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China-based Dropshipping vs. US-based Dropshipping

Blog, eCommerce Insights | June 8, 2021

After you’ve decided to leap into the world of dropshipping, you must make the critical decision of determining which dropshipping supplier you’d like to conduct business with. The dropshipping supplier that you choose will significantly impact your business operations as they will be the sole handlers of your products. The United States and China are two of the most popular countries that boast incredible dropshipping suppliers. Here are the main differences between China-based dropshipping vs. US-based dropshipping:

 

Product Differentiation

When comparing the products between the United States and China, products made in China are generally of lower quality. High-quality products are not the primary focus of China-based dropshipping vendors; their main priorities are to sustain a facility that can mass-produce various products for a low cost.

 

If you’re looking for new products just entering the market, China-based dropshipping is a great way to offer versatile products that people want to get their hands on.

 

US-based dropshipping vendors tend to focus more on creating quality products, mainly because there are standards that the federal government sets for production facilities. If you’re looking to build a cult following based on a few high-ticket and high-quality products — US-based dropshipping might be for you.

 

Shipping Times

It’s no surprise that a product being shipped from overseas will take longer to reach the customer than a product that is shipped domestically. In the age of Amazon Prime two-day shipping, it’s quite hard to convince customers to buy a product from your business if it means that they’ll need to wait longer.

 

Consumers are more impatient with shipping times nowadays. If you choose to work with a China-based drop shipping company, your customers will need to wait approximately 7-14 days for their products to arrive. If you choose to go the China-based dropshipping route, we recommend that you’re upfront and honest with your customers about the ETA of their order. Most customers will understand that you get what you pay for. If your customers feel that they got a good deal from your store, the product is unique enough to worth the wait, and you hire a foreign supplier to cut down the price — they will likely be okay with an extended wait period.

 

It’s important to note that China-based shipping allows customers access to full mile tracking, so they are informed every step of the way throughout the shipping process.

 

If you choose US-based dropshipping, shipping will be much more convenient for US customers. US customers would gravitate towards your business as the wait time would likely be a few days at most. There are various shipping options available for those who reside in the United States.

 

A popular way to combine the benefits of China-based dropshipping and US-based dropshipping is to import inventory from China to US, and fulfill orders from a US-based fulfillment center.

 

The Return Process

It’s critical to remember that some customers will want to return products for a refund. The return process with Chinese dropship vendors may be more complicated than with vendors in the United States. The price of shipping the product back to China might cost more than the product itself.

 

You could always opt not to offer returns at all — so you wouldn’t have to deal with returns anyways. While customers often find comfort in having the ability to return the products they ordered if something goes wrong, you could lose potential customers by not offering returns. A common practice is to offer customer refund and have them keep the product.

 

United States’ vendors would make the return process much more manageable. Customers expect a relatively easy return process, and US-based dropshipping makes meeting your customers’ standards easier in reference to returns. It’s worth knowing that fulfillment center will charge you handing and inspection fees to accept returned products.

 

The Difference in Overall Costs

It’s no secret that products made in China cost less. The main reason that China-based dropshipping is so popular is because people who choose this route make a substantial profit. You can mark up the prices while still making your customers feel like they got a good deal.

 

The main disadvantage of US-based dropshipping is that the products cost is much more than those made in China. The products end up costing more because the production process costs more.

 

Upfront Costs

Starting a business can be pretty costly. If you don’t have much capital to start your company, you may want to lean towards China-based dropshipping because it’s significantly cheaper to get off the ground. US-based dropshipping involves a bit more startup capital.

 

Inventory

When you start dropshipping, you’ll realize the importance of finding a great dropshipping vendor who keeps the items you sell in your store stocked. If the supplier suddenly runs out of the product you’re selling, it could negatively impact your business and your customers’ perception of your brand.

 

China-based dropshipping vendors are great at keeping their inventory high. You’ll also find that vendors in China offer endless amounts of products that you can choose to add to your store.

 

US-based dropshipping vendors may not have the selection of inventory that you’re looking for. One of the main benefits of dropshipping is that you can add and drop products from your store instantaneously, without any monetary losses. Vendors in the United States don’t have the same massive inventory as their Chinese counterparts. Your customers could become frustrated if they fall in love with a product you sell — but it’s never in stock.

 

However, as mentioned, you can combine the advantages of the two business models by shipping a stock of products from China to US, and fulfill orders from there. Dropshippers go for this option when they have scaled up a winning products, or just to ensure speedy delivery during Black Friday and Chinese New Year.

 

It’s necessary to weigh out the pros and cons of each option to decide which is the right fit for you. Whether you choose to go with China-based dropshipping or US-based dropshipping, your choice to embark on an entrepreneurial path will likely be a lucrative one.