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Drop Shipping Vs Wholesale

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Drop Shipping Vs Wholesale

The difference between drop-shipping and wholesale is that while one does business without having any physical stock, the other first stocks up and then starts doing business. Given below are some more differentiating factors.

The key word in both types of business is 'Control'. If you are a wholesaler, then you have control over your product pricing, your sales price and the time and mode of dispatch. You essentially can decide the price of the product. If you buy in a large quantity, you can get a substantial discount from the manufacturer. Depending on the market conditions you can then either reduce the price of the product or keep the additional profit margin for yourself. Wholesalers however, have to invest a lot of money for purchasing and storing of their products and also need manpower to take care of all the logistics involved in ensuring that the product reaches the customer at the right time and in the right condition. There could be a lot of stress involved in managing such a big operation. However, the margins in stocking and distributing are definitely higher and some special deals could take care of any setbacks, which you might have received in other deals. However, you will have to be on the alert all the time so that you do not accumulate dead stock, and even if you have it, are able to sell it off using innovative marketing ideas. You can thus be flexible in changing your products prices according to the market situation.

If you have limited capital then drop shipping is the only option. All you need is a computer with an Internet connection, a good knowledge of what can sell on the online market and a good drop-shipping house to back you up. Again here, the key word 'Control' is important since you will not be having any. You will not be able to control the purchase price, since it will be the shipper's price on which you will have to add your profit margin. Upon getting the order, you will have no control over the dispatch time taken by the shipper. You will have to take his word that he will ship the product on time to your customer. You will also have no control over the condition or quality of the product when it reaches the customer. So, it is of utmost importance that you catch hold of an honest and efficient drop-shipping house. However, you will also not have to worry about stocking, packing or dispatching the products. All you have to do is to display the product and its specifications and forward the order, which you receive from the customer to your drop-shipping house. They might also allow you to stick your stickers on their products at the time of delivery. So the stress level and the capital required are definitely lower in this type of an arrangement. However, the margin too is quite low. You should therefore look out for innovative products from other locations to keep your sales and profits on a high level.

Drop shipping and wholesaling both have their pros and cons, but depending on your financial situation, you can take a decision on which one will lead you on the path of success faster. Happy selling!

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