Dropshipping VS Inventory – Which is Better for Your Online Store?



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When you’re setting out to open your own eCommerce store, you can decide to carry your own inventory or to use the dropshipping model. There are pros and cons to each.

A majority of the decision-making process has a lot to do with costs. However, it is important to weigh the pros and cons so that you can make the best decision based on your own needs.

I will go over some of the advantages and disadvantages of the two inventory options as well as some of the software options you can use to get started.

Dropshipping VS Inventory – The Meaning of Each

Dropshipping Definition

We’ll start with defining dropshipping. The dropship model is when you locate one or multiple dropshipping suppliers that are selling the items that you want to sell as well.

You can contact these suppliers and request to become a dropshipper. Once you have established a dropshipping relationship, you’ll be able to place their items into your store using their images, titles, and descriptions.

Pricing is set by you and you do not have to order any of the items until a customer has ordered them from your store. When an order is placed, you buy the item from your supplier and provide your customer’s shipping details.

Your supplier then ships the item directly to your customer for you. Your profit is the difference between what you charged your customer and what the supplier charged you.

the dropship model

Dropshipping Suppliers’ Requirements Vary

One thing to keep in mind is that the requirements of dropshipping suppliers vary. Some dropshipping suppliers may require that you have a resale license. Others may charge a dropshipping fee per order.

I’ve even come across dropshipping suppliers that only offer you a discount rather than wholesale pricing which means your profit margins are not as high. Some suppliers may even have limitations on higher ticket items by not allowing you to dropship them.

Be sure to read through all requirements so that you can decide whether or not to choose them as a supplier in the first place.

How To Locate Dropshipping Suppliers

You can locate suppliers on your own by doing a web search. It is a tedious process and you could end up spending many hours trying to locate the right suppliers.

An easier option is to use a wholesale/dropshipping supplier directory. There are various ones that you can use, some are paid and some are free. The fee-based directories can be expensive but the listings include suppliers that have been vetted.

The free versions may still require you to do most of the leg work in terms of reaching out and determining if they are legitimate resources. You can read an earlier post I wrote about wholesale dropshipping resources here.

An inexpensive wholesale director to check out is SaleHoo. They have over 8,000 wholesale and dropshipping suppliers in their directory that have all been vetted and verified to offer quality products.

Using AliExpress As Your Dropshipping Supplier

An even easier solution besides using a dropshipping directory is to source your products from AliExpress. AliExpress is a huge online retailer that is owned by Alibaba. AliExpress is made up of merchants primarily based in China but they also have suppliers that ship from the U.S.

Unlike some other dropshipping suppliers, AliExpress does not have any registration fees or requirements. There are no limits on the number of products that you can sell. They offer many items at wholesale pricing and with ePacket shipping which is a faster shipping method from China to the U.S.

Other benefits include:

  • 200,000 exporters
  • Some suppliers ship from the U.S.
  • Over 100 million items
  • No entry or participation fees
  • No limits on your profit margins
  • No limits on the amount of products you sell
  • Works with individuals and registered companies
  • Free shipping on most items
  • Ships to over 200 countries worldwide
  • Online shipping tracking
  • Wide range of shipping methods
  • Buyer protection system with full money back guarantee

Inventory Definition

Opening your eCommerce store with your own inventory means that you will have to order your inventory in bulk from various wholesale suppliers.

Similar to locating suppliers for dropshipping, you can do your own search, utilize a wholesale directory, or buy products in bulk from Alibaba or AliExpress.

In many cases, you will need a reseller license before a wholesale supplier will do business with you. You can then order items in bulk at wholesale pricing.

This enables you to mark up the items for whatever price that you want. You can sell them in your own store or on other platforms such as eBay, Amazon, and more.

By carrying your own inventory, it is important that the products you offer are of good quality. You can ensure this by ordering one or two products beforehand and verifying them for yourself.

There isn’t much more to defining the process of carrying your own inventory. That being said, let’s get into the pros and cons below.

The Pros and Cons of Dropshipping

Pros

  • No inventory to buy or store
  • No shipping and handling to deal with
  • You can offer a wider variety of products
  • Low cost and low risk

Cons

  • Possible dropshipping fees
  • You must rely on someone else to ship your products
  • Possible limitations on selling certain items
  • Longer shipping times

The Pros and Cons of Carrying Inventory

Pros

  • You have better control over your inventory
  • You can offer faster shipping
  • You can sell on multiple platforms
  • You can get better pricing by buying in bulk

Cons

  • You spend more money up front
  • Responsible for storing your inventory
  • Possible storage fees
  • Your cash is tied up in products that may or may not sell

eCommerce Software Options for Dropshipping

shopping online

There are a variety of software options to get started with your own dropshipping store. One of the most popular options is to use Shopify and the Oberlo app.

The downside to this option is that you will pay monthly software fees and you will not have full ownership of your store. I explain in detail about this here.

Another popular option is to build your dropshipping store using WordPress and/or WooCommerce. The easiest way to do this is with the AliDropship Plugin.

The AliDropship software works similarly to Shopify and Oberlo but has zero monthly software fees and you get to retain 100% ownership of your store.

You also get free lifelong updates and customer support. Feel free to read my AliDropship review here.

eCommerce Software Options for Inventory

As far as carrying your own inventory, you’ll have a ton more options in terms of shopping cart software. Again, Shopify is a popular option and most other eCommerce solutions will be fee-based and work similarly.

Some shopping cart options include:

  • BigCommerce
  • Volusion
  • 3D Cart
  • Magento

You’ll definitely want to comparison shop and find out what the monthly fees are and what features are included.

In Conclusion

When it comes to deciding between dropshipping vs inventory, you have many things to consider.

Dropshipping is a popular option because you do not have to buy any inventory upfront which saves a ton of money. You can begin selling immediately and offer a wider range of products.

Carrying your own inventory means better control over your product, shipping, and often better pricing.

An ideal dropshipping software to use is AliDropship while an ideal shopping cart software to use for carrying your inventory is Shopify.

Explore the options available for suppliers as well as for software. Reach out to these various companies and services with your questions.

I wish you much success in your eCommerce journey!

Eartha

Hey there! My name is Eartha. I'm an internet marketer. I enjoy helping others discover the benefits of starting their own online businesses.

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