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Newbie question regarding dropshipping

by glamx
9 replies
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How do distributors make money if in theory resellers are not buying in bulk? Since resellers who buy from distributors do not keep inventory and only buy when an order from a customer is placed, are resellers getting a discounted price? I think I might be missing something here..
#dropshipping #newbie #question
  • Profile picture of the author Steeleton
    The reality is that most of the distributors that normal folks have access to aren't selling anything wholesale. There might be a small discount available but I think you'll find it's really hard to make a profit through drop shipping if you're trying to sell the products online.

    Real wholesaler distributors require that a business buy in huge quantities and if you're able to buy just one or two items at a time that's not really a wholesaler at all.
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    • Profile picture of the author RunMarty
      Originally Posted by Steeleton View Post

      Real wholesaler distributors require that a business buy in huge quantities and if you're able to buy just one or two items at a time that's not really a wholesaler at all.
      This is correct. You will find many businesses calling themselves wholesaler sand distributors when they are actually just middling.
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      • Profile picture of the author glamx
        Originally Posted by RunMarty View Post

        This is correct. You will find many businesses calling themselves wholesaler sand distributors when they are actually just middling.
        I just opened an account with D&H distributing and I believe that they are legitimate distributor. It sucks though having to find out that their prices are so high and it's not even their products. I can buy $15 usb flash drive and shipping will be like $13 plus the $5 handling fee .

        The reality is that most of the distributors that normal folks have access to aren't selling anything wholesale. There might be a small discount available but I think you'll find it's really hard to make a profit through drop shipping if you're trying to sell the products online.
        I am slowly realizing this. I think I might just resort to purchasing wholesale products. I just don't understand why there would be distributors out there who are willing to drop ship individual products. Where's the profit in that?
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        • Profile picture of the author Importexport
          Originally Posted by glamx View Post

          I just opened an account with D&H distributing and I believe that they are legitimate distributor. It sucks though having to find out that their prices are so high and it's not even their products. I can buy $15 usb flash drive and shipping will be like $13 plus the $5 handling fee .

          I am slowly realizing this. I think I might just resort to purchasing wholesale products. I just don't understand why there would be distributors out there who are willing to drop ship individual products. Where's the profit in that?
          If you decide to buy inventory, don't buy from wholesalers when you can buy direct from manufacturers overseas.

          Wholesalers and distributors buy from manufacturers and add a substantial margin before selling to you. You can pocket that extra margin.

          You can ignore the myths about having to buy huge quantities to buy direct from manufacturers. I teach how to get real manufacturers to supply small quantities.

          It is important that when you first approach them you avoid letting them know that you are a newbie or a single person business.
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  • Profile picture of the author jkgultimate
    Drop shipping wholesalers will never give you the discount from the actual manufacture themselves.

    There are lot's of places where you can go directly to the manufacture where you don't have to buy a ton of inventory. Most of these manufactures give you test sample of the product.
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    • Profile picture of the author Importexport
      Originally Posted by jkgultimate View Post

      Drop shipping wholesalers will never give you the discount from the actual manufacture themselves.

      There are lot's of places where you can go directly to the manufacture where you don't have to buy a ton of inventory. Most of these manufactures give you test sample of the product.
      Depending on the value of the item, samples are often given free but you will have to pay for Air Courier delivery.

      Suppliers invariably ask for your Courier account number. Don't just give it to them without first getting a written quote from your courier.

      If you don't have an account you will have to ask the supplier to prepay their usual courier. They will do so, but be sure you are sitting down when you read the email from them with the price.
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  • Profile picture of the author bonvideo
    Most US based dropshippers buy from large wholesale Asian companies with big online portals, think of DX, Ahappydeal or TK5.Biz, etc!

    regards
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  • Profile picture of the author Hydraman
    You can still make money from drop shipping even if you buy from the distributors. The only thing is your profit may be lower than if you buy from a wholesaler and supply the products to your customers yourself. But, yes, you can still make money with drop shipping. The drop shipper sells the product to you at a price less than retail price. Besides, you can set your own higher price if you think you can sell the product at a higher price. There are people doing drop shipping by buying at retail price but sell at higher price. You can buy at retail price from offline stores and sell online at higher price. or from another online store and sell at higher price.
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    • Profile picture of the author Importexport
      Originally Posted by jkgultimate View Post

      Drop shipping wholesalers will never give you the discount from the actual manufacture themselves.

      There are lot's of places where you can go directly to the manufacture where you don't have to buy a ton of inventory. Most of these manufactures give you test sample of the product.
      Originally Posted by bonvideo View Post

      Most US based dropshippers buy from large wholesale Asian companies with big online portals, think of DX, Ahappydeal or TK5.Biz, etc!

      regards
      Dropshippers who buy from such sites are buying from their own competitors. They are retailers, not wholesalers.

      It's true that some of the Chinese dropship companies give a discount to resellers, but those discounts are pathetically small.

      As jkgultimate points out, you can go straight to the manufacturer and you don't need to buy a large quantity. That is the way to make real money instead of working as very cheap labor for dropshipping wholesalers.
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