Wholesale

Definition

Wholesale refers to the business model of selling products in large quantities to retailers or resellers at a lower per-unit price. Wholesalers typically sell goods in bulk rather than directly to end consumers.

Explanation

In dropshipping, wholesalers are often the suppliers that provide products to online retailers. Instead of purchasing and storing inventory, a dropshipper lists wholesale products in their online store and only buys the item from the supplier after a customer places an order.

Although traditional wholesale usually requires bulk purchasing, many dropshipping suppliers adapt the model by allowing retailers to order single units at wholesale pricing, while the supplier handles packaging and shipping directly to the customer.

This model allows dropshippers to:

• Access lower product costs compared to retail pricing
• Offer a wide range of products without holding inventory
• Scale their business without large upfront investment

Example

A supplier sells a desk lamp with a wholesale price of $12.

• The dropshipper lists the product in their online store for $29.99.
• A customer places an order.
• The dropshipper forwards the order to the wholesale supplier and pays $12 + shipping.
• The supplier ships the lamp directly to the customer.

The difference between the retail price and the wholesale cost becomes the dropshipper’s profit margin.