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Understanding the Dropshipping Concept: Retail or Wholesale?

If you are interested in the apparel business, then you must have heard of the dropship model. However, it can be quite the tricky one, clouded in all the ambiguity that surrounds it. What is the model based on? Is it wholesale or retail?

In this blog, you are going to find out everything you could ever be confused about how drop shipping clothing manufacturers work. Once you are done with this blog, you will understand everything there is of any confusion in this business model. Now, let us take a look –

1. Is dropship wholesale or retail?

It depends on where you are looking from. If you are a dropship retailer, then the manufacturer is a wholesaler – you pay a monthly rental to host their catalog on your website or marketplace and put your profit above the wholesale rate that they charge for the product.

However, the dropship wholesaler and supplier also takes care of the entire delivery process to the final customer – which is basically the retailer’s job in most cases. So, the dropship manufacturer is kind of doing all the retailer and manufacturer’s work save only the retail marketing part of it.

2. How does the retailer make profits? Is it commission basis?

No, it is not on a commission basis at all. Why? Firstly, the retailer is starting an independent business and therefore paying the registration and rental fees – if it were just promoting and earning on commissions, it would not have to pay a rental.

The dropship retailer gets the wholesale price list from the manufacturer cum dropshipper and while hosting the product on his or her marketplace, he is free to add any amount of profit he seems fit for the apparel. For example, if a product costs $20 from the manufacturer, the dropship retailer could market the product for $21 or $30, depending on the kind of profit they want to make.

Quick Tip: Keeping profits moderate makes the products more saleable in the beginning when you are building the brand, as you offer prices lower than your competition.

3. Does the delivery system of the dropship manufacturer require payment?

The dropshipper already charges a monthly rental and in most cases the delivery charges of the products are covered with it. However, if you do come across one that asks for delivery charge as well, you better run, unless they are costing tremendously low rental fees.

The dropship manufacturer and wholesaler makes sure that the delivery is done on a timely basis, with responsible packaging, and the best quality products. All you have to do is sit at home and make profits on a regular basis.

4. Is there a limit to the profits you can make as a dropship retailer?

None at all. At the end of the day it is your business and duty to make sure that you sell as much as you can. In fact, to make sure that your marketplace or website is highlighted, you should sponsor your advertisements on social media to make sure that more people come to know about your business and you get the right traffic.

And whether it is drop shipping women’s clothing or men’s, always make sure that you are partnered with the right kind of wholesaler cum manufacturer, so that your products have a standard that appeals to your would-be customers.

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