Drop Shipping And Wholesale

By Author: Ann Hoskins
Total Articles: 30
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Ever wonder how people on eBay and other sites get the stuff they sell? Thinking about running your own eBay business or retail website? Generally speaking, there are 2 different methods of obtaining the items that one would sell on retail websites: Wholesale and Drop Ship. Read on for an explanation.

The majority of large-scale retail establishments and websites buy their items wholesale. That simply means that the retailer buys the items (usually in large quantities) directly from the wholesaler then stores the items in their own warehouse to sell to consumers until their inventory is depleted. The retailer will then purchase more items in that manner. The benefits of this are that the retailer can keep costs low by storing the items themselves. The downside to this is that the retailer will have to work out the logistics of shipping to consumers and carry the cost of warehousing the quantities of items they buy.

For many home-based businesses or small retail establishments, dropshipping ...
... is the best answer. This is where inventory is kept by the wholesaler then shipped out directly to the consumer on an order-by-order basis. The benefits are obvious: Theres no need to store a huge inventory and the logistics of shipping are carried out by the drop-shipper. The downside is that the costs per item are usually higher-sometimes considerably. Drop-ship companies will also charge a surcharge per order something that the retailer needs to add into the retail price of their item. Its a balancing act, but profit can still be made.

For most home-based retailers, this is the only option. Who has the space in their home to store all of the widgets they sell? But for those home-based entrepreneurs who might have some dry storage space in their home or small-to-midsize retailers, a combination of warehousing small items and dropshipping larger ones keeps some costs down.

What method to use is an individual decision, and should not be made lightly. Drop ship and wholesale sources are sometimes the same company, so you might be able to save some costs. Understand the fee structure for drop-shipments and know what it will cost before you order. Reading wholesale news sources can also provide insight on trends in the industry.


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.