Dropshipping 101

By Author: Ann Hoskins
Total Articles: 30
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Have you ever wondered how the items you purchase and take home make it into your local store? Whether it is a grocery store, clothing store or even a furniture store but all of them receive their product and earn their money in using the same two outlets; wholesaling and drop shipping.

Wholesaling is the distribution of goods straight from the packaging companies, in bulk to resellers and retailers for both industrial and commercial type usage. More often than not these Wholesaling businesses will take responsibility for breaking large bulk lots into smaller lots and often assembling the merchandise.

On the other side of the process are the drop shippers. Drop shipping unlike wholesalers, retailers and resellers have no contact with merchandise whatsoever. The main concern of a drop seller is basically to be the middleman between the wholesaler and the retailer. The retailer will call in an order for a certain type and amount of merchandise. The drop shipper then gets in contact ...
... with a wholesaler to put in and confirm the order. It is the wholesaler's responsibility to directly ship the order from the warehouse to the retailers and resellers.

After both the wholesalers and the drop shippers have completed their part of the process, the retail company should have its product at a relatively low cost, as it was shipped straight from the wholesaler. Where a retail chain makes its money is in the difference between what they paid for each unit of merchandise and the shelf price of the merchandise. For example, a shipment of sweaters is sent to a retailer in bulk at a price of $300 for a gross. If there are thirty sweaters in that gross, they only paid $10 apiece for them. If they charge $30 on the rack for each sweater and sell them all they have brought in $900 which is a $600 profit after the purchase wholesale price.

They may not be very visible when you go into your favorite chain clothing stores and buy a new pair of shoes, but the wholesalers and the drop shippers are the behind-the-scene workers to the entire retail production. They are what you would call the silent partners to the whole of economy and without them every part of retail purchase would be exponentially more complex.


Ann Hoskins has been writing and publishing articles about wholesale and drop shipping. She is a business consultant and has been specializing in logistics management and shipping for more than 10 years.