Understanding the usage of drop shipping wholesaler

Understanding the Usage of Drop Shipping Wholesaler

In the ecommerce industry, there are a lot of terms that you will encounter. While most are easy to understand, there are some that are a lot more in-depth than the average dictionary lets on. A drop shipping wholesaler, for example, isn’t a person; instead it’s a fulfillment model used by ecommerce professionals.

Drop Shipping Wholesalers

When you go with drop shipping you’re using a different type of order fulfillment for your customers. You buy products from a wholesaler and the wholesaler ships those products directly to you — and in return you send it to the customer. The customer buys, pays and communicates with your business, but the wholesaler handles the inventory.

That means you aren’t purchasing a large amount of inventory items, paying to store those items or even managing a warehouse. Instead you partner with this wholesaler and list the items in their inventory for sale on your ecommerce site. You’ll receive the items from the wholesaler, repackage them in your own materials and then ship from your own warehouse.

Why Would a Company Use a Drop Ship Wholesaler?

Drop shipping is an advantageous business model, especially for smaller startups or ecommerce companies that want to sell multiple merchandise items without having an extensive inventory. Some key advantages of using drop shipping include:

Less Startup Funds

If you’re just starting out, the drop shipping model doesn’t require as much startup capital to get going, because you aren’t using thousands of dollars to purchase inventory before you start selling. With drop shipping you purchase the item once it’s sold and fill the order. In fact, with drop shipping you could operate out of a home or small office, because you won’t need as much square footage to get started.

Offers Customers a Wider Selection

With drop shipping you can purchase multiple products from multiple wholesalers. That means you can offer your customers a wider selection of products, from multiple categories, without having to pay for the extensive inventory. This could be beneficial, because customers could use your website as their one-stop-shop since you have multiple inventory items to suit their shopping list.

The Risk to Startup is Less

When you start a traditional ecommerce business you’re taking on a lot of risk. For most ecommerce businesses they must spend thousands of dollars buying their inventory and acquiring the warehouse space to store it. If the business doesn’t work out, they are stuck with that inventory — something that they will most likely have to sell at a loss.

Your Business Grows as Much as You Want

With a drop shipping wholesaler you list and purchase the items you want. Since you aren’t manually fulfilling every order placed on your website, you can scale (up or down) your business as much as you want.

Potentially Higher Profits

Using a drop shipping wholesaler might earn you a higher profit margin than other business models. But, as with anything in business there is always a risk. Drop shipping is only one of the factors that determines whether or not your business will be successful, but it is a good starting point if you want to start a business with minimal risk.

Additional Tips for Success

• Consider your profit margin: When you list a wholesaler’s product, you need to ensure you’ll make a considerable profit once the product is sold on your site, purchased from the wholesaler, and shipped to the customer.
• Negotiate pricing with wholesalers: Some drop shipping wholesalers will negotiate pricing based on how many orders you place each month — which can increase your profits.
• Use an attractive ecommerce website: Your website is crucial for your success. If your website isn’t easy to use, attractive, and engaging, customers won’t buy products from it.

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