Are you starting an online store and trying to decide between dropshipping and wholesaling? Both have pros and cons, so understanding the key differences is essential for picking the best approach for your business.

But first, let us tell you a story...

Amanda dress retailer

Meet Amanda, a passionate entrepreneur with a keen eye for fashion. She had always dreamed of starting her own online business selling elegant, formal dresses. With a solid understanding of her target market and a curated selection of stunning gowns, Amanda was ready to embark on her ecommerce journey. However, she found herself at a crossroads, torn between two popular business models: dropshipping and wholesale.

Amanda spent countless hours researching the pros and cons of each approach, trying to determine which would be the best fit for her new venture. On one hand, dropshipping offered a low-risk, hands-off approach that would allow her to focus on marketing and customer service. She could launch her online store quickly, without the need to invest in inventory upfront. The idea of partnering with reliable dropshipping suppliers who would handle the storage and shipping of her products was tempting.

On the other hand, wholesale buying presented an opportunity for higher profit margins and greater control over product quality. By purchasing dresses in bulk from trusted wholesale suppliers, Amanda could ensure that her customers received the best possible products. She would have the freedom to create a unique brand identity and offer a carefully curated selection of formal wear. However, this approach would require a larger upfront investment and more involvement in inventory management and order fulfillment.

As Amanda weighed her options, she realized that the decision between dropshipping and wholesale would shape the future of her business. She needed to consider factors such as her budget, time constraints, and long-term goals. With so much at stake, Amanda knew she had to make an informed choice that aligned with her vision for success. She needed a guide, and that's where we came in...

This comprehensive e-commerce guide, written by an ecommerce expert with 10+ years of experience, dives deep into dropshipping and wholesale. It provides actionable insights to help you confidently choose the right model and set your business up for long-term success.

Key Differences Between Dropshipping and Wholesaling Business

Key Differences between Wholesale and Dropshipping
Dropshipping Wholesaling
You don't keep products in stock. When a customer orders, you buy the item from a third party supplier who ships it directly to the customer. You purchase products in bulk from a manufacturer or distributor at a lower price and resell them for a profit.
Requires less upfront investment and is easier to start, with the supplier handling storage and fulfillment. Requires more startup capital to buy inventory. You handle storage, packing and shipping yourself.
Offers a wide product selection since you're not limited by inventory, a benefit for wholesale businesses. Allows more control over product quality, branding and customer experience.
Profit margins tend to be lower. Finding reliable suppliers can be challenging, especially in the dropshipping vs wholesale debate where supply chain reliability is crucial. Bulk purchasing means higher profit margins. But unsold stock, storage limits, and fulfillment logistics are risks.

How Dropshipping Works: Process & Logistics

How Dropshipping Works: Process & Logistics
  1. You list the supplier's products on your store at a markup
  2. Customer places an order and pays you the retail price
  3. You forward the order details to the supplier, paying the wholesale price, in contrast to dropshipping, where a dropshipper doesn't need to purchase large quantities.
  4. Supplier packages and ships the order directly to the customer, a critical component of order fulfillment in both dropshipping and wholesale supply chain.

Your role is customer service and marketing. Selecting reliable suppliers is key, since they control product quality and shipping speed which impacts customer satisfaction, a shared concern in dropshipping vs wholesale. Maintain strong supplier relationships and have backups to ensure consistent fulfillment.

Is Dropshipping or Wholesaling Better for Your Online Store?

Dropshipping or Wholesaling Better for Your Online Store

Consider these factors when deciding:

Investment & Risk:

  • Dropshipping requires minimal investment and inventory risk
  • Wholesaling needs significant capital to purchase stock upfront

Control & Branding:

  • Wholesaling allows more control over quality, packaging and customer experience
  • Dropshipping limits your ability to build a unique brand identity

Profit Margins in Online Business:

  • Wholesale margins are higher since you get bulk discounts when you buy wholesale.
  • Dropshipping margins are lower, so you need high sales volume

Supplier Relationships:

  • Dropshipping relies heavily on supplier performance
  • Wholesaling gives you more supplier independence

Inventory Management in E-commerce:

  • Wholesaling requires robust inventory tracking systems for effective order fulfillment, emphasizing the importance of manage inventory techniques.
  • Dropshipping has no inventory to manage, but risks stock-outs if suppliers run out

Ultimately, the right model depends on your niche, budget and business goals. Dropshipping suits smaller upfront investment and wider product selection, offering a stark contrast to the need to purchase large quantities in wholesaling. Wholesaling offers more control and better margins, but needs more capital and logistics.

Whichever you choose, stay agile and adapt to ecommerce trends to stay competitive in 2024 and beyond. Focus on your unique value proposition and customer experience to build a thriving, sustainable online store.

Dropshipping Suppliers vs. Wholesale Suppliers for Your Business: FAQ

Dropshipping Suppliers vs. Wholesale Suppliers

What is the difference between wholesale and dropshipping?

Wholesale involves purchasing products in bulk from a supplier and storing them yourself, while dropshipping involves selling products without holding inventory, as the supplier ships directly to the customer.

What are the key differences between dropshipping and wholesale suppliers?

Aspect Dropshipping Suppliers Wholesale Suppliers
Inventory Management No need to hold inventory Requires purchasing products in bulk and managing storage
Upfront Costs Low startup costs are a hallmark of dropshipping, contrasting with the investment needed to start selling wholesale. Higher upfront costs for bulk purchases when you buy in bulk.
Shipping Processes Supplier handles shipping directly to the customer Retailer responsible for shipping to customers

What are the advantages and disadvantages of dropshipping businesses?


