Yes, there are advantages and disadvantages to both Wholesale and Drop Shipping.
Now there are several advantages, but essentially the big advantage of Drop Shipping is low or no cash flow required as you don't pay for the item until the item is actually ordered. At that point in time you have been paid and can then use that money to pay for the order.
Let's say you have a friend who has a car he wants sold, but doesn't know much about cars and doesn't want the hassle of dealing with inquiries. So you say, well I ll take a shot at selling it for you if you give me X percent of the sale price.
What you are doing is brokering a deal between two parties, the product's owner and the products buyer. That is what Drop Shipping is in a nutshell, you are brokering the deal between the product's owner and the purchaser. You never actually own the product yourself.
There are also several disadvantages acting as a broker (Drop Shipping), and one of the biggest is the profit margin. Of course with Drop Shipping you are only buying a single item at a time, so essentially it's almost like buying from a retailer themselves.
Several advantages and disadvantages to purchasing Wholesale as well, with the biggest advantage being the more you buy, the better your purchase price is per unit.
This then makes you far more competitive in the marketplace as you now have some margin to play with. The biggest disadvantage of Wholesale is what makes Drop Shipping so appealing to many... the cash flow required.
Of course to by in volume you need upfront cash flow.
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