Drop shipping is incorrectly portrayed as a magic e-business model with very little work and great return. In reality, drop shipping is a business in which you provide a service: you are the transaction middle man between wholesalers and buyers. Now since you neither made the product, nor warehoused it, as a drop shipper your profit margin is typically tight.
There are many reasons why bulk drop shipping in a business to business (B2B) environment is better than retail drop shipping. By retail drop shipping, we mean selling individual wholesale items to an end consumer. Retail drop shippers typically use online stores to sell products shipped directly from the wholesaler to the buyer. Sure there are successful retail drop shippers on eBay and other similar sites. However, bulk drop shipping opens up an entirely new market with many benefits.
The first benefit of a B2B wholesale customer over a retail buyer is repeat business built into the transaction. Remember, as a drop shipper, you really make money on the volume of goods you move from the wholesaler to buyers. A business buyer is buying stock for a retail outlet, and when that stock runs out, where will they want to buy again? Why you of course, if you provided great customer service and an easy ordering interface!
Customer service is also easier to provide to a wholesale business buyer than a retail buyer. Drop shipping can have its hiccups: the product isn’t what a buyer expected or arrived later than normal. A retail customer only purchasing one item is much tougher to 100% please than a business buyer purchasing an entire case lot. In buying only one wholesale item, you only have one shot to make the customer happy. Case lots are a different story. Did one or two items in a case lot not live up to the buyer’s expectations? Give a small credit for the cost of those wholesale items to the business customer and avoid eating the cost of a full return.
B2B is also high volume per transaction drop shipping. As every online retailer knows, there is a real cost associated with each transaction. From payment processing fees to just the time it takes for administrative tasks, each purchase costs the online business something. Which type of transaction do you prefer? One item for $1 plus shipping or one hundred items in a case lot for $100 plus shipping? As a drop shipper you are making only pennies on that item, so the individual transaction is actually a loss.
Although the retail drop shipping business market is fairly well-saturated, the B2B bulk drop shipping model is still growing. There are a lot of resources that allow you to learn more about drp shipping and wholesale news.