The two distinct supply chain management process that helps commerce businesses to perform the process of order fulfillment efficiently and effectively are, drop shipping and wholesale. If you are planning to start an online business of any kind, it is imperative to know the dynamics of these two. In order to understand these, let us see both separately:
What is WHOLESALE?
The process of procuring product inventory at a discounted rate from a manufacturer and selling it by applying margins to the customers is what the definition of the term Wholesale is.In wholesale business, the retailer owns the product and thus keeping the inventory is a burden for the merchant. And also, the marketing and sale of products quite a task for the business owners.
What is DROP SHIPPING?
The order fulfillment process wherein the inventory and the delivery of the products overhead is on the shoulders of the drop ship company. The retailer takes the online order from the customer, forwards the order details to the drop shipper, who later by adding their own profit margin delivers the product or items into the consumers doorsteps.
As seen above, the basic definition of both the processes shows that both are beneficial when a merchant do not want to manufacture their own products. But they are different in many ways, let’s dig deep into the differences of wholesale and drop shipping businesses,
Drop shipping requires no inventory at the retailers end, thus helping the organization to focus on more important internal tasks, removing the extra overhead and also the risks of costs are fairly low whereas in case of Wholesale the retailer has to manage the whole inventory and have larger profit margins.
Better sale price is obtained in wholesale but in case of drop shipping, since as the inventory is owned by the drop ship organization, it provides less profits to the businesses as the fess of the drop shipper takes away another bit of their profit margin.
Drop shipping brings more security to the online shopping business as the retailer does not have to keep worry about the sale of products but in case of wholesale the stocked inventory has to be sold in any case creating a peer pressure for the e commerce merchants.
Starting new business or want to take an extra leap in your business, then choosing among both the options, wholesale and drop shipping, solely relies on you as a business owner. Both will give you an opportunity to focus and learn on marketing area and skip the manufacturing challenges. The only thing is if you are ready to manage the whole inventory for your online store than go with Wholesale and if it’s the other way around Drop shipping is the best.
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