Dropshipping vs. Reselling: What’s the Difference?

The realm of e-commerce is experiencing rapid growth, accompanied by a plethora of choices for vending products to consumers.

From trading on virtual marketplaces to practicing dropshipping and embracing print on demand, various pathways are available when launching an e-commerce enterprise.

But when contrasting the well-established reselling approach with the more contemporary and popular method of dropshipping, what emerges?

What sets these two apart?

The principal distinction between dropshipping and reselling lies in the sequence of events: with dropshipping, you first sell a product and subsequently purchase it from a supplier, whereas with reselling, you acquire a product first and then vend it to a buyer.

Within this article, we will dissect the disparities between dropshipping and reselling, appraising their merits and drawbacks, enabling you to determine the optimal business model for your endeavor.

Overview: Dropshipping vs. Reselling

To begin, let's offer a concise overview of dropshipping versus reselling.

Dropshipping constitutes an e-commerce business model wherein an online store doesn't stock inventory but acts as an intermediary between customers and suppliers. When a customer places an order, the store forwards the purchase to the dropshipping supplier, who subsequently ships the item directly to the customer.

Now, let's delve into the definition of reselling:

Reselling involves procuring a product, often at a lower cost than what consumers would pay, and then reselling it at a profit. It's prevalent on platforms like eBay and Craigslist, where users frequently post items for sale.

Both these models have their advantages and drawbacks, as follows:

Pros of Dropshipping | Cons of Dropshipping | Pros of Reselling | Cons of Reselling Lower initial investment | Narrower profit margins | Higher profit margins | Elevated initial investment Reduced overhead expenses | Limited control over products and pricing | Greater product and pricing control | Elevated overhead expenses No inventory management | Longer shipping durations | Shorter shipping durations | Inventory management required Flexibility in working hours | Heightened competitive landscape | Lesser competition | Inflexible working hours Ease of scalability | Difficulty establishing a brand | Simpler brand development | More challenging to scale Access to broader product range | | | Less straightforward to provide extensive product catalog

Defining Dropshipping

First, let's gain an understanding of dropshipping.

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Dropshipping encompasses a business model where you vend products on your online store without stocking those products yourself. This task is assumed by your dropshipping supplier, who oversees inventory, order processing, and shipping.

To offer further clarity, below is an infographic elucidating the concept of dropshipping, as a picture often conveys more than a thousand words.

(The article goes on to describe the dropshipping process, advantages, and disadvantages in a detailed manner.)

Understanding Reselling

Now, let's explore the essence of reselling.

Reselling involves procuring a product and subsequently vending it to a different buyer at a higher price.

This can span various items, from cars, technology, and attire to furniture, artwork, and antiques—diverse possibilities abound.

Reselling can transpire item by item, yet some individuals acquire products in bulk and then proceed to sell them individually.

The primary objective of reselling is to procure items at a low cost and vend them at or above the market rate.

(The article continues by detailing how reselling works, its advantages, and its role in various platforms.)

Comparing the Business Models

In essence, the most conspicuous distinction between dropshipping and reselling is that in dropshipping, products are sold first and then purchased, while in reselling, products are purchased first and then sold.

However, both models aim to sell products at prices exceeding their costs.

In this article, the pros and cons of dropshipping versus reselling are juxtaposed in their most prevalent forms:

Dropshipping: Trading products from a dropshipping supplier on a Shopify store. Reselling: Uncovering advantageous deals online, acquiring these products, and subsequently vending them on platforms like eBay and Craigslist.

Pros of Dropshipping (or Cons of Reselling)

Let's commence by examining the benefits of dropshipping or, conversely, the drawbacks of reselling.

1. Lower Initial Investment A notable advantage of dropshipping is its minimal initial investment.

Unlike reselling, which necessitates upfront inventory purchases, dropshipping can be initiated with comparatively modest funds. This renders it an appealing business model for entrepreneurs with limited financial resources.

2. Reduced Overhead Expenses In addition to sidestepping upfront inventory expenditures, dropshipping also obviates numerous conventional business overheads, including inventory storage costs.

Furthermore, since the supplier directly ships products to customers, there's no need to pay multiple shipping fees, leading to considerable savings in contrast to high-volume reselling.

3. No Inventory Management Dropshipping further relieves the burden of inventory management.

By conducting transactions through a dropshipping supplier, you delegate all inventory-related tasks to them.

4. Flexible Working Hours Dropshipping can offer more flexible work hours compared to reselling.

Given that you're not required to be physically present for shipping operations, you can manage your enterprise during hours that best suit your schedule. This makes it an attractive choice for those seeking greater control over their work-life equilibrium.

5. Ease of Scalability With relatively modest overhead expenses and no need for additional staff to handle shipping, scaling up by introducing new products and expanding your business becomes more feasible in the dropshipping realm.

6. Access to a Broad Product Range By partnering with a dropshipping supplier, you gain access to an extensive product catalog. This empowers you to test various products with minimal risk. Furthermore, this flexibility enables you to swiftly respond to shifting market trends.

Cons of Dropshipping (or Pros of Reselling)

Now, let's explore the reverse perspective, delineating the drawbacks of dropshipping and the benefits of reselling.

1. Lower Profit Margins One drawback of dropshipping lies in its typically narrower profit margins in comparison to reselling.

Dropshippers generally pay higher prices for their products than resellers, who may uncover exceptional deals or acquire goods in bulk for reduced rates.

2. Limited Control over Products and Pricing Dropshipping curtails your control over products and pricing when contrasted with reselling.

You remain subject to your supplier's product availability and pricing decisions. If your supplier runs out of a product or chooses to augment prices, your options are limited.

3. Longer Shipping Durations Dropshippers often contend with extended shipping durations.

While strategies exist to expedite dropshipping shipping times, products generally take longer to reach customers than through reselling. This is due to the need to transport items from the supplier to the customer, a process that can add days or even weeks to shipping times.

4. Intensified Competition Given the relatively accessible entry into dropshipping, competition is fierce in this domain. This heightened competitive landscape can make it challenging to differentiate your store and entice customers.

5. Tougher Brand Establishment Creating a brand is easier with reselling compared to dropshipping. With reselling, you maintain control over the product and branding choices. Conversely, in dropshipping, the supplier often dictates branding elements, complicating the development of a distinctive brand identity.

Ultimately, while more demanding, building a robust brand identity is attainable, as exemplified by various branded dropshipping enterprises.

Concluding Thoughts: