I am often asked, why would a wholesaler drop ship instead of just selling directly to the public. This is an excellent question and understanding the answer is key to understanding the whole drop shipping business.
What do Wholesalers Do?
Wholesalers purchase products from manufacturers with the goal of selling large quantities to retailers. Many wholesalers will only sell items in large quantities – we are talking entire truckloads for some items. These wholesalers prefer to make their money in large lump sums, usually on a few big accounts.
However, this model leaves money on the table. There are many online and small retailers that cannot afford to purchase huge quantities of merchandise in one lump sum. This is where drop shipping comes in. With drop shipping, when a customer makes a purchase from a retailer (either online or in a store), the retailer sends the shipping information on to the wholesaler. The wholesaler then ships the order (which may contain as little as one item) directly to the customer. The wholesaler usually ships with a generic return address and either no insert or the retailers insert. Basically, with drop shipping it looks...
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