Dropship, Wholesale Or Import?

There are basically three different types of suppliers: dropshippers, wholesalers and manufactures. If you don’t already have products to sell then using a dropshipper is probably the best place to start to test out the waters.

Drop Shippers

To begin with it may be best to try and find a drop shipper as this involves little risk on your part and means you won’t be storing any stock yourself. The idea behind dropshipping is quite simple. You accept orders and payment from customers for goods that you advertise on your website. You don't hold any stock of these goods. Instead you place an order with the dropshipper who delivers the goods directly to your customer's address. The paperwork accompanying the delivery will make it appear that the goods were delivered directly from your business. Your customer pays the retail prices fixed by you, while you pay the wholesale price from the supplier, thereby making a profit.

This said, do remember that you will always pay a little more for a product when buying from a dropshipper as they do most of the hard work, such as packing and shipping.

Its also worth noting that you can always use a dropshipper in the beginning even with a small profit margin or even no profit just to test whether the products sell. Once you know they do, you can source them cheaper from a wholesaler and start making better profit margins – by using this method you eliminate the risk of buying a load of stock from a wholesaler only to find that it doesn’t sell!

Wholesalers

Wholesalers typically have a minimum order value which can be a problem when you first start out as you don’t really want to spend a $1000 on stock you are not certain you will sell.
However sometimes it is possible to get them to reduce this amount if you explain you are just starting out etc.

Many wholesalers use the minimum order to filter out the people trying to make a few bucks selling their products cheap from the house and in a way it can be beneficial to you too. Some people are happy to make just a few hundred extra dollars a week selling products online with a tiny profit margin but unfortunately that kills it for anyone with a business that has overheads.
In order to make a decent living selling online you need to pick products with a decent profit margin so make sure you check that the wholesalers are giving you true trade prices and be sure to appear as though you are a proper established business.
Sometimes even the wholesalers will deliver straight to your customer too if you ask, particularly when the item is large so always ask.
The trick is with wholesalers to buy from them what you need and don’t get sucked in to buying a wide variety of products with first proving that they sell. You can even sell the products on your website and THEN order them in from your wholesaler removing any risk of being stuck with slow selling stock.

Just be sure that your shipping times displayed on your website allow enough time for you to order in the product from your wholesaler and then re-ship it out to the customer.
Try to make sure you have multiple wholesale suppliers for your products as often they will be out of stock when you need it, so if one’s out hopefully the other will have it in stock.

Importing

The time to consider importing is when you have a successful ecommerce store and not before. Importing products can get you them cheaper but it does have pitfalls. I would recommend using an experienced import agent at least for the first few times you import goods. You will be expected to buy in large quantities direct from the manufacturer usually either a 20ft or 40ft container load of products.

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