One of the first things that comes to your mind when starting a business is probably how you can compete with others, right? So many businesses and brands to consider, most of them are already bigger than yours. Penetrating the market with a brand-new product is going to be a tough challenge.

If you are planning to start small, instead of taking those competitors head on with a new product, you can always try to do a dropshipping or a reselling of widely known products. That way you don’t have to spend much money as a start, don’t have to take bigger risks by competing with known brands, and maybe can learn a thing or two about how those products perform in the already established market.

Here are a few basic things you should know about dropshipping and reselling.

What is Dropshipping?

You sell products (or services) to a customer, customer make the purchases, you get the money, you purchase the products from the supplier, and then the supplier will send the items to the customer. That’s called “dropshipping”. The business owner doesn’t keep the stock, and get profits from the margin.

Another variant of this activity is that you only need to do online marketing, and when a customer approaches you to make purchases, you direct the customer to the supplier website (or any official platforms) so they can make their purchases there. You as the business owner will then get paid a commission from that transaction. The bigger the transaction value, the bigger your commission would be.

What is Reselling?

You buy products (or services) from the supplier (they usually have a minimum purchase requirement for resellers), you keep & maintain the stock, you do the marketing on your own platforms, and you sell the products directly to the customers. That’s called “reselling”. Suppliers usually provide a much lower price for resellers, so when resellers sell the products even on normal prices, they’d still get profits.

It’s much simpler than dropshipping, but then you’d need to have a budget to fulfil the first minimum purchase requirement. And you usually are not allowed to sell the products below a price limit, regulated by the supplier. You also need a safe place to keep the stock (and also as a pick-up point), can be in a physical store or in a warehouse.

Benefits and Drawbacks of Dropshipping & Reselling

Dropshipping is preferable if you want to spend minimum budget. Basically, all you need to do is online marketing, to shout around about the products and attract customers. Some suppliers will allow you to market and sell their products using your own digital platforms, but some will require you to drive customers to their own digital platforms.

If you are allowed to use your own digital platforms to sell, then you should be careful when managing & incorporating the shipping fees and taxes into the transaction, otherwise it’d be possible for you to ended up with losses from covering those costs. 

If you are using suppliers’ platforms, the transactions are usually calculated automatically by their system; but pay close attention the policies there, the dos and don’ts. You don’t want to accidentally violate the agreement and losing a part of your commission, right?

Reselling is preferable if you already know what products from the suppliers that are actually in high demand, and when they are being actively purchased by returning customers. You can also set your own promotional offers, and marketing gimmicks, to attract customers. 

The drawbacks are that you need to provide space to keep the stocks, maintain logistics and delivery service, and you need to push extra hard to sell all the things you already purchased from the supplier, to avoid dead stocks. 

Resellers also need to comply with policies and regulations set by the supplier. It’s a bit more flexible than the ones dropshipper has, but still need to be obeyed.

Now, you already have the information on what kind of products most people buy during specific times, what kinds of promo offers customers would be attracted to, and any other business & marketing insights of those specific products. Then it’s time to start developing your own products and brand, don’t you think?

Or you can always stick with those 2 methods if it’s actually working better for you (or if you don’t want to leave your main job). It’s all up to you.

Good luck!