Wholesale Dropship Business

Dropshipping is when the product distributor (wholesaler) takes care of the shipping to your customer. You don't need to stock the items you sell, the stock remains with the distributor. Then, when you make a sale, you notify the product supplyer who packs up the item and mails it straight to the customer with your company label on the box.

The customer pays retail price for the item to you, and you pay wholesale price to the drop ship supplyer. In addition you pay for the mailing cost to the drop shipper.

Drop shipping is a very popular option with sellers because it's so simple and easy to do - no need for stocking goods or sending items to customers. However, there are both pros and cons to drop shipping, and especially for new sellers there can be some downsides.

To help you make a qualified decision if you want to start a wholesale dropship business, here's a list of the pros and cons of dropshipping.

Dropshipping Advantages

1. No storage space needed 
   You don't need stocking room to keep the products you are going to sell. Your dropship supplyer is stocking everything, you don't even see the items. This is particularly useful if you are selling large items.

2. No need for locking up money
   Because you don't need to buy goods in bulk and keep stock, you don't have to pay for the products before you sell them. This is a huge advantage as you don't have to tie up any money in stock.

3. Reduced shipping costs 
   Again, as you don't have to bring stock from the wholesale supplier to your own storage area, you save those shipping costs. You will only pay for the shipping from the dropshipping distributor to your customer.

4. No packaging required 
   You don't have to buy and store packaging materials, which will save you both money, time, and storage room.

5. Time saver 
   You don't have to spend time on packing and shipping items, or driving to the post office each day to send your packages. This leaves you a lot of time to spend on other things in your business, like marketing and building relationship with customers.

6. No "leftovers"
   With dropshipping, you will not end up with a bunch of items you will never be going to sell. If you keep your own stock, it's inevitable that many items will never be sold.

Dropshipping Minuses

1. Finding good drop shippers 
   There are many product distributors offering drop shipping, but as with everything else in this world, there are good, and there are bad. For a newbie in this business it's not easy to know how to find decent dropship wholesalers to deal with. Using a lousy dropshipper can damage your business.

2. Additional expenses 
   Because you have to pay for the cost of the packaging and shipping involved in drop shipping, the profit margins can work out to be smaller that you thought. Especially new sellers can be surprised at the additional costs that reduces their expected profits.

3. Dealing with customers 
   Any problem that arise with the product delivery is to be handled by you. If there is a shipping delay, or the item arrived damaged, you are the person in charge, even if these things are out of your control.

4. Delivery problems 
   If your drop shipper is running out of stock, you will have to face a crowd of impatient and unhappy customers who then might claim a refund. Those customers will then be lost customers. Not all drop shippers will necessarily tell you when they are running low on stock.

Even if drop shipping can be an easy to start online business option, it might not be for everybody. You need to take into consideration the cons mentioned above before making your decision if wholesale dropship business is something for you. Then you should start out small and carefully, and scale it up later if you find dropshipping worth your time.

To help you find good and reliable drop ship wholesalers, there are several drop ship directories, or product sourcing portals, on the market. They have searchable databases of suppliers and products, which are regularely updated to ensure that the latest products are always available.

A recommended dropship directory is SaleHoo.com. A membership with them costs $67 per year.

Another good and recommended directory for wholesale dropship business is Worldwide Brands, which charges a one time fee of $299 for a lifetime membership.

See also our Dropship Review page.

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