Many individuals might be confused as to what services are provided by a wholesaler and a drop shipper and what the differences are between the two. The majority of persons are familiar with wholesale services; but drop shipping is certainly growing in fame with the boom of internet marketers.

A wholesaler can be termed as a company who sells goods at deeply discounted rates (usually half the retail rate) and without sales tax. You should have a state tax ID and a valid business license so you can take advantage of these services. Manufacturers can market directly to company owners or they could use a middle man. Wholesalers market goods in bulk and it is the vendor's responsibility to stock and sell the inventory.

A drop shipper can be termed as a wholesaler who sells goods one at a time instead of in bulk. Using a drop ship system enables the vendor to list more items, carry less inventory, and invest very small as they do not really have to pay for something until the product is already sold.

Here is how this drop shipping procedure works: the vendor will list all or any of the products that the wholesaler or manufacturer offers on a website or through an in store catalog. When a consumer purchases the item, the vendor will order it from the wholesaler or manufacturer. Then the wholesaler will ship the item directly to the consumer. The vendor never physically has the item.

So which system is best for you? If you are a brick and mortar store it is possibly best to have real physical inventory. If you are an online vendor it is more popular to use the drop ship system.

There are advantages and disadvantages to both systems. Drop ship services may ask a drop ship fee that will minimize your income margin or make you less cutthroat than those using manufacturers. Vendors using a wholesale program will have to stock and deliver their own inventory and invest more cash for goods that are not assured to sell.

To find good drop shippers and wholesalers you can look through wholesale and drop ship sources like directories. You should also confirm the authenticity of the businesses by looking through wholesale news sites as well as forums for more details.

Always keep in mind that whichever method you use, the success of your online industry still depends on how you run your business efficiently.