Drop Shipping and Risks Involved

When you are using a dropshipper as a supplier, it's all about transferring risk. You are eliminating the risk of carrying a large inventory - plus other associated costs like storage. Of course you will need to pay for that transfer of risk. That's why you cannot expect to pay the same cost per inventory item when you order one item at a time as when you order a pallet!

However, keep in mind that if you are a steady and consistant purchaser from a dropship supplier, you should be able to negotiate better prices than somebody who buys one item every six months. You may also be able to negotiate a deal up front. You commit to sell x amount of items within a time span, and then the drop shipper will still store and ship the items out for you.

Your price per item will still not be as low as if you had ordered your own truck full of inventory. However you will not have to ship, store, and unload that truck either! What I am trying to explain is that your margin of profit from the cost per item will not be as large as somebody who stores their own inventory, but you do not need it to be! While a normal supplier may need to markup their items by fifty to one hundred percent, you may be find with a twenty percent markup!

If you take away the need to actually deal with physical products, you should be able to make up in volume the lower percentage of the inventory that you store.