How Does Dropshipping Differ From Wholesaling?

By Author: Ann Hoskins
Total Articles: 30
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When trying to decide whether you should use a drop shipper or a wholesaler to obtain inventory for your retail business you should weigh out the pros and cons of each. There are many advantageous elements to each method but one method may be better than another for your particular situation. In this article I will outline the pros and cons for both wholesale and drop ship programs so that you can decide which would be a better fit for your company.

Wholesale and drop ship programs are essentially the same thing. They are both programs that you can obtain products to sell in your retail store at a reduced (or wholesale) price and without sales tax. The differences between the two methods lie within the logistics and the discount amount. When you buy from a wholesaler you are able to take advantage of higher savings because you are buying in bulk. When you buy from a drop shipper you are able to offer a much larger selection plus you don't need to carry physical inventory which means no storage or shipping problems.
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... br />There are specific cons to each method as well. With wholesaling you would need to buy everything in bulk whereas with dropshipping you would not need to buy anything until you actually sell it. However with drop shipping you probably will not receive as big of a discount as you would if you bought at wholesale. Also most drop shippers charge a small fee per item.

One way to maximize profits is to take advantage of both wholesale and drop ship programs. Here is an example of how to achieve this: an online retailer finds a manufacturer from a wholesale source that offers both a wholesale and drop ship service. They list the entire collection on their website and plan to drop ship anything that is ordered. Keeping records of all the best sellers, the retailer would then find a few key products that have a proven track record of high sales and order those products wholesale. This will minimize the risk and maximize the profits.

When choosing a drop shipper or wholesaler you should always check out their legitimacy. You can find this out by looking through wholesale news sites such as forums and directories.


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.