The Reality of Wholesale Pricing
January 14, 2011Individuals flock towards that drop shipping industry in an attempt to crate a business that is predicated on the misconception of wholesale pricing. Most people assume that wholesale pricing is equivalent to having rock-bottom pricing that will give them an unfair advantage in a competitive market.
What Wholesale Really Means
Working with a wholesaler will not automatically enable you and your business to sell all of the best products for the lowest prices around. You will still have competitors in the marketplace who have prices just as low as your company and sometimes even lower.
Even if your wholesale supplier does not offer you the lowest prices in the drop shipping market, you still don’t want to make it a habit to compete on price because customers will always expect you to have the lowest prices.
The reality is that competitive pricing is an everyday occurrence in the retail market and you have to ensure that you are properly educated about the inner workings of the drop shipping industry.
Regardless of your wholesale drop shipper, there are always other stores and websites selling products to the end customer at prices lower than your wholesale price. Most of the time there is a logical explanation for this pricing anomaly and it is critical that you take the time to study and understand these irregularities in order to successfully sell retail products.
One of the main reasons why this happens is because the retailer that is selling items for less than your wholesale price is generally a major retail chain, similar to a Wal-Mart. These large retailers purchase huge quantities of product at price levels that smaller retailers simply can not compete. Besides, Wal-Mart is selling to low income consumers.
If you are selling to the high income consumers, than you should not sell for the lowest price.
The Perception of “Wholesale” Pricing
Wholesale pricing is subjective depending upon the person receiving the wholesale pricing. What one company considers being wholesale pricing, would be considered as retail pricing to another company. Wholesale pricing also varies depending upon the quantity of product that you purchase. The more you purchase the deeper your wholesale discounts. Most Wholesale Drop Shippers offer discounts on a tiered basis. For example, it you purchase 10 items at once you may be on the 1st pricing level, however, as you acquire more product you will move up the pricing levels and receive deeper discounts.
Wholesale pricing will also vary depending upon what type of product you are selling. For instance, electronics tend to sell at a lower profit margin than clothing. In addition to the lower margins, the industry is very competitive as numerous retailers sell the same products and often have nothing more than price to compete upon.
It is because of these submarkets similar to the electronics market than can turn a product with a decent wholesale price with profit margin into a loss leader than regularly gets sold at rock bottom prices in order to entice prospective customers. It is because of this trend that you should make sure that you look for ways to compete for customers by adding value and without lowering your prices.
business Business Model Drop Shipping dropship dropshipping Global Economy internet marketing Niche Market online business
Inspiration
- Challenges of Dropshipping on Amazon: Pitfalls, Alternatives, and Strategies for Success
- Shoppers Trust Amazon.com, Should You Sell At Amazon?
- The Future For Ebay & Online Shops
- An Online Shop Could Be A Better Alternative To Ebay
- 5 Reasons Why It’s Getting Harder To Be Successful On Ebay
- Why It Can Be Hard To Build A Business With Ebay
- Why Some Sellers Are Leaving Ebay
- Alternatives To Ebay That Could Be Better For Your Business
