The Chinese-based e-commerce company Alibaba was established back in 1999 by Jack Ma.
Alibaba has established itself as the world’s biggest e-commerce retail brand after surpassing Walmart in 2016.
The brand is operating in more than 200 countries and is one of the world’s top 10 most valuable multinational brands.
Alibaba also has more than 251,000 employees at its disposal.
Alibaba offers more than 5,900 different types of goods, which include raw materials and finished goods.
Alibaba shipping is, however, relatively costly compared to normal shipping services from the same country.
You may be wondering why it may cost you more to ship products over the same distance and why anyone would opt for this expensive shipping service.
This article looks into some of the critical reasons Alibaba’s shipping is more costly.
Why Is Alibaba Shipping So Expensive? (Top 10 Reasons)
Alibaba is the only Asian brand that has exceeded the US$600 billion value mark.
Apart from these, the brand has more than 550 million monthly active mobile users across its platforms.
Overall, more than 150,000 different sellers are using Alibaba’s online platform to introduce their goods to the market.
The website’s clients come from all walks of life and various countries across the globe.
Alibaba ships its products to over 200 countries.
Goods that weigh less than or equal to 200 pounds are generally shipped by air transport.
The average shipping costs range between $6 and $15 per pound.
The items that weigh more than 200 pounds can be shipped using air or sea freight.
This method is more cost-effective than via air, but it can also become complicated.
Why is Alibaba so popular with shoppers despite its high shipping costs compared to other sites? The following are some of the reasons Alibaba has expensive shipping rates.
1. Reliable, Fast, And Secure Shipping Services
In the year 2018, Alibaba successfully shipped 1.04 billion packages to destinations all over the world.
Two years later, that number had more than doubled to 2.32 billion packages.
The majority of the packages arrived on time, well packaged, and in satisfactory condition.
Alibaba’s track record thus speaks for itself.
The company has been in existence for more than 20 years now and has perfected its logistics handling capabilities over the years and has gained tremendous experience in the sector.
Alibaba ships to over 35,000 zip codes worldwide and eliminates the need for a middleman to handle your logistics needs.
The company has well-trained and professional employees who ensure that your packages are safely delivered on time and, on top of that, provide top-notch customer service.
You may be able to also track your parcel in real-time on the company website to see the progress of your shipment.
Therefore, the company provides some of the best service negotiating in the market, thus making Alibaba shipping quite expensive.
2. Individual Sellers
When you shop on an e-commerce website such as Target or Walmart, you can choose several items that you would like and put all of them in your online shopping cart.
The items will be packed in one package and sent to you, and you will therefore only be charged a shipping fee for one package.
However, the e-commerce website Alibaba has thousands of different sellers.
If you were to shop for items from different sellers on the website, this would make your shipping fees more expensive.
This is because the items from the various sellers all have to go through individual logistic procedures before they are shipped to you.
In addition, each of the sellers on Alibaba has its processing plant or warehouse.
There is no centralized warehousing for all the products sold on the website.
Therefore, ordering different items from different sellers on the website will increase your shipping costs and make them varied.
3. High Seller Fees
To be able to maintain its website, Alibaba charges seller fees on its platform.
The fees are also charged for all the support Alibaba provides to its sellers, such as technical and customer support, marketing tools, and knowledge.
Although lower than the charges one would use to set up physical stores, the fees are still pretty high.
Currently, there are three membership levels on Alibaba: basic, standard, and premium.
Premium is more expensive but has more to offer than the other packages.
On top of this, Alibaba gets a commission on all the sales done through their platform.
This further raises the sellers’ cost of doing business and hence the increased fees to maximize profit.
4. High Marketing Fees For Sellers
Alibaba has more than 150,000 sellers on its e-commerce website.
With thousands of sellers in every category and various industries, it is tough for a seller to be visible to potential customers.
Alibaba addresses this issue by charging sellers a premium to appear at the top of searches and advertisements on their platforms.
However, these fees are usually too high for most sellers, ranging between $3,500 and $10,000.
