Understanding the Supply Chain of E-commerce Dropshipping Business

Supply chain may be a fancy term describing the trail a product takes to travel from conception through manufacturing and eventually into the hands of a customer. If we were talking with hard-core supplier chain gurus, they’d insist a product’s supply chain reaches all the thanks to the mining of the materials (like oil and rubber) wont to manufacture an item. But that’s a touch intense.

For the needs of this guide, we do not got to get quite that detailed. you merely got to understand the three most applicable players that structure the dropshipping supply chain: manufacturers, wholesalers and retailers.

Manufacturers.

Manufacturers create the merchandise and most don’t sell on to the general public. Instead, they sell in bulk to wholesalers and retailers. Buying directly from the manufacturer is that the cheapest thanks to purchase products for resale, but most have minimum purchase requirements you will need to satisfy . You’ll also got to stock then re-ship the products when selling them to customers. For these reasons, it’s often easier to shop for directly from a wholesaler.

Wholesalers.

Wholesalers buy products in bulk from manufacturers, mark them up slightly then sell them to retailers for resale to the general public . If they are doing have purchasing minimums, they’re generally much less than those required by a manufacturer. Wholesalers will usually stock products from dozens—if not hundreds—of manufacturers and have a tendency to work during a specific industry or niche. Most are strictly wholesaler operators, meaning they sell only to retailers and indirectly to the overall public.

Retailers.

A retailer is anyone who sells products on to the general public at a markup. If you run a business that fulfills your orders via dropshipping suppliers, you are a retailer.

You’ll notice that “dropshipper” isn’t one among the players listed within the supply chain. Why? Because any of the three—manufacturer, wholesaler, or retailer—can act as a drop shipper!

If a manufacturer is willing to ship its products on to your customer, it’s “dropshipping” on your behalf. Similarly, a retailer offers to dropship, although its pricing won’t be as competitive as a wholesaler’s because it is not buying directly from the manufacturer.

Just because someone claims to be a “dropshipper” doesn’t mean you’re getting wholesale pricing. It simply means the corporate will ship products on your behalf. to urge the simplest pricing, you would like to form sure you’re working directly with a legitimate wholesaler or manufacturer.