Dropshipping vs. Wholesaling

Whether you are new to the retail business or an old veteran it is always a good idea to keep up to date with the latest wholesale news. With the surge of internet retail businesses emerging everyday comes a wholesale trend called drop shipping that could be beneficial to both internet and brick venues. Many people may be confused as to differences between a drop ship and wholesale program. In the following article I will outline the differences between the two so you can decide which would be the best method for your business.

Essentially both methods are the same in that with both you will receive a deep discount (or wholesale discount) in order to sell your products at retail prices. The difference between the two is how products are sold and shipped. With wholesale products the retailer would buy a large quantity of products and store them in their warehouse.

With drop shipped products the wholesaler or manufacturer stores the products in their warehouse while allowing sellers to list the products on their websites or catalogs. Once the item is ordered by a customer the retailer will order it from the manufacturer or wholesaler. This method allows the retailers to order their products one by one which eliminates the risk of slow moving products.

Dropshipping is probably most beneficial for internet based stores as it allows the retailers to offer a large selection without having to physically own the stock. It is also beneficial because the manufacturer or wholesaler will ship the products directly to the customer.

Disadvantages to drop shipping your products are that you may not get as deep of a discount as you would if you bought the products in bulk. Typically wholesale products offer a 50% discount whereas drop shippers typically offer a 30% discount. There may also be a $3-$5 drop ship fee per shipment which could significantly affect your profit margin or make your business less competitive.

To find more drop shippers or wholesalers you can check out wholesale sources such as directories and forums. These sources will help you find new and reputable companies that offer both wholesale and drop shipping services.


Ann Hoskins has been writing and publishing articles about wholesale and drop shipping. She is a business consultant and has been specializing in logistics management and shipping for more than 10 years.