Sep 6, 2012

Benefits of Wholesaling vs Dropshipping Electronics for Online Resellers

Electronic Products Warehouse

If you are an electronics online seller you may be aware of 2 popular methods to sell  products. You can buy in wholesale or dropship products direct to your buyers. There are pros and cost for each method and as a retail business with experience with both these methods, we have picked wholesaling over dropshipping.

Buying in wholesale requires you buy products in bulk from a wholesaler and resell those products in smaller quantities. The unit cost that you pay for the wholesale order is often much less than the unit cost you sell the item for. This difference in unit cost allows you to make a significantly large profit for each sale.
Dropshipping is another process where you sell our products and the supply or dropship company will fulfill the order for you. You will sell the product for a higher cost than what the supply company will charge you. This difference in unit cost allows you to make a small profit for each sale.

Cons of Dropshipping
  • Supply companies will not charge you real wholesale prices. Your profit margin is reduced.
  • Dropship prices are often higher than wholesale prices. In todays competative online retail environment you may not be able to compete with other retailers. We have often noticed that some retail prices on sites like eBay are even lower than what dropship companies are offering.
  • Your customer response time and order processing time will be higher. There will often be delay in shipping as your order will be first processed by you and then by your dropship companies. You will also often reply on dropship companies to answer customer queries which may increase the response time.
Pros of Wholesaling:
  • Wholesale companies will charge you real wholesale prices. Your profit margin is increased.
  • The profit martin will be substantial for you to competitive with other online retailers
  • You can respond to customer inquiries and ship out orders faster - for the key reason being that you control the inventory and you don't need to rely on another company for inventory status, shipping status, product information, etc.
 Although our emphasis is on electronics such as as home audio, TV, mobile phone and GPS systems, these cons and pros and standard for most product types. Other online retailers who sell furniture, books, cosmetics, home decor and other products will face the similar situation.

For these reasons, if you are an online retail company looking to for electronics product to resell, we would suggest that you wholesale products instead of getting them dropshipped. The most important reason is that than when you buy wholesale you can true wholesale prices. In todays competitive online marketplace your selling price is the most important part of a shoppers buying decision. Electronics and other online resellers and refer to the  Wholesale and Dropshipper Directory to find both dropshippers and wholesalers.


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