When starting a enw online store or boutique, a key aspect that may result in success or failure of your new venture is the business model and the choice of your suppliers. There are many ways adopted by small, medium and big stores, wich pretty much fit any pokets, however have their differences, advantages and disadvantages.Hence, we want to highlight the major methods that we have encountered so far, and hope that it will give a more profound understanding on the advantages and disadvantages of each approach.
What is the difference among Wholesaling and Dropship?
Both Wholesale and Dropship have pros and cons, as well as being very different from one another. When buying wholesale the idea is to buy a big volume( bulk ) of certain items, and to gain a discount which increases proportionally with the volume of the item bought. Hence the main advantage of Wholesaling is that the more you buy the better the price.
On the other hand, with drop-shipping you don’t own any product. You are acting as the middleman between the supplier and the customers and your products are directly shipped to the customers upon purchase on your site. In fact, Dropshipping is a retail fulfillment method where a store sells products on behalf of a supplier. The products are not kept in stock by the store, but they are bought and sent directly to customers when they make a purchase. Dropshipping is a great way to start a store or an online boutique given that it requires a low start-up investment, and is a great business-model to avoid slow moving or dead stock.
What is the difference between dropshipping and drop surfing?
There isn’t a difference between drop surfing and dropshipping, apart from the fact that drop surfing is a practice to enhance your dropshipping. With Drop surfing you have multiple suppliers lined up for each product, which you can then choose to send the items to your customers when you sell through dropshipping. The major advantage of using dropshipping is to be able to have a flexible source for each product, mainly chosen upon price, reliability or service level.
What is the difference between wholesale sales and selling on consignment?
Wholesale typically sells big quantities of products directly to stores which gain a discount upon the volume of items bought. On the other hand selling on consignment means to loan the product to stores which gain profit from a commission of the sales price.
Since, the consignment stock is legally owned by one party, but held by another, the risks and rewards fall into the responsibilities of the first party whilst the second party operates the retail and distribution of the stock.
What is the difference between affiliate sales and dropshipping?
In essence, dropshipping is when you sell products which are owned by a third party, and then the suppliers will ship the items directly to your customers.Affiliates sales work almost the same as dropshipping, with the main difference being a way to market products of a third party and get a commision from the referral or sales of those products.
The main difference is that with dropshipping you can set your own price on the product therefore you can profit from a chosen mark-up. On the other hand, with affiliate sales you can’t choose the price, but you only profit when referring a customer to another business and take a commission if the customer makes a purchase.
What about sustainability?
Whether is wholesale, dropshipping, selling on consignments and so on, we believe that much attention should be paid to the suppliers impact on enviromental sustainability.
There are cases where slow moving or dead stock are better off sold to third party in a different country, where there is a higher brand perception for that particular product than to keep on trying to sell to the local market, and in the worst scenario to create waste. For example a wholesaler like Styliafoe has been aquiring its products from a great array of local italian boutiques before they lost all their market value, and reintroduce them in foreign markets, hence allowing local stores to profit and reducing the waste from the fashion industry which accounts to a around a yearly 10% of the Global waste.