Dropshipping price confusion

Full Member
irenes
Posts: 2
Joined: 29 Oct 16
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29 Oct 16 06:50:50 pm
HI, I am new here and learning about dropshiping. however the 1st thing I have seen, from the 1st dropshiper I have browsed (Ifuncity), is flipping me out.
So he has these sports watches priced more than double than on amazon.. I thought dropshippers would be having lower prices.. so I am very confused.: please see the links below:
Your dropshiper:

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amazon exact watch listings:
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and the same with the Iphone cases... it makes no sense...

Can you help with my confusion? :/
thanks!
I.

Site Admin
fudjj
Posts: 5913
Joined: 27 Jul 07
Karma: 
29 Oct 16 08:29:13 pm
Hi Susana and welcome to the forum,

You're confusion is something we see from many new members, so you're certainly not alone. I think this link will give you a much better understanding of how the market actually works and will explain what might be happening in this circumstance.

general/why-are-ebay-prices-so-cheap-t17763.html

One really important factor to always consider with a Dropshipping supply model is that while Dropshipping offers some great advantages, profit margin is rarely ever one of them. The only way to have a good Dropshipping margin is usually buying direct from an actual manufacturer of a product because then you only have two people in the chain.

Most Dropshipping companies are NOT manufacturers, they are essentially a third party that buys in the stock from manufactures in bulk and then Dropships for their customers, so now you have 3 people in the chain and that of course means much less money to go around. From there it only gets worse, because you can have situations where another party will then buy in smaller volume from the actual Dropshgipper and then on-sell to their customers, meaning that you are now 4th in the chain and all the potential margin as evaporated along the way before you even get a chance.

So Dropsihipping can be a very intertwined network of parties and is why researching suppliers is of the utmost importance to ensure you are as far up in the food chain as you can possibly be. That said, as the post points out in the link above, Dropshipping will only ever give you a chance of competing against other Dropshippers, it will rarely, if ever, give you a chance of competing effectively against a seller using a Wholesale supply model.

Cheers


Mark (fudjj)

Community Manager
SaleHoo.com

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Full Member
irenes
Posts: 2
Joined: 29 Oct 16
Karma: 
29 Oct 16 09:47:54 pm
Hi Marc,
this is not answering my question: i do understand very well how dropshiping works and its differences with wholeselling, but dropshipers are supposed to be selling products a lesser prices than retailers, as they are one of the middle mans, but not the end retailers, and that is the reason why people like me now subscribed to SaleHOO or other sites.
So far every single product I have seen on SaleHoo is not only not cheaper than on Amazon but more expenssive as even some double than those on amazon, so whats the point in subscribing to SaleHoo? in fact some products even have misleading information stating one is saving 1 dollar from the retail price, when in fact they are cheaper on amazon.
it sounds like I am not missing a point here but that this membership other than for wholesaling is not worth it when attempting dropshiping. I understand well the profits margins my not be as high as when wholeselling as it is logical but same prices or higher prices on Salehoo drophshippers than on Amazon? this is not making sense.

If you can explain why products are more expenssive here than on Amazon Id love to know. if not Im thinking of asking for a refund, only 2 hours after registering.
Thanks,
S.

quote="fudjj"]Hi Susana and welcome to the forum,

You're confusion is something we see from many new members, so you're certainly not alone. I think this link will give you a much better understanding of how the market actually works and will explain what might be happening in this circumstance.

general/why-are-ebay-prices-so-cheap-t17763.html

One really important factor to always consider with a Dropshipping supply model is that while Dropshipping offers some great advantages, profit margin is rarely ever one of them. The only way to have a good Dropshipping margin is usually buying direct from an actual manufacturer of a product because then you only have two people in the chain.

Most Dropshipping companies are NOT manufacturers, they are essentially a third party that buys in the stock from manufactures in bulk and then Dropships for their customers, so now you have 3 people in the chain and that of course means much less money to go around. From there it only gets worse, because you can have situations where another party will then buy in smaller volume from the actual Dropshgipper and then on-sell to their customers, meaning that you are now 4th in the chain and all the potential margin as evaporated along the way before you even get a chance.

So Dropsihipping can be a very intertwined network of parties and is why researching suppliers is of the utmost importance to ensure you are as far up in the food chain as you can possibly be. That said, as the post points out in the link above, Dropshipping will only ever give you a chance of competing against other Dropshippers, it will rarely, if ever, give you a chance of competing effectively against a seller using a Wholesale supply model.

Cheers[/quote]

Site Admin
fudjj
Posts: 5913
Joined: 27 Jul 07
Karma: 
29 Oct 16 10:37:21 pm
Sorry Susana,

I notice that the link I attempted to post didn't actually work and therefore you may not have had a chance to read the explantion. Let me try to repost that link for you now as I am sure it will go directly to clarifying your question.

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Mark (fudjj)

Community Manager
SaleHoo.com

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Site Admin
fudjj
Posts: 5913
Joined: 27 Jul 07
Karma: 
29 Oct 16 10:42:39 pm
OK, that link seems to have worked this time.

The problem is that you don't really know what you are measuring against. For example, you say that a seller is selling cheaper on Amazon than you can get from a Dropshipper, but hopw do you know where that seller is buying their products from and how much margin they have on them?

That's the problem in trying to compare.

Now of course I have no way of knowing, myself, but you may be looking at a scenaro where you have a seller buying a very large wholesale volume which of course will give them a much better price than any Dropshipper can offer to start with. Then they may also be selling at a very tight margin to try and dominate the market and quash the competition on top of that as well.
]
Now on top of that again, throw in the possibility of some marketing teqniques such as loss leading being at play and that seller may even be selling at cost or lower in an effort to either drive traffic or to again, try to dry up the market for other competitors.

So if that is the case, and again I have no way of knowing, but if it is so then a Dropship supplier is never going to be able to provide a price that will allow you to compete against that seller. That's the problem when trying to compare prices like this, without knowing what the seller is paying, what the marketing technique they are using and what margin they are making, there is just no way of getting an accurate comparison.

I hope I am making sense?


Mark (fudjj)

Community Manager
SaleHoo.com

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