Ever had a hard time deciding between Dropshipping vs Wholesale?
Seeking ways to grow your wholesale dropshipping business?
Wholesale dropshipping has gained popularity in the e-commerce era, and it’s not difficult to see why. Both wholesale vs dropship have pros and downsides, so you must determine which is ideal for your company. Dropshipping allows you to sell your items rapidly and at a cheaper cost. If you want to buy in bulk and keep more stock on hand, wholesale may be the best option for you.
As a business owner, the way you source your products can make or break your success. Depending on whether you decide to go with dropshipping vs wholesale. Whether you’re just starting out or looking to expand, understanding the different methods of procuring and selling goods is essential.
Whichever side you’re on when it comes to the “dropship vs wholesale” debate, these are two of the most popular options among eCommerce sellers. Dropshipping vs wholesale each has its own set of pros and cons. In this article, we’ll dive deep into the details to help you decide which one is right for you.
It’s important to understand the many methods you might want to use to sell your items. Wholesale and dropshipping are two popular options – while wholesale involves selling large quantities of goods, dropshipping allows you to reach your audience directly.
Read on to find out more about dropshipping vs wholesale, dropshipping methods, bulk vs wholesale, dropshipping vs reselling, Amazon wholesale vs dropshipping and more!
I. Dropshipping vs Wholesale: What is dropshipping?
Dropshipping is a unique approach to selling things online in which you do not hold actual inventory of the items you’re offering for sale. When you sell a product, you simply order it from a supplier, who then delivers it to your buyer. This ensures you can sell things without being required to spend on inventory or deal with standard delivery issues.
One of the greatest aspects about dropshipping is that it is a low-cost option to launch an eCommerce shop. Because you don’t need to invest in goods up front, you can start your store with little money. Furthermore, dropshipping offers you greater product offering options.
Another significant benefit of dropshipping is that you can concentrate on developing your brand and selling your items while the supplier handles the rest. This allows you to build a better customer experience and a more successful marketing approach, both of which may improve your customer base and income.
However, there are several disadvantages to dropshipping. One of the major downsides is that you have limited control over the inventory and delivery process. This can result in lengthier shipment periods and quality problems. Furthermore, because you do not own the inventory, it may be more difficult to oversee the quality of the things you offer. It is critical to conduct research and carefully select a reputable supplier capable of providing high-quality items and customer service.
II. Dropshipping vs Wholesale: What is wholesale?
Now that we’ve covered what dropshipping is, then what is wholesale and what does it involve? To put it simply, wholesale is a traditional and well-adopted method of selling goods. Basically, a business sells things in bulk to other businesses or stores. This strategy enables eCommerce store owners to purchase goods in bulk at a relatively low cost and then resell them to customers at a marked up price.
The ability to purchase goods at a reduced price, which may boost your profit margins, is one of the finest aspects of buying in bulk. Additionally, buying in bulk gives you the power to bargain with suppliers for lower prices and even exclusive access to some goods.
You may retain inventory and manage the stock level, which is another fantastic benefit of wholesale. This enables you to meet consumer requests promptly and prevent inventory issues later on. You can also guarantee the quality of the goods you offer to your consumers because you already have them in your hands.
III. Differences between dropshipping and wholesale
In summary, the differences between dropshipping and wholesale as eCommerce fulfillment methods boil down to these common characteristics:
1. Keeping stock and inventory: Wholesalers are required to maintain stocks and ensure their inventory is well taken care of, whereas with dropshipping, business owners never actually come into contact with any of the products they sell. Instead, they rely on suppliers to provide the goods to customers directly. This means they are not required to keep stock.
2. How orders are processed: Going the wholesale route means you have greater ownership of how you process orders as you do it by yourself. On the other hand, with dropshipping, the supplier is usually the one who handles fulfillment.
3. Initial costs: If you don’t have a lot of capital to start with, you might want to carefully consider your options. Wholesale operations require greater costs as you have to cover operational expenses, which come with inventory management. A more cost-efficient option is dropshipping, as it eliminates the need for overhead expenses, since the supplier fulfills your orders for you.
