In the world of online business, currently there are two business models that are quite popular, namely reseller and dropshiper. You probably already know that both of them sell other manufacturers’ products. However, there are quite basic differences between resellers and dropshippers that you should know.
It is important to understand the differences between the two, especially for those of you who want to start an online business. So, we will explain the differences between resellers and dropshippers in this article so you can choose a strategy according to your business goals and needs.
Apart from that, we will also summarize the advantages and disadvantages of these two business models, as well as provide useful tips for starting a business as a reseller or dropshipper.
Without further ado, let’s start the complete explanation!
What is Reseller and Dropshipping?
Resellers are individuals or companies who buy goods in large quantities from manufacturers or distributors at lower prices.
Then, the reseller resells the product by determining the selling price in accordance with their own business policies.
Meanwhile, dropshipping is a business model where the dropshipper acts as an intermediary between customers and manufacturers or distributors.
When dropshippers receive an order from a customer, they immediately forward it to the relevant party who will take care of packaging and sending the product to the customer.
So, do you understand the difference? If not, you don’t need to worry because we will explain it in more detail below.
Difference Between Reseller and Dropshipper
After understanding the basic concept, you can probably see a general picture of the differences between resellers and dropshippers. However, it doesn’t stop there, you know. In terms of business execution, there are still several things that differentiate the two.
Here are some differences between dropship and reseller that you need to know:
1. Model
The most basic difference between resellers and dropshippers lies in the business capital required.
As a reseller , you will spend capital to buy goods in large quantities from manufacturers or distributors. In other words, you have to invest your funds in product inventory before you can sell it to customers.
Also Read: 8+ Ways to Retain Customers to Make Your Business Last!
On the other hand, as a dropshipper, you don’t need to spend a lot of capital to buy stock. You can run a business with lower capital, and even start a business without capital, because you don’t need to purchase and store product inventory.
2. Stock of Goods
Apart from capital, the difference between resellers and dropshippers is immediately visible in the inventory or stock management.
If you want to become a reseller, you have full responsibility for managing and storing your own product stock. You need to determine the number of items you want to keep in inventory and ensure the items are in good condition.
Meanwhile, in the dropship business, you don’t need to keep stock of goods. Every order from a customer will be directly forwarded to the manufacturer or distributor for processing. You don’t have to worry about running out of stock or physically packaging products.
3. Price Control
As a reseller, you have complete control over the selling price of the product. You can sell products at prices based on your own business policies and set profit margins as desired.
Meanwhile, in the dropship business, the selling price is usually determined by the manufacturer or distributor. You have no direct control over the price of the item. However, you can still maximize profits through marketing and sales strategies.
4. Product Delivery
If you decide to become a reseller, you must be responsible for sending goods to customers. You need to ensure that the product is packaged and shipped in good condition, and arrives on time to the consumer’s address.
In contrast, in the dropship business, the responsibility for packaging and shipping the product lies with the manufacturer concerned. They will send the goods until they reach the customer’s hands. You don’t have to worry about the shipping process and can focus on product sales and marketing.
5. Business Flexibility
The final difference between dropshippers and resellers is flexibility in running and developing a business.
Becoming a reseller means you have full control over managing business operations. You can easily choose what products you want to sell, determine the selling price, market the product, and even build your own business brand.
Meanwhile, as a dropshipper, your main focus is on the marketing and sales aspects. You can try and test various products freely as there is no attachment to physical stock.
Also Read: 10 Most Effective Tips for Building Consumer Trust
This allows you to adapt your business to your target market and customer preferences flexibly.
So, now you understand the differences between dropship and reseller from various angles, from roles to business execution strategies. In the next point, let’s discuss the advantages and disadvantages of the two business models.
Advantages and Disadvantages of Resellers
Here are some of the advantages and disadvantages of being a reseller:
Advantages of Resellers
- As a reseller, you have complete control over business operations, including selling prices, marketing strategies and brand building.
- With control over selling prices, you can determine higher profit margins.
- You can adjust product selection, stock availability, and inventory strategy according to your needs.
Disadvantages of Resellers
- Becoming a reseller requires quite a large amount of initial capital to purchase goods.
- You have to take care of packaging, shipping and product stock management yourself.
- There is a risk of running out of stock of certain products, so it requires a good management strategy.
Advantages and Disadvantages of Dropshipping
Here are some advantages and disadvantages of being a dropshipper :
Advantages of Dropshipping
- Low initial capital, so you can start a business with less financial risk.
- As a dropshipper, you can focus on marketing and sales, increasing business visibility and attracting new customers.
- In dropshipping, you have the flexibility to try different products without having to purchase and store inventory.
Disadvantages of Dropshipping
- Limits your ability to determine profit margins or adjust prices.
- As a dropshipper, you have to rely on manufacturers or distributors as your business partners.
- You have less direct control over product stock and the packaging process.
Tips for Starting a Business as a Reseller or Dropshipper
If you are interested in becoming a reseller or dropshipper, here are some tips to consider:
- Determine personal preferences – Consider your personal preferences and needs in running your business. If you want to have complete control over your business, feel free to jump in as a reseller. However, if you only want to focus on the marketing and sales aspects, choose a dropshipper business.
- Consider business goals – Define your business goals clearly. Do you want to make your dropship reseller business your main source of income or as a side job? Determining goals will help you direct your efforts and strategies in running your business.
- Review resources and capital – Know how much resources and capital you have. If you have sufficient capital to purchase the product, a reseller may be the right choice. Meanwhile, if your initial capital tends to be low, opening a dropship business is more recommended.
- Choose a market niche – Identify a market niche that interests you. Find products or categories that are in high demand with less competition. That way, you can optimize business opportunities and attract more targeted customers.
- Plan a marketing strategy – Make an effective marketing plan to promote your product. Identify your target market and determine appropriate marketing strategies, such as using social media, creating interesting content, or participating in exhibitions related to your industry.
- Create an online shop website – Apart from selling through the marketplace or social media, there’s no harm in selling through a website. By creating an online shop website , you can maximize profits without having to share profits with marketplace platforms or being limited by social media features
Reseller vs Dropship: Which Do You Choose?
In this article, you have learned the differences between resellers and dropshippers, as well as the advantages and disadvantages of each business model.
As a reseller, you have full control over business operations, including selling prices, marketing strategies, and larger profit margins. However, becoming a reseller requires higher initial capital and responsibility for product delivery and stock management.
Meanwhile, as a dropshipper, you can start a business with low initial capital and focus on marketing and sales. You have greater product flexibility and don’t need to take care of inventory. However, you have limited price control and dependence on partners for delivery and product availability.
It is important to consider the advantages, disadvantages, and suitability for your goals and resources when choosing a business model as a dropshipper or reseller. By understanding these differences and factors, you can make the right decision to start a business.
