If you’re thinking about starting an online business, two models usually come up right away: dropshipping and wholesale. Both can work, but they’re very different in terms of startup costs, risks, and long-term potential.
Since I’ve built multiple eCommerce businesses using dropshipping and wholesaling, I’ll break down the pros and cons of each model so you can decide which is the better fit for you.
What Is Dropshipping?
Dropshipping is a retail model where you sell products online without holding inventory. When a customer places an order, you forward it to your supplier, who ships the product directly to the customer.
The trade-off? Margins are slimmer, and you’re reliant on suppliers for fulfillment speed and accuracy.
What Is Wholesale?
Wholesale is the traditional retail model where you buy products in bulk directly from suppliers or manufacturers, store them, and then resell them to customers.
The downside? You’ll need significant upfront capital, warehouse space (or 3PL services), and you risk being stuck with unsold inventory.
Dropshipping vs Wholesale: Key Differences
| Factor | Dropshipping | Wholesale |
|---|---|---|
| Startup Costs | Low ($500–$2,000) | High ($10,000+) |
| Inventory Risk | None - pay after you sell | High - stuck with unsold stock |
| Profit Margins | Lower (10–30%) | Higher (30–60%+) |
| Scalability | Easy with automation | Limited by storage, logistics |
| Cash Flow | Positive (customers pay first) | Negative upfront (you pay first) |
| Best For | Beginners and lean startups | Experienced sellers with capital |
Which Model Should You Choose?
Choose Dropshipping If:
Choose Wholesale If:
My Recommendation
If you’re just starting out, dropshipping is the better option. You can validate niches, build relationships with suppliers, and generate revenue without risking tens of thousands of dollars upfront.
Once your store is profitable and you’ve identified your best-selling products, you can always transition into wholesale for higher margins. In fact, that’s exactly what many advanced dropshippers do; they start lean with dropshipping, then invest in wholesale once they know what works.
Final Thoughts
When it comes to dropshipping vs wholesale business models, it’s not about which one is “best.” It’s about which one is right for you right now.
If you’re new and want a proven way to start selling online with minimal risk, start with dropshipping. If you’ve already got capital and experience, wholesale could give you bigger margins and control.
Either way, both models can lead to a profitable online business, the key is choosing the path that matches your resources and goals.
And if you want to learn the exact steps to start a profitable dropshipping business, join my free training where I walk you through how to build a semi-automated store from scratch.
Hey Everyone,
As many of you already know, I created Drop Ship Lifestyle after selling a network of eCommerce stores and then trying to find a community of other store owners to network with… What I found was a bunch of scammers who promised newbies they would get rich quickly by following their push-button systems!
This led me to create a new community along with an online training program that shares how to build a REAL online business.
I’d love to hear what you think… It’s a 2.5-hour training designed to help you drop ship profitably… all for free.
Be sure to click here to check it out and send me your feedback!
If you go through the “How To Start & Grow A Hyper-Profitable Online Store” webinar and still have questions, just contact me, and I will help you out.