What Is Wholesale Drop Shipping?

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Wholesale drop shipping is a method of business in which the retailer does not personally stock the goods being supplied

. Instead, the goods are directly shipped by the wholesaler to the end user. The retailer makes a profit equal to the difference between wholesale and retail price, minus miscellaneous costs incurred.

In retail stores (as opposed to online stores), the retailer may keep a copy of the item on display, or made available for in-store testing to customers. But due to space or cost constraints, the products being sold are stored in the wholesaler's own space. In fact, some retailers have only catalogues or photographs of certain products.

The main advantage of drop-shipping lies in the fact that an excessive transportation cost can be avoided. Rather than shipping an item from the wholesaler to the retailer and then again from the retailer to the end user, it is much easier to send the product directly from the wholesaler.

Drop shipping has one huge vulnerability, however. If the wholesaler and end user make direct contact, the end user may choose to get products directly from the wholesaler, due to the reduced price. To protect the interests of the retailer, drop shippers will usually include the retailer's address as the return or contact address, or at least withhold their own.

The advantages of drop shipping are reaped best by sellers or retailers who tend to receive mostly small orders, but occasionally large ones as well. In these cases, it is must easier for wholesalers to arrange for large orders at short notice than for the retailer to do so.

Online businesses usually rely on drop shipping for product delivery. This is rendered not only desirable but necessary, as the wholesaler, retailer and consumer may be located on completely different parts of the world: the cost of transportation adds unnecessary and precious dollars to the price of the product. Big online business sites such as Amazon or eBay, for example, rely on small retailers to market products, which are ultimately shipped by large wholesale drop shipping companies.

Customized products are usually marketed by drop shipping, as they typically come in large batches ordered by groups of people. Souvenirs and mementos such as keyrings, caps, USB sticks or coffee mugs are extremely common drop-shipped items. Custom-made Tshirts are also frequent requests, while custom-made formulas of food supplements, herb blends etc have also become popular in recent times.

For people just beginning to set up a business, drop shipping is an absolute blessing. It robs them of the worries of storage and aging products, and lets them concentrate on sales and marketing without worrying about the mundane aspects of shipping, storage and delivery. Additionally, it allows small business owners to operate from the privacy of their own homes, interacting with their customers online or via the telephone. With a well-made web page and a well-chosen product, it doesn't take long to set up a decently profitable business using wholesale drop shipping.

by: Gen Wright

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