However, they are forced to pay as they would not get much business without promoting their shops without opening their websites or physical shops.
Alibaba provides for them a platform with millions of potential customers, so the investment is worthwhile.
However, they have to compensate for these expenses in their pricing.
Shipping prices are one area where these shops may make up for their increased expenditure.
They will charge you extra costs for the shipping of your packages to be able to market their shops on Alibaba.
5. Assessment Of Your Commitment Or Seriousness
Alibaba’s business strategy connects manufacturing businesses in China with clients, especially those purchasing goods in bulk.
Alibaba links you directly to the producer of the item you are looking for on the platform.
Apart from negotiating most of the terms with the seller, you can also customize the item you are interested in to your liking.
Most sellers offer free or subsidized samples of the item they are selling or personalized items for you.
This is one of the best features of Alibaba.
However, you may find that you have been charged very high shipping costs for the sample, though you may have just been sent a few samples, even if they came in a small light package.
This usually happens so that the seller can assess your level of commitment to the deal.
Usually, the high shipping fees may be very small compared to the total value of the goods you plan to order.
Therefore, your willingness to pay this fee will signify that you intend to complete the final purchase.
You will also most likely be charged lower shipping fees when completing your final bulky order after being charged expensively for the delivery of the samples.
6. Custom-Made Products
Alibaba sellers make a wide range of custom-made products.
If you want something with your own customizations or designs, you can get it on Alibaba at a very competitive price.
The cost of production in China is very low compared to most developed countries in the world.
This makes it very easy and affordable to produce most items.
Of course, anytime that custom-made products are being offered, you can expect the cost of the item to be higher than the regular item.
The custom designs are not just more expensive for no reason, but because they take the seller more time to make than the already designed models.
When a custom order is placed, the shop owner has to start working on the project at that time.
Custom products may cost you more.
Some of these fees may be transferred to the shipping fees, and thus you may find yourself paying higher for shipping.
7. Shipping Incoterms
In international trade, incoterms are a set of globally recognized rules and regulations that define the responsibilities of buyers and sellers.
These rules define who is responsible for the goods, shipment, insurance, customs clearance, and other logistic activities and at what point.
Therefore, when one is buying products on any e-commerce site, it is essential to understand their shipment terms.
The shipment terms will determine who will pay for shipping at each specific point in the logistics chain.
Three common shipping incoterms are used on Alibaba and other common e-commerce websites:
- EXW: This is the most expensive shipping method for you. In most cases, the supplier may need to transport the products from their manufacturing plant or warehouse to the seaport for shipping to your destination. In this type of shipping, you as the buyer will have to pay for shipping from the factory to the seaport and from the seaport to your destination.
- FOB: This is the most common type of shipping term. In this case, the supplier of the goods you are buying will take care of all the shipping costs from his factory or warehouse to the seaport. You will then be charged only the shipping costs from the seaport to your destination.
- CIF: These are the least expensive terms for you as the buyer. This is because the supplier pays for both the cost of inland transportation in his country and the sea freight to your destination port.
When shopping on Alibaba, you will find various sellers with different shipping terms on Alibaba.com.
Therefore, you must familiarize yourself with them to choose the cheapest and most convenient one for you.
For example, if you choose a seller with EXW shipping, you will most probably be charged more than double compared to a seller who uses FOB shipping.
8. Long Shipping Distances
When setting shipping rates and prices, the main element is the distance between the pick-up and delivery destinations.
The longer the distance, the higher the shipping rates for the product.
The mode of transportation will also be considered as different transportation modes will similarly have different charges.
Alibaba is based in China, and its independent manufactures and sellers are also located there.
China is quite a long distance from North America, South America, Africa, Australia, and many other places around the globe.
Therefore, the shipping distance from China to these countries will be considerable, and consequently, high shipping fees are expected.
The long shipping distances also mean that, most of the time, the most convenient shipping method is either by air or by sea.
Air transport is the most expensive means of transport in the contemporary world.
This is because many resources go into the purchasing and maintenance of airplanes and the construction of airports.
