Some believe that drop shipping will give a higher return on income. But in reality, it will only give small amount of money since you’re not the one who made the product. You only serve as middleman between the wholesale supplier and your buyer.
There are two types of dropshipping: bulk dropshipping in a B2B environment and retail drop shipping. In retail dropshipping, a product is sold to the end customer. Retail dropshippers usually sell their products online. Products will then be shipped by the wholesaler supplier to the buyer. In bulk dropshipping, products are sold to a business buyer.
Customer in a B2B wholesale process has the benefit of a repeat business. Keep in mind that as a drop shipper you will earn money through the quantity of merchandise that you sell from the manufacturer to your business buyer. If you provide the buyer with a good customer service, this buyer will surely come back to you to order again once they run out of stock.
Customer service provided to a wholesale business buyer is much easier to give than customer service given to a retail buyer. Trouble can happen in a drop shipping business if the product will not be delivered on time or if the product is not the buyer’s expected product. A retail buyer buying only one item is harder to please than a business buyer ordering in bulk. Once you’ve caused trouble to a retail buyer it will surely not come back to order again. In case of a business buyer, if one or two of the products have not met his expectation, you can give him discount for the products in question to avoid product return.
The volume per transaction in a B2B drop shipping is relatively high than a retail drop shipping. The retailer knows that each transaction will incur cost. The cost involves in each transaction are the payment processing fee and administrative fee. You need to choose between this two scenarios; the cost of one item is 1$ with additional cost for shipping or the cost of one hundred items for bulk orders with additional cost for shipping. Profits are only minimal in drop ship business, so if you will sell your products in one item per transaction more shipping cost will be incurred compare to buyers in bulk items.