The Differences Between Dropshippers and Resellers That You Need to Know

Have you ever heard of the terms dropshipper or reseller? If yes, great, if not, the following will discuss the terms so that you understand what they are and what their differences are, the differences between a drop shipper and a reseller.

With the rise of online businesses in today’s highly competitive business environment, the terms dropshipper and reseller have increasingly become an accepted part of the business world’s vernacular. 

In general, as an aside, many people engage in both of these businesses, although many people are still confused about what they are, and their differences. 

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Differences Between Dropshipper and Reseller

A dropshipper is someone who does not need to store any inventory. At all! Rather, when a customer places an order, the seller will directly forward the order and shipping details to the manufacturer, distributor, or supplier. In contrast, a reseller purchases products or services from a manufacturer, distributor, or supplier, and then resells them. 

Also Read: Understanding and Formula for Calculating the Right Selling Price in Business

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1. Inventory Stock

As mentioned above, the difference between a reseller and a dropshipper can be seen in how they operate. 

A reseller is similar to a traditional merchant, which means that they need to purchase products from a supplier or distributor to have an actual inventory of the products they will sell, whereas a dropshipper only offers products to consumers at first without needing to keep and/or maintain inventory or stock.  

In the dropshipping system, once an order is received, it is directly forwarded to the supplier or distributor. The supplier or distributor then ships the product or goods directly to the consumer.

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2. Capital

Next, the difference between reselling and dropshipping is clear in terms of the capital needed to run the business. 

For those wanting to become a reseller, large capital is required because they must firstly purchase and then stock products, whereas a dropshipper only needs to invest in mobile credit or internet data.

 In fact, a dropshipper can open and operate their enterprise without requiring any capital. At all! 

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3. Product Marketing

For those of you who choose to become a reseller, it means that you can directly and immediately offer products to consumers because you already have the stock in hand, available for sale. However, this is not the case for a drop shipper. 

Dropshippers will only promote the products that they want to sell through various social media platforms, websites, chat groups, et. al.

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4. Profit Earned

In terms of profit, resellers have the advantage because they can earn higher profits compared to drop shippers because a reseller typically gets competitive prices when buying in bulk from suppliers. 

On the other hand, the profit a dropshipper earns is usually much smaller or standard, as they cannot control the sales margin.

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5. Risks Involved

Although resellers can earn higher profits, they also face a higher risk of loss when compared to dropshippers. As already explained, because resellers keep actual stock, they are more prone to losses if their products don't sell. 

On the other hand, dropshippers are protected from such losses because they don’t need to bear the risk of holding inventory, as the stock is virtual.

It can be concluded that the advantage of being a reseller lies in the higher profits earned., whereas dropshippers are shielded from losses because their stock is at the very least virtual, or that their inventory is kept at the bare minimum, so, if their products don’t sell, they don’t incur any substantial loss.  

Also Read: Understanding Competitor Analysis and How to Conduct It

Whether you are a reseller or a dropshipper, today it has become easier to share and sell products using Youtap Indonesia’s PHP (Pesan dari HP) feature. This feature helps you to facilitate transactions by simply clicking on the product catalog (e-menu) you share.

To use the PHP feature, simply download Youtap Indonesia’s Online Cashier App, and register your business, today. So, what are you waiting for?

Start your reselling or dropshipping business today with Youtap, the fintech that offers you a variety of solutions with features that make managing your business easier.