4. Quality control: Prioritizing your customers’ satisfaction is a great way to build a loyal customer base, increase trust levels and maintain higher profit levels over time. Between the two options, wholesale is better suited to help you ensure quality control. This is because owning each part of the process gives you better control over the quality of goods, delivery services and more. With dropshipping, you do not really get the same amount of control and flexibility, and are subject to the suppliers’ fulfillment methods.
5. Ability to manufacture your own brands and goods: Have you always aspired to become the owner of a brand? Want to make a unique product that’s not available in the market yet? You’ll want to go wholesale. This is because with dropshipping, you’re only able to resell existing products that are popular in the market. On the other hand, as a wholesale business, you can come up with your own product lines, craft a brand and create compelling brand value that your customers will resonate with and love.
6. Lag time: The biggest downside of going the wholesale route is needing to wait before you can actually start getting the business going. This is because there are many parts involved in the process and this can lead to significant time delays. Instead, you might want to try dropshipping, as you can begin selling products once you’ve gotten your online store set up on a platform like Shopify.
IV. Dropshipping vs Inventory and Dropshipping vs Wholesale: Dropshipping Methods
Want to get into dropshipping? Unsure where to start? According to Shopify, there are 4 main types of dropshipping, and we’ll go through each method so you know how to get started.
1st Method: Product reselling
If you’ve ever shopped online – and come on, who hasn’t in 2023? – chances are you’ve come across a product reseller before. Essentially, product reselling involves an e-commerce business sourcing products from various places like AliExpress and reselling them to customers via their own storefront. This is generally the most popular dropshipping method, because it’s easy to find products which are popular with customers and provide it to them painlessly. Businesses which go down this route tend to build trust through including product reviews and advertising via social media to increase sales.
This dropshipping method tends to work well for those who are particularly interested in selected product categories, or if they enjoy running digital marketing campaigns.
2nd Method: Business extensions
A less popular and known option, business extensions basically refer to when brick-and-mortar stores which lack a presence online are approached by dropshipping companies to help set up a digital website for them, and to transact products on their behalf. When a sale is made, the retail store is the one which actually fulfills the shipment of the item. This is generally a less popular option given that you would need a strong and ongoing partnership with a retail store to have them even consider letting you run their e-commerce store.
3rd Method: Product creation
Can you still be creative while running a dropshipping store? Or are you restricted to just selling items that are already available and popular?
With product creation, you’ll find yourself working your creative muscle to come up with inventive product combinations that you know customers will love. Bundling products together is a great way to come up with a “new” product or kit, which customers can purchase for day-to-day use, as a gift set or for household purposes. If you tend to be creative and enjoy seeing new product lines come to life, this might just be the option you’re looking for to run an online-based, e-commerce business!
However, if you do opt for this dropshipping method, be wary that choosing products from different suppliers could affect your delivery time. Hence, your customer satisfaction rate may also be impacted. To combat this challenge, you might want to consider working with the same supplier, so that the products will be packed and sent together.
4th Method: Print on demand
Print on demand businesses basically involve working with a printing service to print products and merchandise on shirts, curtains, blankets, mugs and more. While also selling those to customers as they order them. One great example of a print on demand site is Redbubble, which allows independent creators to upload their designs in various configurations. Redbubble then prints these items as customers order them, and handles the fulfillment directly.
5th Method: Dropshipping vs reselling
As we’ve covered in the above section, when it comes to dropshipping vs reselling, reselling is just one dropshipping method. While some sellers may choose to repackage existing products which are already popular in the market and purchase them in bulk vs wholesale. There are many methods for dropshipping vs reselling.
V. Drop Ship vs Direct Ship: Dropshipping Wholesale Differences
Do you know the difference between drop ship vs direct ship?
We’ve established throughout this article that dropshipping doesn’t involve any handling of inventory at any step of the fulfillment process. From setting up the store to the customer actually getting the item, a dropshipping business owner will never be required to handle the actual goods. Instead, the supplier they work with is tasked with the fulfillment process.
That marks the key difference between drop ship vs direct ship. This is quite the opposite of direct shipping, which cuts out the middleman (supplier) from the process entirely. With direct shipping, an item is sent directly from the vendor to the client using this delivery option. As a result, the customer will get their order straight from the vendor rather than getting it via a third-party delivery facility.
