Alibaba’s 1688 Direct Opens U.S. Seller Accounts, Threatening DHgate

Alibaba Group quietly opened English-language seller accounts on its 1688 Direct wholesale platform to U.S.-based merchants this month, according to four sourcing agents and two Shopify sellers who confirmed account approvals to Ecommerce Times. The move, which has not been formally announced by Alibaba, represents the most significant restructuring of Chinese B2B wholesale access for American ecommerce operators since DHgate launched its U.S. seller portal in 2021.

1688.com has historically operated as Alibaba’s domestic-facing factory wholesale marketplace — priced for Chinese resellers, denominated in RMB, and navigated almost exclusively in Mandarin. 1688 Direct, a cross-border offshoot the company began piloting in Southeast Asia in late 2024, now appears to be extending that infrastructure to North America with English-language product listings, USD pricing, and integrated freight quoting via Cainiao, Alibaba’s logistics arm.

For Shopify sellers and Amazon FBA operators who have long used DHgate as a middle-market sourcing tool, the implications are immediate: 1688 Direct factory prices on comparable SKUs are running 18% to 34% lower than equivalent DHgate listings, based on spot comparisons conducted by sourcing consultant Kian Golzari, who posted a detailed breakdown to his LinkedIn network on June 19.

“The margin delta is not trivial. On a $12 DHgate unit that a seller is retailing at $49, the 1688 Direct equivalent is landing at $7.80 to $8.40 FOB Guangzhou. That’s a structural cost advantage that compounds fast at volume.”
— Kian Golzari, product sourcing consultant and founder of Sourcing Playground

How Does 1688 Direct’s Pricing Structure Actually Work for U.S. Sellers?

Unlike DHgate, which acts as a marketplace intermediary and earns commission on transactions, 1688 Direct routes orders directly between buyers and verified factories with Alibaba serving as a payment escrow and logistics coordinator. Minimum order quantities on 1688 Direct are generally higher — most verified listings require 50-unit minimums versus DHgate’s frequent 1-piece MOQs — but the trade-off is significant at the unit economics level.

Payment processing currently supports USD wire transfers and PayPal Business accounts, with Alipay+ integration listed as coming in Q3 2026. Cainiao’s integrated freight quoting pulls live rates from a network that includes YunExpress, 4PX, and direct air consolidation lanes out of Yiwu and Guangzhou, giving U.S. sellers comparable shipping visibility to what they currently get inside DHgate’s checkout flow.

Aaron Cordovez, co-founder of Zulay Kitchen and a veteran Amazon private label operator with over $80 million in cumulative marketplace revenue, said his team has already tested three orders through the platform.

“The UI still has rough edges but the supplier verification layer is actually more rigorous than DHgate in my experience. The factory audit scores are pulled from Alibaba’s internal compliance database — you’re seeing the same factories that Gold Suppliers use, just without the markup layer.”
— Aaron Cordovez, co-founder, Zulay Kitchen

What Does This Mean for DHgate’s Market Position?

DHgate processed an estimated $12.4 billion in gross merchandise volume in 2025, with North America representing approximately 31% of that figure, according to data cited in a March 2026 industry report from Marketplace Pulse. The platform has invested heavily in its U.S. seller experience over the past two years, including a revamped dispute resolution center and a 2025 partnership with Loop Returns to streamline cross-border return handling.

But DHgate’s structural position has always been that of a convenience layer sitting above the same factory network that 1688 accesses natively. If 1688 Direct can close the UX gap — particularly around English-language supplier communication and logistics visibility — DHgate’s value proposition shrinks substantially for any seller comfortable with 50-unit-plus order quantities.

• DHgate’s average transaction value for U.S. buyers in 2025 was $187, suggesting most buyers are already operating above impulse-purchase quantities
• 1688 Direct’s verified factory count in electronics, home goods, and apparel currently exceeds 140,000 listings with English product descriptions
• Cainiao’s U.S. delivery SLA for air consolidation is quoted at 8-12 days to major metro fulfillment hubs — comparable to DHgate’s standard shipping tiers
• 1688 Direct does not currently offer buyer protection insurance equivalent to DHgate’s $500 automatic coverage, a gap several sourcing agents flagged as a near-term risk

A DHgate spokesperson did not respond to a request for comment by publication time.

How Are Shopify App Ecosystem Players Responding?

