We will unravel the differences between dropshipping and wholesale that are the most usual methods for inventory management and order fulfillment. Both have their pros and cons. So it's essential to weigh up carefully to decide which is the best strategy for your online business.
Let's look at which option is more suitable for your business and convenient to use whether you want to start an online shop or have been created recently.
What is wholesale?
It refers to buying a bulk order of products to obtain the suppliers' discount and sell it at a higher cost. Wholesalers do not manufacture products. They concentrate on sales and delivery to retailers. Some wholesale clothing companies provide the manufacturing, whereas others serve as importers and seek directly to retail stores.
- You will save money by having a discounted price from the wholesaler. If you calculate the total price that you will pay for the number of wholesale items, it is usually cheaper than the latter.
- You can make more money by reselling it at a higher cost. If you get your products at a favorable price, you can pass the savings onto your clients. They will find your products more affordable than the competitors.
- You will familiarize yourself with the industry knowledge by having leads of manufacturers and get exclusive access to products.
- You will have enough supplies to ensure continuous business operation. Your clients will also continue doing business with you since you have the supplies that they need.
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- It requires more room for your storage since you will be purchasing items in bulk.
- A retailer has to buy a minimum number of products dictated by a wholesaler.
- You will need a higher profit cost since you will be purchasing a large number of supplies. But if you have enough money for the wholesale price, then it won't be a problem.
What is dropshipping?
Dropshipping is the process of accepting orders from customers without keeping the products on hand. Instead, the seller purchases the items from a third party and ships them directly to the customers—no need to pre-purchase inventory or manage inventory. Here’s the basic flow of dropshipping:
- Choose products. Source from independent supplier.
- Import items to your online store and set your prices
- Accept the customer’s orders.
- Forward the orders to your supplier.
- Supplier will ship the order directly to your customer.
- Requires less investment because you don't need to stock products.
- Simplify the sales. Owners do not need to process orders for packaging, transport, and after-sales services. You can manage your online clothing business anywhere in the world.
- The third-party provides pictures.
- It creates heavy competition. You'll have other ways to stand out to compete.
- You don't have control of the quality of the clothes you sell. One lousy product could lead to unsatisfied customers and lost sales.
- You are responsible for providing customer service, placing orders.
- You can't combine products for an order. If you have multiple dropshipping suppliers, you can't combine multiple products into one package.
Check out next: 7 Steps in starting a Successful Online Clothing Business