This week we have another question from you guys that we loved! Jonas wrote to us asking;

How can we compete with Aliexpress?

Hi, We have considered staring an online business. We really don’t have an excuse not to give it fair go as we design and create websites including shopping carts. I know it is more involved than that to have a successful online business but at least we can save on that expense. We have thought of a few different products that we possibly can sell. What makes me unsure of this adventure is how do we actually compete with for example Aliexpress? I know they say Aliexpress is a b2b retailer but when it comes down to it I reckon they are as much a b2c retailer – as anyone can buy products from them at low quantities. How do we, that what to run an ecommerce site and most likely get our products from Aliexpress compete with them after we have added our mark-up? Would be very interested I hearing your views or thoughts on this or if you have heard anything from any of your users that might have expressed similar concerns. Thank you for a good website with some useful information

Kind Regards, jonas

Answer: You Don’t!

Totally agree that Aliexpress is becoming more and more B2C, and that you shouldn’t try to compete with them. We were in China on an Alibaba/Aliexpress panel last year, and along with everyone else on the panel we stated our concerns about how B2C Aliexpress was becoming. They politely took notes, unfortunately it does not appear that the suggestions will be taking place. That doesn’t mean that you can’t use them to get started however, and two of the key things to remember when launching an online business (or any other business for that matter), is that you will always have competition and there are different kinds of customers. When we first started, we sold products on ebay, that we now sell for 2-3 times more on our website. The products are the same, but they are presented and packaged differently, we offer more services and add-on’s with them and they are sold to different customers. The value to the customer has increased greatly and the profit margin for us has also increased creating a win/win.

The easiest way for me to explain this is using an example from here in Thailand. In Bangkok, you can pretty much find a $20 fake Louis Vuitton next to a real store selling them for $3000. Are the products all that much different? Not really, as some of the fakes are really good quality handbags. Are they putting Louis Vuitton out of business? Not at all. This is because some people would never be caught dead spending $3000 on a handbag, and others would never be caught dead buying a fake. This doesn’t mean that you can go out and start selling products at ridiculous prices like Louis can, but you definitely don’t want to be competing on price alone, which is what sites like Aliexpress, Amazon and ebay do.

How Do We Stand Out and Charge More?

Our preferred model is to start with a few products from Aliexpress suppliers when testing the business, then move to Alibaba.com when you’re ready to expand. You have to understand that Aliexpress is often filled with distributors (not manufacturers) that often sell products that are last years products or overruns. When you go to Alibaba.com, you can often find the latest designs/products, that are not to be found on Aliexpress or ebay. You will often have to work a lot harder to get smaller quantities here though, but it’s certainly not impossible, and we do it all the time.While we like to get products that aren’t on ebay or Aliexpress, we have certainly had success selling products on our websites for significantly more than the exact same product that is found on these garage sale sites. This is because we offer the following:
  • Shipped locally (which means they can return or exchange the product locally. Many of the cut price sellers on ebay/Aliexpress are China/Hong Kong based);
  • They’re supporting a local business
  • Local warranty
  • Nicely branded site that makes them feel like they’re going to get nicer service/products;
  • Little bonuses where possible
  • Locally based customer service
  • Easy exchange/returns policy

While these benefits can be enough on their own to swing certain customers over from ebay/Aliexpress, quite a number of searchers will never even go to those sites in the first place, they head straight to Google. There are many reasons why (some founded and some unfounded), and you want to be the one that is there for them when they search for the product in Google.

Finally, never ever compete on price. There’s a reason why “cheap” shops are always going out of business, but the expensive brands have been around for ever. There are plenty of businesses out there who will go out of business trying to beat you on price, and often you’ll both end up going broke. This was a difficult lesson for me personally (Nathan) to learn, because I am a “lowest price” shopper myself, but fortunately (except for my wallet) I’m married to someone who loves paying more for branded products, and now our businesses are much healthier for it.

One of the reasons I (Tessa) am a HUGE branded product shopper is because of the experience. Now let me quickly explain when we say branded we do not mean just big brands here, we mean boutique stores that have made the effort to create a brand, thus creating an experience for the shopper. It is also my biggest joy with our ecommerce stores. I love thinking of ways to create a better experience for our customers. Here are some ideas for you to think about:

7 Tips to Creating A Better Customer Experience

#1 Your colour scheme

On your website you should have a maximum of 2 main colours and a third highlight colour.

#2 Your Merchandising

Just because you are online does not mean you don’t have to merchandise. How are things displayed on your homepage? What does your categories page look like? Have you analysed your traffic and know where your customers are landing when they arrive on your site?

#3 Your Images

This kind of is an add on to merchandising but because your images are the only things showing your customers your product, they have to be detailed and clean. Show exactly what the customer will receive. Check the colours when they are on your screen, do they accurately reflect what you see?

#4 Your Website

It has to be inviting and friendly but it also has to quickly provide information to the customers as well as direct them how to easily shop within your store. I have visited one too many sites that I left because it was just way too much effort to try and find what I was looking for.

#5 Your Packaging

How does the item arrive to the customer? Are they going to have a wow factor or will they be left under whelmed? When a customer buys online it is a very different reaction when the item arrives to if they had purchased in a physical store. One tiny little mark or ding can cause them to be upset, whereas in store they usually see this before they purchase and have made the conscious decision to buy it anyway.

#6 Your Policies

A lot of the cheaper stores don’t have a policy to protect the customer yet a lot of customers would rather pay more to know that if anything goes wrong, you have them covered. How do you cover your customers and make them feel safe?

#7 Your Customer Service

I read too many horror stories of customers receiving “too bad, so sad” replies from business owners when items arrive not as expected, arrive damaged or get lost in transit. Now while these things do hurt your business, to hide behind email and not help your customer is doing long term damage to your brand. Word of mouth is powerful and if you are not utilising it in a positive way YOU ARE MISSING OUT ON POTENTIAL SALES and for what? One refund!

Now over to you guys! What can you add to this list to help Jonas and the TalknBusiness community out? Comment your suggestions below or email them into us, along with any questions you might have.