Why is it important to compare the pros and cons of dropshipping and buying in bulk? If you want to be successful in the eCommerce industry, you must decide what kind of online business model you will use. This step will determine whether you’ll start making more money right away or have trouble the whole time.
Before you can figure out your business model, you need to do some research on how to sell things online. Later, you’ll have to weigh their pros, cons, and problems.
Dropshipping and wholesale are the two most common ways to do business. In communities and forums, people are always talking about which method is better and makes more money.
Reality is different for everyone. You can’t understand every eCommerce business owner out there. Each has its own unique way of doing things and can therefore argue for its own unique experiences. You can’t just go by what other people say, because every business story is different in the most important ways.
Both dropshipping and wholesale have pros and cons, so you need to figure out which method is best for your business idea. Before deciding whether to dropship or buy wholesale, there are a lot of things to think about.
We’ll start by giving a simple dictionary definition of each method.
What does it mean to “dropship”?
“Dropship” means that goods are sent directly from the supplier to the customer. This is what the Google dictionary says. The retailer, who is the owner of the online store, doesn’t ship and deliver the products to the end customers. Instead, his dropshipping supplier does that.
What does the word “wholesale” mean?
On the other hand, the Google dictionary says that “wholesale is the business of selling goods in large quantities and at low prices, usually so that retailers can sell them for a profit.”
Now, let’s look at these ideas in more depth and talk about the pros and cons they bring.
What is dropshipping and how does it work?
Dropshipping is a way to sell goods online without having to keep them in stock yourself. For this method, a customer places an order through your online store, which is then sent directly to your dropshipping supplier. The supplier packs and ships the package to the customer. More specifically, you don’t own an inventory and keep track of it. Instead, the products are shipped directly from the warehouse of your supplier. How do you make money from dropshipping?
Your actual profit is the difference between the retail price your customer pays and the price you pay your supplier.
dropship-empire is an example of a dropshipping provider that takes care of everything and makes dropshipping easy for its B2B partners. When online store owners work with dropship-empire, they get a lot of benefits, such as automatic integration with an eCommerce platform of their choice, real-time syncing of products, automatic updates to inventory, and more. Also, dropship-empire only sells high-quality items from trusted dealers, and it guarantees that every branded fashion item in its catalog is 100% real.
Why dropshipping is a good idea
Low costs to start up
The first good thing about starting a dropshipping business is that you don’t need a lot of money to get the online store up and running. Costs for starting a business include, give or take, buying a domain name and setting up an online store with one of the eCommerce platforms that charge a monthly fee. After this step is done, the next step is to look for dropshipping vendors and buy some of their products to test their service and quality. After you finish the other steps, you will need to spend money on marketing. To sum up, even if you don’t get off to a good start, you won’t have to worry because setting up the store won’t cost you much money.
No costs for stocking up
When you open a traditional online store, you must be able to keep track of a physical inventory. This means that more money needs to be spent on organization and management. A dropshipping store, on the other hand, is not like this. In the dropshipping business, you don’t need to keep any inventory, which saves you a lot of money, time, and energy. As a dropshipper, you will never have to store the items you sell. Your supplier will take care of that.
Better safety
You can open an online store as a test run to find out what people want. If you try selling one product and don’t do well with it, you can always try selling something else. Even in this case, you won’t have to worry about losing money because you won’t have to invest in stocks. Unlike wholesale, dropshipping lets you try selling different kinds of products without taking any risks.
What’s wrong with dropshipping
Dense competition
Dropshipping is a very competitive market because it doesn’t require a big start-up cost and is easy to set up. Dropshipping is something that a lot of online business owners decide to try out. It’s a low-risk and safe way to start a business, which is why most people who are new to eCommerce do it. Because of this, the business is becoming even more popular, and competition is getting very tough. This could make it very hard to choose which products to sell. So, you’ll need to look into your competitors to find out who you’ll be up against.
Dropshipping suppliers who aren’t reliable
Dropshipping could also be bad if you choose the wrong supplier for your store. Today, there are tens of millions of suppliers who sell a wide range of goods. You need to find the most reliable dropshipping suppliers and test their products to make sure that what you see is what you get. Also, look for platforms where you can read reviews of suppliers to find out if you can trust them. You don’t want to get stuck with a supplier who sends your customers broken or low-quality goods.
Less money in the bank
If you choose dropshipping, you won’t be able to take advantage of the benefits of bulk pricing. You will have to pay more for each item you sell than if you bought it in bulk. This will lead to less money in the long run, but there are ways to deal with this risk. You can help by, for example, charging more for your products or getting a better deal from your supplier. In the end, you won’t have to worry about making less profit if your business does well and you sell a lot of products.
How does wholesale work?
When you buy wholesale, you buy a lot of items and put them in your own inventory. With dropshipping, to be more specific, you only pay for your supplier’s goods when a customer places an order. When you buy wholesale, on the other hand, you buy a lot of goods at once from a wholesale supplier. When you buy these items, you own them. You store them in your own storage space, pack them, and ship them when someone places an order. Also, if you want to buy wholesale, you’ll need to come up with a plan for dealing with overstock inventory and learn how to buy in minimum order quantities (MOQ).
The good things about buying in bulk
Bigger profit margins
If you buy in bulk, you should be able to get products at lower prices, which is a good deal for your new store. Also, later on, you’ll put retail prices on the items you’ve bought, which will make you more money each time you sell them. Dropshippers also get many other benefits, like special discounts, when they work with a wholesaler and buy a lot of products at once.
More control
In contrast to dropshipping, where you don’t have control over how your supplier runs their business, when you buy wholesale, you do. If you use a dropshipping supplier, especially one that has a lot of complaints and bad reviews, you might not always get the best services.
The bad things about buying in bulk
Less protection
When you buy in bulk, the chance of losing money is much higher. Dropshipping lets you try out products almost for free to see how well they sell. On the other hand, if your store is based on buying in bulk, you might lose money if no one buys your products. With wholesale, you could spend a lot to stock your store with a lot of products and not get the results you were hoping for. But if you have a lot of money, you can always go ahead and see what happens.
Costs of inventory
In contrast to dropshipping, inventory management goes hand in hand with buying in bulk. When you buy more goods, you may need a warehouse or a place to store them, depending on your needs. Keeping track of an inventory is a difficult and expensive task. You will need to be ready to spend money, time, and energy on putting together well-organized storage space. Depending on what your store needs, you may need to hire more people or use software to make your business run more smoothly.
In a few words
Lastly, just like in every other business, you should always weigh the pros and cons in eCommerce. You can make the best choice based on your needs, wants, resources, and preferences. Whether you decide to do dropshipping or wholesale, go for it and try your best to build and grow a successful business.