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Dropshipping vs Wholesale, A Complete Guide

dropshipping vs wholesale

 

Dropshipping business model does look very promising and wholesale looks more risky and complicated but the real scenario may be different from what you thinking. Let's discuss their pros and cons to make it easier for you to decide between dropshipping and wholesale.

 

4 Reasons Why Korean Cosmetic Wholesale is Better Than Dropshipping

 

The Korean cosmetic industry is one of the popular business niches that you can name. If you are seeing potential in creating your own Korean cosmetic business, which method is more effective? Should you start with dropshipping or wholesale? In this article, we will explain in detail which option is a better choice.

First, let us define what dropshipping and wholesale are.

Drop-shipping means that there is no need for you to store products as the supplier directly ships the products to the customers, wherein wholesale is purchasing a large number of products for a lower price.

Both of these have their benefits and disadvantages. But first, we will tell you more about the pros and cons of dropshipping.

 

PROS

 

A Quick Start

Dropshipping is undoubtedly great for starters as you don’t need to invest much in other business costs. Your dropship partner takes care of everything after you have forwarded the order from your customers. You can easily start by just having a laptop and an internet connection!

 

No Inventory

Since you do not have the items on hand, you can save all the headaches in doing an inventory. Dropshipping also allows you to test which product sells more and what does not, thus you can also lessen the risk of having expired products.

 

Easy Scaling

There is no issue with your business growing bigger and selling more. As a business grows, you will encounter various problems in operations. But with dropshipping, you can easily grow and focus more on your business as you do not need to stock up anything. You can leave all operation inconveniences to dropshipping.

 

Low Overhead Cost

You don’t have a big operation to start with and it eliminates the costs of stocking items, packing. shipping, inventory management, and manpower costs.

So now, what are the cons?

 

CONS

 

Finding the right drop shipper

Unfortunately, there aren't many stable and bigger Korean cosmetic drop shipping service providers. Korean cosmetics has thousands of brands and products and the truth is, no company can stock all of these products.

 

Low-Profit Margin

Come to think of it, dropshipping does offer an easy option for starters, but since the items are sold individually, the prices are much higher compared to when you do bulk purchases in wholesale. In addition to that, dropshipping services do also charge some fees for the packing and shipping labor. Therefore, it makes your margin very small. The Korean cosmetic industry is one of the competitive business niches these days and if you choose to increase your profit margin, you will lose the competition with other businesses, and eventually, fail.

 

Shipping Delays

Shipping is one of the indispensable parts of online businesses, and so are shipment delays. Once the order has been forwarded to your dropship partner, you now lose control of the quality and shipment process. Most of the drop shipping companies are handling and assisting a lot of customers every day, hence it results in delays in shipment. As per the research that we conducted, Korean cosmetic dropshipping companies normally ship an item on an average of 5 to 10 days after the order has been placed. This takes too long compared to when you have items on stocks which means you can ship the item on the next day. Some Korean cosmetic drop shipping companies have limited shipping providers and there is no way to change it unless you are considering a different dropship partner.

Another problem is the shipping transit time. If the goods are being shipped by a drop shipper from Korea, except that it will be much slower than if you will choose to ship in-stock items from your warehouse to your customer directly. The normal average delivery time from Korea to the other parts of the world normally takes 4 to 15 days, and this is not a good thing for any online business.

 

Customers data cofidentiality

You are bound to disclose your customer details such as name, shipping address, telephone number, etc. to your drop shipper, which is a risky thing. You do not have control over this information as to how it will be handled by the drop shipper and will not be used to approach customers directly offer the same items at better prices. 

 

 

Why Wholesale Could be a Better Option?

Now, why is wholesale a better option when you are starting your Korean cosmetic business than dropshipping? Here are the four reasons & tips why:

 

1. You can start small

We highly recommend that you start choosing 3 to 5 top-selling brands in the Korean cosmetic market and mainly focus on them. On those chosen brands, pick five best-selling items. People will always be on the lookout for the most popular product and it would be great if you could offer these at a lower price than your competitors.

 

Big margins

Earlier, we talked about how dropshipping rips off your profit markings, yet when you go for wholesale it’s totally different. Since you are purchasing in bulk, you get lower prices. For example, in Q-depot wholesale, you can get around a 30-70% discount on top of the Korean retail price compared to the 10-20% profit margin in dropshipping. That is such a huge deal!

Remember, good margins can be used for other means such as marketing for your business or it can also help you to earn more and strive the best for your business.

 

Shipping is in your control

As a wholesaler, you have all the items on hand and they can be shipped as soon you want. Of course, who does not want to satisfy their customers? If the items are shipped immediately, it will do a favor to your customers and attract more potential ones. You can also offer multiple shipping options to your customers at their convenience.

 

Uncompromised Quality of Contents

No one wants to receive a damaged item. Proper packaging is one of the important factors why most customers become repeat buyers. It shows great importance and value to your customer. Now that you have the products on hand, you can be sure that what you will ship to your customers are all inspected, handled with care, and well packed. You can also provide customers with actual photos of the items when requested and create your own marketing content using the actual product.

 

To sum up, dropshipping and wholesale are both great and each business owner has their preferences and business methods that work best for them. You will encounter a lot of struggles and each scenario is different. Now it is up to you to decide. Overall, we recommend wholesale as a more efficient business model to start with your Korean cosmetic business.

 

Q-depot is gladly here to support you on your next Korean cosmetic business journey and by all means, we will do our best to help you and your business grow. Please let us know if you have any questions and we are more than willing to assist you.

 


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Posted by Kathy Park

Kathy Park, assistant marketing manager at q-depot with 5 years of extensive Marketing experience in K-beauty industry. Graduated from an international school with good English writing, speaking and listening skills. She loves Korean cosmetics and staying young, great Karaoke singer, a big fan of K-pop and good player of Tennis & squash. 

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