Can You Make Money as a Wholesale Dropshipper?

Friday, December 6th

Can You Make Money as a Wholesale Dropshipper?

The easy answer to that question is "Yes," "No," "Maybe" and "Who knows?". The words 'knowledge,' 'experience,' 'determination' and 'luck' all have major roles to play, not necessarily in equal measure, and will affect which of the above answers fits your endeavor's situation.

Once again however, 'research' is the star of the show.

At the outset of your proposed venture into online retailing using a wholesale drop shipping supplier, research every retail avenue you can to determine how much other retailers are charging for the product you want to sell in your online retail business. If you find that each retailer has your intended product in the same price range, then you have a good idea of what the market will bear. In response to that situation, you need something other than price point to bring sales to you. Outstanding customer service and product knowledge could fill that role. A price war probably won't, at least not for the long run.

When searching for additional items to expand your original idea, look for a product within your area of expertise which has the greatest potential for profit, as in the ubiquitous "buy low and sell high" advice. This online research will take time, a minimum of several hours per item. Knowledge is money, preferably in your pocket.

When you are choosing products for your online retail business, if you are lucky, you might catch a trend on the upswing and enjoy the ride from a bottom-line standpoint. One of the advantages of using a wholesale drop shipping supplier is, if an item has passed the point of novelty and its sales decline, it is sitting on the shelves of the supplier's warehouse and not in your house nor in your inventory because using a wholesale drop shipper means you haven't previously paid for the item that is no longer selling.

When making calculations of possible profits on a particular item, don't focus on percentages, but rather look to dollar amounts. A wholesale drop shipping supplier may be able to sell you a very pretty cuckoo clock made in China in the Black Forest style for $10 and you could possibly sell it for $20, a 100 percent return on investment. But the dollar figure representing potentially pocketable profit stands at $10 and other costs will come out of that $10, lowering, possibly substantially, what can be recorded as profit. On the other hand, a wholesale drop shipping supplier of more quality goods might be able to sell you a cuckoo clock made in Freiburg, Germany for $500 which you could sell $1,000, more than perhaps your online retail competitor could get, because you have a reputation for knowing cuckoo clocks inside and out. Same profit percentage, 100, but a very different dollar amount.

As an online retailer using a wholesale drop shipping supplier, meaning your customer pays you before you actually buy the item, the risk of offering a low ticket product and a high priced one, is exactly the same, essentially none.