Many shoppers wonder how AliExpress sellers can offer products at shockingly low prices—sometimes even below cost—while still providing free shipping. Are cross-border e-commerce companies running charities? The reality is more complex, with sophisticated business strategies behind these seemingly loss-leading prices.
Four Strategic Reasons Behind AliExpress' Pricing Tactics
Sellers frequently encounter competitors listing products at prices that defy logic. This phenomenon isn't accidental but rather the result of calculated business strategies.
1. SKU Portfolio Strategy: Losing on Singles, Winning on Multiples
This approach sacrifices margin on individual items to encourage larger basket sizes. For small, lightweight products, sellers create multiple SKUs and incentivize bulk purchases. While one unit might sell at a loss, purchasing two or three creates profitability.
The key lies in setting irresistibly low single-unit prices that attract orders while encouraging customers to add more items to their cart—effectively increasing average order value. This works particularly well for consumable or frequently lost items like accessories and small tools, where customers naturally buy multiples.
2. Traffic Driver Strategy: Loss Leaders for Storewide Profit
Sellers strategically select certain products as traffic drivers—priced aggressively to attract shoppers who then purchase higher-margin items. These loss leaders boost store visibility and gross merchandise value (GMV).
The ideal traffic drivers are high-demand, mass-appeal products. While these may sell at break-even or slight losses, they generate store visits that convert to profitable sales elsewhere in the catalog. Success requires careful product selection, sufficient complementary high-margin offerings, and optimized store design to maximize conversion rates.
3. Capital Game: Playing the Long Investment Con
Well-funded sellers—particularly those backed by venture capital—often prioritize growth over immediate profitability. These companies may operate under investment agreements requiring specific sales targets, leading to aggressive pricing even at unsustainable margins.
Their true revenue source isn't international consumers but domestic investors and public markets. By demonstrating rapid growth through artificially inflated sales volumes, they increase company valuation for eventual IPOs or additional funding rounds—making money through capital appreciation rather than product margins.
4. Cost Advantages & Inventory Liquidation
Some sellers genuinely achieve ultra-low prices through exceptional cost structures. Manufacturers in regions like Yiwu leverage scale and labor advantages to produce at unmatched costs. Others use AliExpress as an inventory clearance channel—liquidating excess stock from business failures or operational restructuring at whatever price recovers working capital.
AliExpress as Strategic Showroom: The Bigger Picture
One seller revealed their operation lists all products at loss-making single-unit prices, only achieving profitability on multi-item orders. Why? Their AliExpress store serves as a testing ground for identifying winning products to then sell profitably on Amazon, Shopee, and Lazada—where margins reach 30-50% compared to AliExpress' -5% to 2% range.
This illustrates how successful cross-border e-commerce operations view individual platforms as components of an integrated system rather than standalone profit centers. The strategic value often lies beyond immediate transactional results.
The Path to Profitability: Diversification & Precision Operations
Successful cross-border sellers employ multifaceted approaches:
- Multi-platform presence: Distributing risk across marketplaces while capitalizing on each platform's unique strengths
- Strategic product differentiation: Avoiding commodity competition through unique designs, superior quality, or added-value features that command premium pricing
- Data-driven optimization: Leveraging analytics to refine product listings, store design, and marketing for maximum conversion and repeat purchase rates
- Supply chain mastery: Minimizing procurement, logistics, and warehousing expenses to preserve margin
- Brand development: Building recognizable trademarks that justify price premiums and foster customer loyalty
AliExpress' bargain prices represent sophisticated business calculus rather than simple loss-leader tactics. Through strategic SKU management, traffic generation, capital market positioning, and operational advantages, sellers transform apparent losses into sustainable profits. The most successful operators combine platform diversification with meticulous execution across all aspects of their business.