Monday, September 2, 2019

Should I Use Retail Dropshipping or Buy Products in Bulk For Dropshipping?

We are seeing posts and videos talking about what products to sell, how to advertise your store, and how much you need to start a dropshipping business. Now, we want to share with you another way of saving money in dropshipping. And the question today is if we should use dropshipping or buy products in bulk?

Should I use dropshipping or buy products in bulk?  I recommend buying products in bulk because of these reasons. It gives you more savings. It reduces delays in shipping. It allows you to do your quality control over the products. But, all this is considering that the products are consistently selling for at least 2-3 weeks and you do not feel it will not die out anytime soon.

Let us all move forward as we discuss why wholesale dropshipping is more favorable to us.  Basically, we have generalized the reasons to better summarize how wholesale dropshipping can benefit you.  However, know that should you wish to stick with retail dropshipping is entirely up to you.
Bigger Savings on the Product Pricing
To compute on the pricing of a product be it a retail or wholesale is based on several considerations. First on the factors to consider would be the cost of materials, labor, profit, and overhead expenses - which is the overall expenses spent to come up with the product.  

Examples of overhead expenses are the following but are not limited to shipping cost, packaging, energy, marketing and many more.   Aside from saving more from shipping costs, it will also reduce the delays in shipping the products from the warehouse to the customer.  

On our previous post about What Is The Turnaround Time For Fulfilling A Dropshipping Order.  We discussed how important it is to fulfill orders faster.  It will make more happy customers if you will be able to deliver the products to them faster. 

Wholesale prices are relatively cheaper compared with retail prices because if accounts for the profit you can gain in case you never sold the products.  In this regard, retail prices are usually double the price of wholesale.

Wholesale Dropshipping Brings Better Business Relationship with the Suppliers
A businessman would always think about the stability of the business. Although suppliers would choose to work with retail dropshippers. Given the statement we just mentioned, suppliers would more likely to feel secure to work with wholesale dropshippers.  

Buying products in bulk from suppliers would create a better relationship. The longer you are staying with the supplier and buying bulk volume, the better rates you will also get in the long run. You will also expect quality service from your suppliers because they would want to keep doing business from regular clients who make huge purchases, right?

Longer Business Term
In line with the good relationship you will expect from your suppliers, you would also expect to have long business term with them. They will expect to give you better service and rates to keep your business. The contract will more likely stipulate better protection for your business because you are making huge purchases.

Also on your end, having bulk products on hand will give you an advantage among the rest.  Because you were able to get the products at fairly low prices, you as a seller could also sell your products at a more competitive rate.  You will also be able to supply to buyers who will buy the same products in larger quantities.  

Create your Own Branding
Another potential saving to the business is to be able to create your branding for your products. Remember we mentioned earlier how we can save from buying products in bulk. Branding is considered an overhead expense. And with the ability to produce your branding for your products will save you more. 

You will also have the advantage of doing quality control because you can see if the products you will send to the customers are of good quality and no defects. Although this will mean more work for you, at the end of the day, we want to look at the bigger picture of making customers happy. 

Less Customer Complaints
On to the last objective of doing wholesale dropshipping, we go to the customer satisfaction. I put this reasoning at the end because customer satisfaction is our biggest output. We are catering services to our customers and having fewer complaints from them is an achievement to the business. Overall, given the advantages we mentioned above will all result to least customer complaints. 

If we were able to maintain this status in our business, we can ensure that we can attract more customers to buy from us. Hence, will give more profit to the business. If in the long run, we think of making an expansion, it would be more feasible because we can already handle the business well.
Why Buying Bulk Products is NOT Suitable for your Dropshipping Business
Those advantages we considered earlier are good points provided that we are confident that the business can sustain buying products in bulk.  It may not be appropriate for some because of the following factors. 
No Space for Inventory
An advantage of dropshipping is not spending on product inventory. This is a fact and is usually the case why people are putting up their store. So, in any case, if you do not have space to keep safe your products, then definitely we can stick with retail dropshipping. It will be more practical for you. 

Minimum Capital
If you can only set up your dropshipping business at a bare minimum which was discussed in our previous post What Is The Cost Of Launching A Dropshipping Store, then it is definite that you are unable to sustain having a wholesale dropshipping. Your capital expenses need to be considered because you will be spending more not only in space but also in making large quantity purchases.

Your Dropshipping Store is a Startup Business
While we mentioned above that the wholesale dropshipping can be used to protect the business and can result to a long business term, it may not be clever to do wholesale dropshipping given you are only starting with the business. 

We want to calculate the risks when making decisions for the business, especially that we might lose more. This is one of the mistakes made by startup dropshippers where they jump into making aggressive decisions losing more in the end. Remember, our goal is to earn. We want to work ourselves in making it happen.
This post is for the purpose of giving relevant information only.  Should you decide to choose between dropshipping and buying bulk products is totally up to you and shall also depend on your ability and capacity to cater both fulfillment methods.  At the end of the day, we want to ensure that we gain from the business and minimize the risks involved mentioned in Why Most Dropshippers Fail.

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