Dropshipping vs. Reselling

Dropshipping and reselling are two of the most common business models for beginners to start their online entrepreneurship journeys with. Both have similarities, but they are fundamentally two different things.

Before jumping into either, it’s important that you get a full understanding of how these business models work. Moreover, you should ensure that your skills, commitment level, and personality matches whichever one you choose. Comparing both of them directly is the best way to do this.

In this comprehensive guide, we’ll compare dropshipping and reselling for you in some key categories. You’ll also learn more about what’s involved in each business model, allowing you to make a better decision.

What Is Dropshipping?

Dropshipping involves selling items that someone else has made. You’ll create a store to host your products and drive traffic through either organic or paid traffic. When someone makes a sale, the supplier you partner with will then ship the product to your customer.

In many cases, dropshipping is seen as a cost-effective alternative to running an eCommerce brand. While you’re still selling products to others, you do not manage the inventory. In many cases, you also do not pay any fees until you’ve actually sold something.

With dropshipping, you can sell numerous kinds of products. Examples include clothing, posters, and calendars.

The Pros and Cons of Dropshipping

What Is Reselling?

Reselling is when you buy something and then aim to sell it again for a profit on what you’ve bought. It’s more hands-on than dropshipping, which has good and bad elements. While you’re responsible for shipping items, you also have full control over the items and can check for quality.

It’s possible to resell on your own website, but many people use platforms like eBay and Vinted. In essence, it’s like selling your old items on eBay – only that you buy things without the intention of first using them.

The Pros and Cons of Reselling

Dropshipping vs. Reselling: How They Compare

Now that you know more about dropshipping and reselling, let’s look at how the two business models compare in different categories.

Profit Margins

While you will have to create a dropshipping website, this business model often has bigger profit margins. You do not have to store inventory, which has the added benefit of taking off a huge mental load. On top of that, you don’t pay anything – in most cases – until you make a sale.

With reselling, you don’t have to create a website. However, you do need to cover shipping costs (though this is also necessary with dropshipping). The main cost in reselling is buying the items; to make a significant profit, you need to sell these for a decent chunk more than you bought them.

Much of your profit margins for both models will depend on the items you sell and how much they cost. But if we look at a broad spectrum, dropshipping is the winner here.

Winner: Dropshipping

Less of a Hands-On Approach

Dropshipping is the clear winner if you want a business model with less of a hands-on approach. You do not have to touch the items you sell at any point from production to sale, nor are you responsible for shipping them. The only things you need to do are market the products and partner with a reliable dropshipping partner.

On the other hand, you’re basically on your own with reselling. You need to find the items to sell and then list them again, which can be a time-consuming process in and of itself. Moreover, you must ship the items yourself once you’ve sold them.

Because you need to physically handle and ship the products you sell in reselling, you also aren’t location-independent. If your goal is to make a business that can run regardless of where you are, dropshipping is a better choice.

Winner: Dropshipping

Time to Make the First Sale

When starting any new business, getting some momentum as soon as possible is always a good idea. Having this will keep you motivated to continue delivering results and build something special. Though long-term growth is always more important, understanding how long it takes to make the first sale is still worthwhile.

Generally speaking, you can make sales quickly with dropshipping and reselling. One key thing to note, however, is that dropshipping will typically require you to use paid ads in the beginning before you make a sale. Besides spending money on paid ads, you need to be an effective advertising copywriter.

On the other hand, you can organically make sales with reselling in the first week. This will, however, require you to sell products that people want and create a good product description. Moreover, you need to take good pictures of your products. Once you’ve done these, you should find it easier to generate sales.

Given the normal amount of time it takes to sell for the first time, reselling gets the point here.

Winner: Reselling

Long-Term Scalability

Dropshipping and reselling have their own unique advantages and long-term scalability, along with some potential barriers that you need to consider. For example, reselling makes it easier to create a personal brand. As a result, people who like what you sell might come back and purchase from you in the future.

On the other hand, it’s easier to sell bigger volumes with dropshipping. Your only limits are the capabilities of your dropshipping partner, and you don’t need to be based in any particular location to make sales.

Even when you sell more units, you won’t need a warehouse with dropshipping. The same, however, cannot be said for reselling. When weighing all the pros and cons, dropshipping is better for long-term scalability. Having said that, you can build brands from both business models with enough effort.

Winner: Dropshipping

Initial Investment

Dropshipping will require you to build a website. As part of this, you should pick a hosting provider with fast speeds, scalable limits, and high levels of security. For example, Verpex has plans designed specifically for eCommerce; these will also work with dropshipping sites.

With dropshipping, you will also need to pay for ads if you wish to accelerate sales. However, you do not have to pay upfront fees for your dropshipping provider. Instead, you’ll pay when you make a sale in most cases. Both of these balance out the initial costs.

Reselling doesn’t necessarily require a website, but having one can help with credibility. You do, however, need to pay for the items that you buy. Depending on how many things you purchase, this can be quite a sizable amount.

Winner: Tie

Barrier to Entry

Dropshipping and reselling are both easier business models for beginners than eCommerce. Both have their own complexities that you need to think about when you build a business, and they’re about the same in terms of difficulty.

Reselling is something that you’ve probably subconsciously done before. It’s literally the same as listing a second-hand item that you want to sell from around your house. The main learning curves will involve targeting your customers, creating product descriptions, and taking high-quality photos.

Dropshipping is great for beginners because you’re mainly responsible for the marketing. In this sense, it’s quite similar to affiliate marketing. You will also need to know about fundamentals like web design.

Generally speaking, reselling has a lower barrier to entry.

Winner: Reseling

Risk Level

While you do need to pay for the initial setup with dropshipping, the process of selling items is pretty low-risk. You don’t need to use your expenses for inventory management or continue paying a supplier if you don’t make a sale, meaning that you don’t need to worry as much about generating a loss.

Reselling, on the other hand, has huge associated risks. There’s no guarantee that you will sell your products, and in some cases, you might make a loss when doing so. Even if you don’t have a full warehouse, the need to store something that you plan to sell can be mentally taxing.

Winner: Dropshipping

Which Is Better: Dropshipping or Reselling?

Reselling is ideal if you’re looking for a quick business to set up. You can get started in less than a day by listing items you already have. Once you’ve done that, you can also make sales in shorter periods of time.

On the other hand, dropshipping might be a better choice for people looking to build something long-term. It’s definitely ideal if location freedom is your priority, and you should look at dropshipping if you don’t want to store your own inventory.

Summary

Dropshipping and reselling both have unique advantages and disadvantages. Picking the right choice will depend on your preferences and what you’re looking for in a business. You can always try both of them to see which one works best for you and then double down when you find your preferred option.

Frequently Asked Questions