Pricing is another important distinction when it comes to deciding between dropshipping and direct shipment. This is because the warehouse or fulfillment center that owns the products is responsible for paying the employees’ wages and other overhead costs. On the other hand, dropshipping is definitely far more affordable. A dropshipping e-commerce business would leave the fulfillment to their supplier, and does not have to bear costs like rental and wages. This means more profit for the business, as less is spent on operational expenses.
VI. Wholesale vs bulk
Are wholesale vs bulk referring to the same thing when it comes to e-commerce sales and business?
While wholesale vs bulk are often perceived to have the same meaning, they’re actually not the same!
On one hand, buying in bulk refers to buying items in large quantities. When it comes to buying wholesale, you actually need to have a wholesale account with a seller in order to enjoy discounts and perks of buying wholesale. While any customer can buy in bulk, only actual verified and tax-paying businesses can buy wholesale. Bulk vs wholesale is an important difference when deciding how to procure your products for your dropshipping wholesale store.
Wholesale vs Bulk: Why would I want to buy goods in large quantities?
Buying products in excess and stocking up can be hugely beneficial to your business when you decide to buy wholesale vs bulk, saving you time and money while you do so. Here are some of the reasons why customers might consider buying items in bulk quantities, whether it’s directly from suppliers or straight from the wholesaler:
- Discounted prices: You’re likely to score a substantial discount with a wholesaler or when you buy in bulk. Buying larger quantities of goods incentivises sellers to give you a cheaper price, since they would have increased revenue from your purchase anyway. Take advantage of this and account for future bulk buys, so you can get good prices all in one go!
- Time-saving: No one likes waiting or experiencing shipment delays. You can overcome delays by consolidating your purchases and timing them correctly.
VII. Dropshipping vs Wholesale: As Your Business Grows
When it comes to Amazon wholesale vs dropshipping, thinking long-term is essential. As your company expands and changes, it’s crucial to think about your sourcing strategies’ scalability. While dropshipping and wholesale both provide benefits for growing your business, their effects on operations and logistics differ.
Having a thorough awareness of your product demand and a well-defined strategy for controlling your inventory can help when it comes to growing with your wholesale venture. Your cost per item will go down when you place more orders, although you’ll also need to spend more on storage and transportation to accommodate the bigger number of goods. You must also make sure that your inventory management and tracking system is solid and effective.
Dropshipping, on the other hand, enables you to simply and rapidly add new goods to your store without having to make an inventory investment. Therefore making it a perfect alternative for growing your business. As your sales grow, you may bargain better terms and pricing with your supplier. It’s crucial to bear in mind that your capacity to satisfy demand will depend on your supplier. Therefore you should have a fallback plan in place in case they are unable to do so.
Another thing to think about when considering dropshipping vs wholesale is the possibility that as your company expands. You’ll want to start developing your own brand and making your own items. Since you’ll have greater control over the product creation process and the capacity to produce distinctive and differentiating items, buying wholesale is usually simpler than dropshipping. This can help in your decision making between dropshipping vs wholesale and Amazon wholesale vs dropshipping.
VIII. Dropshipping vs Wholesale: Conclusion
Whether you decide to become a wholesale retailer or start a dropshipping store, one thing is certain: having a good grasp on data and analytics is key for wholesale dropshipping. Data drives decisions in today’s digital age and wholesale dropshipping businesses, and your e-commerce workflow should be no different. No matter which you decide between wholesale and dropshipping, having an e-commerce tool that can help with your needs is paramount.
Curious how you can succeed in your next e-commerce venture and build the store of your dreams, between dropshipping vs wholesale?
Enter Koala Inspector – a popular Google Chrome inspector tool that lets you spy on your Shopify competitors, one click at a time. You can use this tool to grow your wholesale dropshipping business. By leveraging Koala Inspector’s capabilities, you can find important data on competitors including the Shopify themes and apps they use, their traffic data, ad campaigns and more. Don’t let yourself be kept in the dark any longer, use Koala Inspector to find out all the winning tips and tricks that are helping your competitors get ahead.