ncl7_2000 wrote:I just joined Salehoo recently and I'm disappointed with how "wholesalers" have retail websites that compete with those they are selling to. I had an online business before. I bought all my inventory wholesale. Some of my suppliers, I later found out, were also selling retail. I was really upset after paying the minimum order prices in merchandise. Merchandise, by the way that I could not get rid of and it's still sitting in a spare room in my house. AND I still owe money for that inventory. I can't even get rid of it on Ebay.
That is why I decided to try drop shipping this time. I was lured by the flood of emails and ads about drop shipping and what a great business model it is yada, yada, yada.
Now I read these posts and the story is different. I know the differences between wholesale and drop shipping. I know, for the manufacturer it may be a hassle to package one item vs selling a dozen. But I really expected to find some manufacturers here that really do dropshipping and don't undercut their customers with their retail website.
Seriously thinking about forgetting this whole venture and trying something else.
Hi Norma and welcome to the forum,
There is no doubt that the online retail market can be a very confusing and very messy space to try and do business in. You've highlighted in your post how some suppliers are happy to take your cash and then turn around and compete against you.
Some will do so, but will sell at their retail price, which then still gives you space to compete, given your wholesale purchase price discount. The really big problem, and it sounds from your post that this is what you have found with your supplier, that they are undercutting you on price. Essentially burning the candle at both ends by selling to customers wholesale for them to retail and then using avenues such as eBay to unload at wholesale price as well, completing shutting down the market space needed to make any margin on the wholesale purchase.
It's unfortunately far more common than anyone would like. There are, thankfully (as per Tony above) who are ethical traders and do not drop any double plays on you. It's one of the first questions you should really ask any supplier, including Drop-Shippers, if they in fact also have a retail arm or sell their products through other avenues and if yes, have them identify those avenues for you.
Even if they say no, some basic research on the products you are interested in selling will usually identify possible problems you may be facing, whether that involves your supplier or other sellers in your chosen market space.
Drop-Shipping certainly has its advantages, but supply price usually isn't one of them. Not when compared with a genuine Wholesale price. Another thing to watch out for if you do think about going back into wholesale is the MOQ trap.
Many people are attracted to the MOQ minimum to save money, but what most aren't aware of is that the supplier has a staggered wholesale price structure, Meaning, their MOQ price is just the base wholesale price and buying in a larger volume can quite often then secure a bigger discount.
Of course, what happens here is you buy at the MOQ price, then a competitor comes in and buys in a larger volume, securing a better price and then you find you have stock you can't see because your price is not competitive, despite your wholesale price.
So if you ever deal in wholesale, never just focus on the MOQ, always ask what the best price is they offer and what sized volume is required to secure that price. Then you will be fully informed and be able to avoid the MOQ trap, should one be waiting for you to fall into.
In regards to clearing your stock that you ahve. I'm not sure what the product is, but are you able to clear at cost and at least get yoru money back or even take a small hit to liquidate. Getting as much back as possible at least gives you some working capital again, where as having stock you can't make money on just sitting around isn't doing you any good at all.
