Dropshipping vs Import Export: Which Model Is Right for Your Business?

Many businesses worldwide are increasing their revenue by purchasing goods at low prices from global manufacturing hubs like China and reselling them at higher prices in domestic markets. The result is substantial profit. Two popular methods for achieving this are dropshipping vs import export. Both approaches come with their own advantages, but how do you know which one fits your business needs? In this article, we’ll break down the differences between these two business models and help you decide which one is the best choice for your business.

What is Dropshipping?

Dropshipping is a business model where you sell products through an online store without physically stocking the products. When a customer makes a purchase, you buy the item from a supplier who directly ships it to the customer. Essentially, your role involves:

• Finding a supplier that offers dropshipping.
• Creating an online store to sell the products.
• Selecting products to list from your supplier’s catalog.
• Marking up the products to earn a profit.
• Paying the supplier once a sale is made.
• Having the supplier ship the product directly to your customer.

This model minimizes the need for inventory management and logistics, which is a key reason why many new entrepreneurs opt for dropshipping.

What is Importing?

Importing involves buying goods in bulk at wholesale prices and selling them in your domestic market at a higher retail price. This business model is especially profitable for online retailers selling on platforms like eBay and Amazon. The process looks like this:

• Find a reliable supplier for a product.
• Purchase large quantities of products.
• Have the supplier ship the products to you.
• Resell the products to customers at market prices.

With importing, you have full control over inventory, packaging, and shipping, which can lead to greater customization and branding opportunities.

Key Differences Between Dropshipping vs Import Export

Ease of Operation

When comparing ease of operation, dropshipping takes the lead. It’s much less time-consuming because you don’t have to handle warehousing, packing, or shipping. This means you can focus on marketing and growing your business, and it can even be run from home with minimal startup costs.

In contrast, importing requires more hands-on management. You need to:

• Maintain a warehouse to store inventory.
• Pack and ship products to customers.
• Track stock levels and manage returns.
• Handle inventory control, all of which add ongoing costs and complexities.

Control Over Operations

Dropshipping gives you minimal control over the shipping process. Since you rely on third-party suppliers, if there are delays, stockouts, or even fraud, your customers will hold you accountable. You may not even know when products are out of stock if you’re working with multiple suppliers with fluctuating inventories.

On the other hand, importing allows full control over inventory and shipping, letting you manage the entire process. You have better visibility over delivery timelines and product quality.

Product Quality

As a dropshipper, you won’t physically handle the products you sell, so you can’t inspect them before they’re shipped to customers. This can lead to quality issues, such as defective products or customer dissatisfaction.

Importers, however, can inspect goods before they’re sold, ensuring that only quality products are shipped out to customers.

Delivery Speed

Delivery times with dropshipping can be unpredictable. For example, if you’re sourcing from suppliers in China, it could take 2 to 6 weeks for orders to arrive, which can result in customer complaints and refunds.

With importing, you manage the stock and shipping, allowing you to control delivery times and ensure more predictable shipping speeds, resulting in a better customer experience.

Operating Costs

Dropshipping typically has low operational costs. Since you don’t have to worry about warehousing or shipping, your costs are limited to the price of the goods and marketing expenses. However, suppliers often charge higher prices for dropshipping, which can reduce your profit margins.

Importing involves higher initial costs, such as bulk product purchases, storage fees, and shipping expenses. However, buying products in bulk at wholesale prices allows you to mark up products significantly and increase profit margins.

Profit Margins

A major disadvantage of dropshipping is its narrow profit margins. You’re paying retail or near-retail prices for individual products, leaving little room to mark up prices.

When importing, buying in bulk at wholesale prices allows you to set higher retail prices and earn greater profit margins compared to dropshipping.

Branding

Importers have the advantage of being able to customize products with logos, packaging, and branding. This can help create a unique identity in the market, which is valuable for building brand loyalty.

Dropshipping, on the other hand, often offers limited branding opportunities since you’re sourcing products from third-party suppliers, many of whom also supply to other sellers.

Can You Sell to Dropshippers?

Despite the challenges of dropshipping, there are opportunities for businesses to sell their own stock to dropshippers. This can be a profitable venture, as you:

• Work with a single, regular customer (the dropshipper) instead of multiple individual buyers.
• Maintain higher profit margins than in a traditional dropshipping model.
• Retain control over your inventory and product quality.

Need Help with Shipping and Sourcing?

At Avartek Sourcing, we specialise in both dropshipping and importing, offering expert advice and solutions for businesses navigating international trade. With offices in China and strategic partnerships across Asia Pacific, we have extensive experience in managing shipments, sourcing products, and helping businesses grow.

Contact us today to learn more about how we can help streamline your shipping and sourcing processes, no matter which model you choose.