What Is The Better Option - Dropshipping Or Wholesale?
Buying products from dropshippers for resale is an easy way to get your e-commerce business started with little initial outlay
. Many people, however, point out that theres more potential for profit when you buy directly from manufacturers and wholesalers.
Dropshipping is a system where the retailer does not keep goods in stock, but instead conveys client orders and delivery details either to the manufacturer or a wholesaler, who then ships the goods straight to the customers. Most dropshipping retailers have a website or catalog, so customers can view the products they want to purchase and place their orders.
Wholesalers, on the other hand, generally deal only with companies or clients able to meet minimum orders, whether monetary or by item count. You have to purchase the products from the supplier first and then sell them online on your website. This can make things hard on a small business looking to reduce startup costs.
So should you source your products from dropshippers or wholesalers?
Advantages and Disadvantages of Selling Dropship Products
Your customer actually finances the order, so you dont have to pay to stock inventory. You dont get stuck with stock that wont sell, and you dont have to be concerned about how to finance high minimum orders of wholesale merchandise. You also dont have to worry about fulfillment your dropshipper packages and ships out the orders for you.
On the negative side, you would usually pay more than if you'd bought in bulk from the wholesaler and did your own shipping, since the dropshipper is doing the majority of the work, selling and shipping items individually. Also, the seller has to rely heavily on the support and professionalism of the drop shipper.
Advantages and Disadvantages of using a Wholesaler
When you use a wholesaler, you avoid being scammed, because genuine wholesalers will always ask for your legal paperwork before they do business with you. If youre in doubt, you can always contact the wholesalers local chamber of commerce. Also, legitimate wholesalers would never charge you account set up fees or monthly account maintenance fees for selling their dropship products.
The biggest disadvantage to buying from wholesale rather than dropship products, however, is the outlay you will have to make to purchase stock in order to take advantage of the bulk discounts, as well as finding suitable storage for your products until theyre sold. This may be fine if you are selling small, or inexpensive items, but if youre moving large, or pricey items these could be major snags.
So Which is Best for You?
You could complement your dropshipping by sourcing cheaper items from international wholesalers that have a smaller minimum order quantity once you've built up some profits, so you get the better profit potential, without the huge investment.
When you use dropshipping to discover what products you can do well with, you can source these products directly from wholesalers to increase your profit and grow your business. This method has proven effective for scores of extremely successful e-commerce sellers, and youre sure to find it just as useful for you. If you use it, you can save yourself a lot of time and money, and make massive profits in the long run.
by: Wendy vanDijk
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