Wholesale & Dropshipping Success

June 28, 2008 | Leave a Comment

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Introduction to Wholesale & Dropshipping

When first starting a small online business it can be difficult to know what is the best use of your time and what sales channels will provide the biggest benefit. Sometimes you follow a natural progression by starting with selling on your own website, then someone will contact you and ask if you dropship, then if it proves to be a winning product they will ask you to sell wholesale.

There are a few different business strategies that are popular now and revolves around dropshipping and wholesaling products. You can source products to sell on your website and carry no inventory, you can sell your own products via wholesalers/dropshippers or direct to retailers with your own program, you can source products that are complimentary to your own products to upsell or cross sell your customers.

Those that are new will ask what’s the difference between Wholesale & Dropship?

In simple terms, dropship is when a retailer or catalog advertises a product, the customer places an order, and the retailer will send the order to the manufacturer to ship the product directly to the customer.

Retailer - Manufacturer/Distributor - Customer

Wholesale is when a retailer places an order with the manufactuer and carries the inventory. This cuts out the middle process and goes to direct from the retailer to the customer.

Manufacturer/Distributor - Retailer - Customer

As you can expect, both have pros and cons and one of them is what it means to your bottom line.

Dropshipper get a certain percentage of the sale, say 25-35% of the retail cost and tend to be one offs (one here and there as a customer buys it), but you also are not paying out of pocket expenses. You only pay your vendor after your customer placed their order so essentially you are giving the vendor the customers money while keeping a small cut for your efforts.

Where if you are buying in quantity you get a set wholesale price since they are buying more product all at once but you are also pre-paying the vendor. You will have “inventory debt”, so the goal is to turn the product over quickly and since you are making more money per piece you can shorten the window of having the liability of products sitting stagnant. Most manufacturers will have a min number that a retailer must buy to get the wholesale price depending on the vendor it could be thousands of units or a small case.

Wholesale & Dropship Companies

There are thousands of companies on the internet that offer products for wholesale/dropship, the problem? While researching how to effectively build my dropship/wholesale program I found these differences.

Quality products. You are the face to your customers if you sell them crap they won’t come back. Plain & Simple.

Unique products. Do they put any effort into sourcing unique products to offer or are they just unloading a barge of mass produced items that everyone else is selling. This will make your own selling efforts more difficult.

Customer Service & Security. Since wholesale/dropship distributors are middle men, meaning they don’t actually carry products they just connect manufacturers with retailers, you never know who you are dealing with. It could be a person living in the basement with a website and may take all your personal (& your customers) information and disappear tomorrow. You may also have a hard time getting a physical person to talk to you when you have a question.

Deliver. If they are dropshipping to your customer, you want to know that the product is going to arrive on the doorstep of your customer when it is supposed to.

Let me state, that you do not need to go through a wholesale or dropshipping company. You can go direct to the source and find manufacturers that you want to work with. The advantage is you are most likely going to get a more unique product since it’s not being advertised to the masses, the downfall is it will take you more time and effort to manage the process since most mfgs will have different requirements, and you don’t have a company that pre-screens to make sure they are trustworthy.

What it means for the Small Manufacturers

The world of wholesale and dropshiping open doors for small manufacturers to more sales channels and getting their product in front of more people, but it does take work. Normally, there is some paperwork and emails/phone calls to provide information, follow up and build a relationship with the vendors. You also need to create a description of your products, quality photos and any other promotional materials for the retailers.

I have found that WorldWide Brands has more then proven that they are a great company to associated with and I highly recommend any manufacturer or distributor of a product that has not checked out what they offer to do so now. The application process is simple, you get a backlink to your site from a hard hitting authority site, and they offer a ton of great FREE resources to learn more about the dropshipping and wholesale process.

I have made great contacts from this resource and best of all it hasn’t cost me as a manufacturer anything to set up my account. I’ll admit, as a small operation we have not used this resource to it’s full potential but we are working on this and with the new information they are giving out we expect to improve our process and service for this sales channel.

I also appreciate how quick their response rate is and of course, they are very personable to work with. This makes a huge difference to me as well. I give them a high recommendation no matter if you are a retailer, manufacturer, ebayer they have what it takes to grow your business.

Check out some of the FREE Ebooks that WorldWide Brands offer. Who better to learn from then those that are experts in the field of dropship and wholesale?