Although cheaper than air, the sea is much slower than all other methods, but it is more efficient for bulky goods.
It is, therefore, primarily used in shipping heavy packages, usually in tons.
The heavier the goods, the more Alibaba will charge for shipping.
Therefore, the long shipping distances and the weight of the packages are most likely why Alibaba is charging you higher shipping charges than you are used to on other platforms.
These shipping fees are quite high.
For example, for general shipping of goods that weigh from 0.5 kg to 10 kg, the shipping fee is around $20 to $100.
For general goods weighing from 10 kg to 20 kg, the shipping fee is about $100 to $200, and for goods weighing 21 kg to 100 kg, the shipping fee is around $200 to $500.
However, you may notice that the rates favor those buyers shipping bulky goods.
9. Labor From The Seller
When you purchase an item on Alibaba, you should never forget that you are paying for the item and the material used to make it as well as the labor that goes into creating it.
When buying any item, remember that it took someone time to make it, package it, and ensure it is shipped to you.
As it is said in every business, time is money.
If you think about some of the time invested in ensuring you get satisfactory goods, some of the high rates charged are totally called for and necessary.
On top of creating the products, the seller has to ensure the product is well packaged and also has to deliver it to the seaport for shipping to your location.
The seller also has to ensure that he always has the best and most qualified employees to make sure you get the best services possible.
Most of this cost is transferred to the buyer.
10. No Regular Bulk Shipping
One huge problem with having individual vendors selling different products to different buyers across the globe is that it is hard to get regular bulk goods or packages being shipped to the same location.
In logistics, when you have large quantities of goods being shipped to the same location, you will get discounted shipping fees.
However, when sellers are sending packages to different locations, it becomes quite challenging to get any shipping discounts.
For most sellers, it becomes quite a challenge.
Most sellers are forced to add shipping costs to a product’s total price.
When you are buying from different sellers, your goods may also not be packaged or shipped together.
You could have to pay quite a bit in shipping because sellers are not getting a discount for the shipping rates they pay.
4 Ways To Minimize Alibaba Shipping Costs
Right now, you must be wondering if there is any way by which one can reduce the shipping charges.
Well, yes, there are several ways you can minimize your shipping costs on Alibaba.
Shipping costs are primarily dependent on the seller, shipping service, distance, and the size and weight of the package.
Therefore, here are a few tips you can use to minimize your shipping costs on Alibaba.
- The first method one may try out is to try to handle it for yourself, which is, of course, not a great idea. There is a tremendous amount of paperwork and many procedures to follow while moving large quantities of products from one country to another. Therefore, this method is not very convenient and may consume a lot of your time that you could have spent on other activities.
- The second method one might try is to let the seller do the shipping for you. There are both advantages and disadvantages to using this method. One drawback to this is that a supplier can end up calling their preferred freight forwarder, who might charge a high cost. This also adds a second layer of communication. Coming to the advantages, this method is much more comfortable and convenient for you as the buyer because the seller will handle everything. You will also save your time and will therefore enjoy the efficiency of e-commerce. In most instances, the shipping charges the seller will give you will be relatively reasonable while you get the best service, but one should keep in mind that this is not always the case.
- The third option is to use a third-party service yourself, so one has to sort out their shipping agents or freight forwarder or use Alibaba’s logistics service. Cons that come with this include the fact that it is hard to find an acceptable shipping agent. Some of these logistics agents may also have restrictions such as weight. If you do not do your due diligence when searching for a logistics company, you may experience challenges in receiving your package. However, several competent logistics services may act as third parties and ship your goods to you. This will be very convenient and time-saving. The third-party vendor may also most likely charge less.
- Buying in bulk will help lower your costs. Alibaba has been created for the benefit of vendors. Buying a single item will probably be very expensive. However, when one buys in bulk, the prices are guaranteed to be quite low. Also, when you shop in bulk, you will have more bargaining power over the seller, and you will therefore be able to negotiate a good deal. Always remember to research the market price of the item you are searching for so that you will be able to identify when you are being charged extra.