What Is The Difference Between Wholesale And Drop Shipping
What Is A Wholesaler?
A wholesaler is essentially the supplier who buys directly from the primary distributor. Wholesalers typically buy products in excessively large quantities, which they then sell to retailers or online store owners in smaller quantities-even in quantities as low as one item at a time.
However, you can also access wholesale prices directly from some vendors. For example, a small business may still be so small that they offer direct wholesale pricing to both retailers and online store owners.
What Is Drop shipping?
Drop shipping is an innovative order fulfillment method, ideal for ecommerce stores. It allows you, the online store owner, to place items on your website for sale-without the need to keep any inventory on hand. When an order is placed, you send the required information to your supplier, and they ship the order directly to your buyer. Most often, they make it look as though the order was shipped from your fulfillment center and they will never print their name on the packing slips. This is referred to as Blind Shipping.
How Are Drop shipping And Wholesalers Connected?
If you launch an ecommerce website with the intention of keeping only minimal, or no inventory at all, on hand-then you will create a partnership with a wholesale supplier who offers drop shipping services. When a customer places their order with you, you pay the supplier their wholesale price-and you keep the profits. Since you only pay wholesale prices, you are free to determine the markup for most products. Remember to always consider the shipping cost that you will have to pay the supplier to ship your order.
What Are The Advantages Of Drop shipping?
The reason that many ecommerce website owners choose drop shipping, is because it allows for a much lower overhead-and saves a lot of time. Here are some of the advantages instead of buying bulk wholesale stock:
- Sell a wider variety of products, without an increased financial investment and without having to pay for any products up front
- Eliminate the time required to ship products
- Sell hundreds of products at a time, without keeping any inventory on hand
- Manage your business from anywhere with Internet access
Will I Get Good Wholesale Prices With Drop Shipping?
This is a very common questions asked by many people. Most people that are not familiar with drop shipping might expect to get the same lower wholesale prices when buying in bulk which is not the case.
When you buy from a drop shipping supplier, the wholesale price will be a little higher than the price when buying in bulk from a wholesaler or manufacturer.
For example if you buy a large pallet of electronics, you may spend $5,000 up front for the whole pallet, but if you buy from a drop shipping company you will pay for each item one by one as you sell them over time. These companies will typically increase their wholesale prices to cover their overhead costs for warehousing the products and for handling and packing the products to ship to your customers.
Comparing Your Drop Shipping Price With The Market
The best way to determine if you are getting good prices so you can make a decent profit, is by comparing their wholesale prices with listings on eBay and Amazon.
When you are comparing your wholesale prices, always keep in mind that you are not the one subject to the overhead cost. You should also always take into consideration the shipping fee. Some suppliers offer free shipping, and some may charge more shipping fees than others. Add up the selling price + the shipping fee and then compare the total cost with your supplier wholesale price + shipping fee. This will give you an accurate result.
Furthermore when comparing your wholesale prices, you should always compare them with the average prices you find on eBay or Amazon. The reason being that not every seller uses drop shipping. Some sellers might be buying products in large bulk at a cheaper price or they might be buying replicas or cheaper similar products from China.
Most inexperienced sellers will compare their wholesale costs with the absolute lowest prices found on eBay or Amazon and jump too quickly to a conclusion. You must always compare your prices to the averages, and don’t quit before you even begin selling.
Remember that the quality of the products is extremely important and will directly contribute to your long term success with your online business. Focus on providing great quality products, and great quality service, and your business will thrive.
Can You Still Buy In Bulk?
Most sellers use the drop shipping method only, but the choice is up to you. If you come across a rock bottom bulk order price that is too good to pass up, make the purchase-and load your product to your website. When that specific product sells, you will of course be responsible for shipping. Unlike drop shipping, you will also have to pay for the entire order upfront.