Why is IC on Digikey 5 times expensive than board with the same IC on Alibaba?

I am a project procurement a for telecom device. When I compared the unit price of the same IC between Digikey and Alibaba and find Digikey one is much more expensive. Why?

PCB Assembly
November 30, 2023

Digikey sources its parts from the manufacturers and adds a retail markup.

The Alibaba seller takes remnants from someone’s production run. For example, if someone orders 10000 products, which may have 3500 parts roll left over in the warehouse of the PCB factory, the PCB factory can distribute these leftover parts to other order. So, seller on Alibaba, the PCB factory, don’t pay full price for parts due to bulk purchasing. Then, the unit price is lower.

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Oliver Smith

Oliver is an experienced electronics engineer skilled in PCB design, analog circuits, embedded systems, and prototyping. His deep knowledge spans schematic capture, firmware coding, simulation, layout, testing, and troubleshooting. Oliver excels at taking projects from concept to mass production using his electrical design talents and mechanical aptitude.

Oliver Smith

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