The immediate downstream effect is already registering in the dropshipping automation layer. AutoDS and Zendrop, both of which have built supplier integrations as a core product feature, are watching the 1688 Direct rollout carefully. AutoDS currently supports DHgate as a native import source; a 1688 Direct integration would represent a meaningful catalog expansion if Alibaba opens an API.

Lior Pozin, CEO of AutoDS, confirmed his team is in early exploratory conversations with Alibaba’s developer relations group but declined to give a timeline.

“Our merchants are already asking us about 1688 Direct access. If Alibaba opens a proper API with order management hooks, this becomes a priority integration for us. The catalog depth is an order of magnitude larger than anything we currently connect to.”
— Lior Pozin, CEO, AutoDS

For Shopify merchants using Oberlo’s successor tools or running hybrid dropship-to-private-label pipelines, 1688 Direct’s catalog could also reshape sourcing research workflows. Helium 10’s Black Box product research tool and Jungle Scout’s supplier database both rely heavily on Alibaba’s international-facing data; a more permeable 1688 data layer could eventually surface domestic Chinese pricing benchmarks that have historically been opaque to Western operators.

What Are the Regulatory and Trade Compliance Risks?

The launch timing is notable. 1688 Direct is expanding U.S. access three months after the May 2026 expiration of the de minimis exemption for Chinese-origin goods — the $800 duty-free threshold that was eliminated under the Trade Fairness and Enforcement Act signed in February 2026. That regulatory shift hit DHgate volume hard in Q1, with Marketplace Pulse estimating a 22% drop in sub-$800 package volume from Chinese platforms in April and May.

1688 Direct’s positioning around larger MOQs and consolidated freight shipments may be a deliberate architectural response to that regulatory environment. Consolidated air freight shipments cleared as formal entries under HTS codes are structurally cleaner under the new regime than the small-parcel direct-to-consumer model that de minimis enabled.

• Orders shipped via Cainiao consolidation are classified as B2B commercial entries, not individual consumer parcels, simplifying customs bond requirements
• 1688 Direct’s checkout requires buyers to input an EIN or business entity number — a friction point that filters out casual individual buyers but aligns with formal import compliance
• Section 301 tariffs on Chinese goods remain in effect at 25%-145% depending on HTS classification, meaning total landed cost advantages vary significantly by category
• Electronics and certain apparel categories where Section 301 rates are highest may see 1688 Direct’s factory price advantage largely consumed by tariff loads

Brandon Chopp, VP of Strategy at digital agency iDealo (which manages sourcing and marketplace operations for roughly 60 mid-market brands), said his team has begun running landed cost models across their client catalogs.

“The categories where this is genuinely compelling right now are home goods, pet accessories, and fitness equipment — HTS buckets where tariff exposure is more manageable. For electronics clients, the math doesn’t work yet unless they’re nearshoring assembly. But the pipeline is real and we’re building supplier relationship workflows around it now.”
— Brandon Chopp, VP of Strategy, iDealo

Is Amazon’s Haul Program a Factor in Alibaba’s Timing?

Industry observers are also reading the 1688 Direct expansion as a competitive response to Amazon Haul, Amazon’s low-price storefront that launched in late 2024 and has since grown to over 4 million SKUs, many sourced directly from Chinese factories under Amazon’s own supplier agreements. By empowering U.S.-based third-party sellers with direct 1688 factory access, Alibaba may be attempting to preserve its role as the manufacturing supply chain’s primary broker even as Amazon Haul, Temu, and Shein have each attempted to disintermediate the traditional wholesale layer.

Whether 1688 Direct achieves meaningful penetration among U.S. Shopify and Amazon sellers will hinge on three near-term execution questions: how quickly Alibaba resolves the buyer protection gap, whether an AutoDS or Zendrop API integration materializes before Q4, and how aggressively U.S. customs enforcement applies scrutiny to Cainiao consolidated shipments as the new de minimis enforcement regime matures.

For now, sourcing agents and DTC operators are treating 1688 Direct as a tool worth stress-testing before peak season inventory commitments — a low-friction experiment with meaningful margin upside if the logistics and compliance layer holds. Given that U.S. sellers will need to lock October and November inventory orders by late July, the next four weeks may determine whether 1688 Direct registers as a genuine market force or a platform feature that arrived one quarter too late.