  • Low startup costs
  • No need to hold inventory
  • Flexibility in product selection is more pronounced in dropshipping vs wholesale, where you need to purchase large quantities.


  • Lower profit margins
  • Less control over shipping times
  • Potential issues with product quality or stock availability

How does the dropshipping business model work?

In dropshipping, the retailer lists wholesale products for sale without holding inventory through a third-party. When a customer places an order, the retailer purchases the item from a wholesaler who then ships it directly to the customer, allowing the retailer to earn a profit without handling the product.

What are the disadvantages of wholesale suppliers?

Dropshipping Suppliers vs. Wholesale Suppliers

Wholesale suppliers require you to:

  • Buy products in bulk
  • Invest in storage space
  • Manage shipping processes

This can lead to:

  • Higher upfront costs
  • Excess inventory
  • Need to take on more risk compared to dropshipping

Should I choose wholesale or dropshipping for my ecommerce business?

Dropshipping Suppliers vs. Wholesale Suppliers

The choice between wholesale and dropshipping for your online business depends on factors like:

  • Your budget
  • Desire for control over inventory and shipping
  • Business model

Wholesale may suit those willing to invest upfront and manage logistics, while dropshipping offers a low-risk, low-investment option with less control over product availability.

How can I grow my business with dropshipping services?

To grow your business with dropshipping:

  1. Focus on selecting trending products
  2. Optimize your website for conversions
  3. Provide excellent customer service
  4. Build partnerships with reliable suppliers
  5. Consistently monitor market trends and customer feedback

When it comes to finding reliable suppliers, consider platforms like SMC Fashion offers both dropshipping and wholesale options for a wide range of elegant formal dresses and gowns. With their extensive selection and flexible business models, SMC Fashion can be an excellent partner for entrepreneurs (like Amanda), who are looking to start or grow their online fashion boutique.

By partnering with a supplier like SMC Fashion, you can access high-quality products, reliable order fulfillment, and the option to choose between dropshipping and wholesale depending on your business needs. This flexibility allows you to start with dropshipping to test the market and minimize upfront investment, and then transition to wholesale as your business grows and you require more control over inventory and branding.

What are the disparities between dropshipping and wholesale?

With dropshipping, you operate your business without having inventory. The supplier ships the product directly to the customer when a customer places an order in your dropshipping store. Wholesale buying means that you buy products in bulk at a lower price and take care of the inventory and shipping by yourself.

Which is the better, dropshipping or wholesale?

The correct decision for your business will depend on a set of variables. Dropshipping offers you an opportunity to begin selling with a very small upfront investment, since you don’t need to buy wholesale products or handle inventory. On the other hand, wholesale buying gives better profits and the buyer has the control over the quality of the product, as well as its brand. Reflect on your business goals and resources to decide what is the best approach.

Which business structure shall be the best for dropshipping?

When starting a dropshipping store, having the right business structure is critical. A lot of dropshippers prefer sole proprietorship or limited liability company (LLC) to protect personal assets and to simplify taxes. Seek advice from a legal advisor on determining the best entity depending on your situation.

Is dropshipping really valuable?

The success of dropshipping has increased because this system is a low-risk, low-cost model. Although it provides benefits such as low initial investment and the flexibility to offer many products, the success depends on niche selection, marketing tactics, and finding the right suppliers. Just like any business, dropshipping needs hard work to succeed.

Which dropshipping business is the most profitable?

The highest earning dropshipping niches are determined by the market trends and the consumers’ requirements. The common niches are health and wellness, beauty items, home decor, and pet supplies. Study your audience and assess your competitors to find the best ways of making money. Find items with high demand, low competition, and sufficient profit margins.

Should I do a dropship or wholesale of printed t-shirts?

The option to choose between dropshipping and wholesale for printed t shirts will depend on your business model and market. You can offer different designs by means of dropshipping without inventory, so that it is easier to test products. On the other hand, wholesale buying can give you better prices and branding opportunities if you have a successful design and a big customer base.

What are the criteria for selecting wholesale products when dropshipping?

When choosing wholesale products for your dropshipping, some of the things to consider include the product quality, reliability of the suppliers, shipping times, and profit margins. Conduct extensive research on potential suppliers and ask for samples of their products to see if they are up to your standards. Seek for items that are related to your niche area and have a history of sales.

What are the benefits of dropshipping?

Dropshipping is advantageous in many ways, that is, it requires low start up costs, minimal inventory risk, ability to offer a wide product selection, and flexibility to operate business from anywhere. Dropshipping allows you to concentrate on marketing and customer service as the supplier takes care of inventory and shipping.

What are the hazards of wholesale distribution?

Wholesale distribution needs a large amount of money to be spent to have inventory, storage space, and shipping logistics. It is also more risky, since the demand may change. Besides, managing a large number of products may turn out to be a trouble and robust inventory management systems are needed.

What is better than dropshipping?

Although dropshipping is a well-known business model, depending on your goals and resources, there are other alternatives that you may consider. Wholesale purchasing enables the seller to have better profit margins and better control over the quality of the products. Private laming and manufacturing of your products give you even more control, and also branding possibilities. Do an analysis of the advantages and disadvantages of each model to see which fits the best in your business.