import of tracking numbers.
The same app could also do product import and order monitoring.
Last but not least, how fast can the shipping agent respond to you should you alert them of any issues you encounter during fulfillment? Are they able to provide you with a dedicated client manager whom you can call to resolve those issues? You are going to need their support down the road, and it had better be responsive.
Once you have the answers to the above, you should ask yourself two final questions: can you form a good working relationship with them? Can you entrust them with your dropshipping business?
If you answer yes to both questions, then you’ve got yourself a deal.