Alibaba commission explained - how much does it cost to sell on Alibaba?
It’s no secret that getting your products in front of as many customers as possible is the best way to increase your sales and grow your business. The challenge is finding a platform that gives you the exposure you need at an affordable price point.
With so many different e-commerce marketplaces out there, it can be overwhelming for manufacturers to figure out where to sell their products. However, with 400 million users, Alibaba will without a doubt become one of your first choices when exploring potential partners. But before diving into the specifics of how to list on Alibaba and their partnership program, let’s take a look at what makes this company so special:
What is Alibaba?
Alibaba is a Chinese e-commerce and cloud computing company that was founded by Jack Ma. It operates online marketplaces for both consumers and businesses. Alibaba’s B2B marketplaces include AliExpress, Alibaba.com, and Alibaba.com.in. It also provides a cloud computing service called Alibaba Cloud, which powers the company’s online presence.
For context, Amazon acquired its first company in 1997 and went public in 1999. Alibaba was founded in 1999, making it younger than Amazon by about two years. In fact, it was the first online retailer to generate $100 million in revenue, and it did so in just one year.
Alibaba currently has a market cap of $450 billion, making it the second-largest company in the world by market cap (behind Apple). Alibaba’s stock price has increased by over 300% since the beginning of 2018.
Alibaba commission structure
Like most e-commerce marketplaces, Alibaba charges a commission on each sale that takes place on the platform. However, unlike a lot of other companies, Alibaba’s commission is not a set percentage. Instead, it is calculated based on the sale price of your products—with the range being between 4.75% and 9.95%.
Not only does this make the cost of selling on Alibaba easier to predict, but it also means that the bigger your sales volume gets, the less commission you will pay.
How to sell on Alibaba?
There are a few different ways to sell on Alibaba depending on your company’s size. Before diving into each option, it’s important to keep in mind that you can only sell what is allowed to be sold on Alibaba’s marketplaces.
Consumer to Consumer (C2C) - If you plan to sell products at a lower price point, have a small-scale inventory, and don’t plan on having a professional website, C2C is your best bet. This option is great for drop-shippers and small brands that don’t have their own products. Be advised, though, that you will be responsible for collecting payment from your customers directly.
- Business-to-Consumer (B2C) - If you have a website and/or products that are within Alibaba’s guidelines, you can list them on B2C. Be aware, however, that you will need a Chinese business license to be able to sell on B2C.
- Business-to-Business (B2B) - If you are a manufacturer that sells wholesale products to other businesses, then B2B is your best option.
Alibaba’s B2B partnership program
One of the best things about selling on Alibaba’s marketplace is that you can become a “Gold” or “Silver” member and be eligible for the company’s partnership program.
Once you’ve been accepted into the program, you’ll have access to Alibaba’s massive customer base, as well as their sophisticated marketing platform.
For example, as a “Silver” member, you’ll have access to the Alibaba SEM (search engine marketing), which allows you to massively scale your customer acquisition at a low cost.
Should you sell on Alibaba?
Selling on Alibaba has an obvious appeal for both manufacturers and distributors, but it’s not a decision that should be made lightly. Becoming an Alibaba vendor means that you will be committing a significant amount of time, effort, and money into the platform.
If you have the resources to do it, though, Alibaba is a great option. Not only will you have access to over 400 million potential customers, but you’ll also be able to grow your business significantly through their marketing resources.
In conclusion, it’s clear that Alibaba is a powerful e-commerce platform that offers manufacturers a great deal of exposure. However, before you start listing your products on the site, you need to make sure that you meet their seller criteria.
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