Wholesale dropshippers allow retailers to do business without one of the most significant risks in the retail model: excess inventory. This model of business means that an order is fulfilled by the merchant through a relationship with a manufacturer who actually sends the product along to the consumer. It's a relatively simple model and can be very very profitable.



The basic scenario is best explained in the context of a e-business. A retailer maintains a website where they sell a given product, For the sake of example, luxury brand bath products. Instead of ordering a case of a given product and hoping it sells, the merchant establishes a relationship with a dropshipping firm and advertises their products.

When a customer orders bath products off the merchant's site, the merchant collects the price of the sale, usually a "keystoned" rate that is 2-2.5 times the wholesale value. They then pass along the wholesale price to the dropshipping firm, along with the customer's shipping information and the wholesale dropshipper sends the order directly to the consumer. The merchant acts as sort of a broker, collecting the product markup in exchange for allowing the customer to purchase the product and for allowing the manufacturer to make the sale.

Working with wholesale dropshippers requires the merchant to be reliable, to handle the marketing aspects of the business themselves and to work with customers to make sure their needs are met. Merchants sell their wares in any number of ways online, including storefront sites and online auction sites. Not having to carry lots of inventory means that the dropshipper needs no more space to operate their business than is required for the administrative functions and that, essentially, they are supplied with a warehouse and shipping personnel at no cost to them.

Some wholesale dropshippers advertise their arrangements as a panacea for merchants. In reality, any business requires that the owner be diligent, willing to work and that they are capable of exercising the necessary creativity in their marketing that will allow them to stand out above their competition. Every business is built on work and there is no magic solution to making a living. However, those who take the time to understand how to run such a business can enjoy enormous profits while taking little risk. For those looking for a means to work their way to independence, this business model is one that holds great potential.