Why Move Up from Dropshipping To Wholesale?

So far in your online selling career you have been engaged in dropshipping. This means you marketed a product, and once you had the sale concluded you’d seek out a third-party seller, buy the product from them and have the third-party seller ship the product to your customer. It is a good way of making money for someone who does not want to worry about storage space.

However, it also comes with its disadvantages, and you would like to step up your game. In order to do that you must find a better way to make money online. You have a certain customer base, you have already built a good reputation, you only to buy quality products for less money and sell them for a bigger profit. Is there a way? Yes, you can buy wholesale merchandise and resell it online, as simple as that.

Buy Pallets of Returned Merchandise

Buying wholesale means you are buying merchandise in bulk, by a wholesale pallet or a lot. This means you end up with a whole pallet of merchandise to sell online. Although you might now need a storage space, you don’t have to worry about the supply because you are selling products you already own. In addition, not having a dedicated storage space should not stop you from dealing with wholesale merchandise. You could use a corner of your room and store the merchandise there, and only buy as much as that space allows you until you decide to go big and get a dedicated storage space.

However, working with any wholesale supplier or liquidator does not guarantee success. Some research has to go into finding the right source before making the investment. Look for the services a wholesaler provides, their shipping arrangements, and seek out customer reviews online. Working with a reputable wholesaler will give you the best chance to buy in bulk, reducing the price of the merchandise per unit. If you look for wholesale pallets of returned merchandise, this price reduces significantly more, for items that may still be in an unopened condition. Profits margins are significantly larger compared to dropshipping.  

What Are the Advantages of Buying Wholesale over Dropshipping?

Dropshipping is at a disadvantage since you are buying products individually and the profit margin is very slim. The reason for this is that you are either buying from a retailer or another online seller who has already purchased the product from a wholesale supplier or at some sort of a discount and is looking to make a profit. This does not give you, as a dropshipper, a chance to stand out among the competition, with a competitive price.

This is especially noticeable now that prices on online sale platforms like eBay or Amazon are very close to wholesale prices. This is because the competition has already turned to cheaper supply sources, like wholesale suppliers or liquidators, and you will be left behind if you don’t make the switch soon.

What you get with buying wholesale merchandise is a chance to get hold of a larger number of cheaper products that you can sell individually and make more money off every item.  

It has to be stressed that finding a reputable wholesale supplier makes your life a lot easier. It is not unusual that, when buying wholesale, you get a pallet of a certain group of products, electronics for example, but these products can range from headphones to laptops. This means that you are not exactly covering an undersupplied niche market, but a wide range of markets.

Reputable wholesalers, on the other hand, will always either have a full listing of what products are exactly in a pallet or even have the wholesale pallet sorted so it contains only one type of product, which is perfect for those seeking to supply only a specific market.  

Dropshipping can be a solution if you are looking to make a smaller number of sales from time to time, but your profits will be minimal and the whole process would not make much financial sense.

Avoiding the Pitfalls

Although in comparison to dropshipping, buying wholesale merchandise gives you a significantly bigger profit margin, there are things you should consider before making any purchases.  

Before closing any deals, always do some research on the market dynamics. As mentioned above, you must find a niche market that is short of supply and fill that gap. Jumping on the opportunity to buy any sort of merchandise simply because it is cheap could be the first step to failure. If a market is oversupplied, it will take you time to sell all of the merchandise you purchased.

In addition, buying from any wholesale supplier could lead to purchasing damaged goods that you can’t sell at all, leaving you with a pallet of unusable merchandise and a loss on investment. Always make sure you are dealing with a reputable wholesale supplier or liquidator and that you have access to the full manifest of products contained in a pallet.

As noted above, a wholesale supplier will offer returned goods, like electronics, smartphones or tablets. When dealing with such products, having access to detailed information, a detailed manifest is key. If a wholesaler is withholding information or the manifest is missing completely, stay away from them.

Statistics show that of all the items bought online, over 30 percent get returned to the seller for various reasons. These returned items, however, are an even bigger issue for dropshippers. If you bought the item from a wholesaler, it gets returned to you and you can remarket it and sell it to another customer.  

However, in dropshipping, the item you ordered from a third-party seller and had it delivered to your customer, returns to the third-party seller and you can’t make the same sale again, which is another drawback.  

All in all, buying wholesale to resell online has a number of advantages over dropshipping and is a natural step forward for anyone who is looking to up their online resale game.

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Henley Johnson

Henley currently works as a sales representative for Direct Liquidation, assisting businesses with product sourcing of liquidated merchandise from the largest retailers in the world. Whether you are looking for a pallet or a truckload Henley is here to help you grow your business.

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