eCommerce is definitely one of the most profitable industries in the world for the small business owner, as it provides a unique global opportunity through which retail markets can be penetrated with very little effort and investment. Ecommerce hosting accounts give you everything needed to become a successful online business owner and open an internet shop that is aesthetically professional, however it cannot provide you with the right business plan or model. If you want to be successful with eCommerce hosting then you will need to find a profitable business model that will allow you to make the most amount of money in the least amount of time possible. The following information will compare two of the most popular online business models – drop shipping and wholesale merchandise.
The Pros of Drop Shipping
Drop shipping is perfect for novice business owners that do not have a lot to invest and would like to being making money as soon as possible with minimal work. With drop shipping you simply list the item for sale on your web site with the help of your eCommerce hosting plan, and when an item sells you order it from your supplier and it gets sent straight to your customer. Some drop shipping programs will even print your company name on the package so that it appears as if it is being shipped from you. This is especially important in this modern society where company branding is essential to success. The investment required for drop shipping is minimal. In fact, the only investment required is a website, as you’ll never have to purchase a single product with your own money.
The Cons of Drop Shipping
Although drop shipping may seem like the best option for starting your own online business, it should be noted that the potential for profit is much less than investing in wholesale items. In general, items that are drop shipped only provide a few dollars in profit for the seller, as the drop shipping provider makes most of the profit with minimal work. Drop shipping is also much less reliable then normal retail business, primarily because items are frequently out of stock unexpectedly.
The Pros of Investing in Wholesale Merchandise
Investing in wholesale merchandise is much more profitable than investing in drop shipping because you are able to benefit from the discounts offered when you purchase items in bulk. With wholesale merchandise the profit margins are much larger, you have more control of item stocking, and you can provide quicker shipping times to your customers. You’ll also sell a lot more items if you invest in wholesale products because you’ll be able to sell them for a more competitive price. In short, you can sell items for less, make more profit, and offer a more reliable service to your customers with wholesale merchandise.
The Cons of Investing in Wholesale Merchandise
Investing in wholesale merchandise is much more costly than drop shipping, and a substantial investment is required in order to fully stock every item in your online store. As such, many online business owners decide to drop ship some of their products and then stock the more profitable items for maximum profits and minimal investments.
This is a great read. There will always be pros and cons to any business models. Whether you do dropshipping or invest in wholesale merchandise, you will still have to rise above the competition by learning, mastering, and applying effective SEO and marketing techniques to be able to increase sales and profits. I use DSM Tool (www.dsmtool.com) to optimize my eBay listings and store.
Great article. It’s great that you placed the pros and cons of drop shipping and investing on wholesale merchandise. Either way, i think having excellent marketing techniques (blog.dsmtool.com) can aid in boosting profit.