Wholesale Electronics: How to Choose Between Reselling, Dropshipping, and Affiliates

Retail Seller / Dropship Vendor / Affiliate - Which Approach Is Going To Work For YOU?

This article covers two main topics about making money from Electronics Wholesale:

Looking at a modern ecommerce wholesaler like Chinavasion, there are three main ways you can profit from the opportunity. These three approaches are the same for any wholesaler with an affiliate program:

1. Retail Seller. You buy stock in large quantity from the wholesaler, and have an online or physical shop where you sell the goods to end customers.

2. Dropship Vendor. You advertise and "sell" products on auction sites like eBay or your own online store, but you do not actually send the goods. You hold no stock. Your dropship wholesale supplier [http://www.chinavasion.com/wholesale-dropship.php] holds the stock, checks the quality, packs the goods, and sends them directly to your customers according to your orders.

3. Affiliate Promoter. You simply promote the wholesaler, encouraging people to buy direct, and collect commissions.

Many entrepreneurs checking out Chinavasion can't easily decide which option is best for their business.

One way of weighing up the advantages of different options is to compare the responsibilities - in terms of time and money you need to give - of the three approaches.

Check out this table to get a better understanding of:

The responsibilities of retailers, dropship vendors, and affiliates

Here are some key notes relating to the table:

1. End customers don't want to worry about hidden costs like import taxes.

   If a retailer buys from a wholesaler overseas, they will have to pay import duties and other taxes when the goods arrive in Customs.

   These costs are added to the end retail price, so eventually the end customer does pay these taxes, but they are basically "taken care of" by the retailer, which is better than unclear dropshipping sitautions where the buyer may be hit with unexpected import tax responsibilities.

2. End customers don't appreciate having to pay return postage costs for broken or unwanted items.

   Many ecommerce retailers will have to pay for their customers to return unwanted or faulty products during the guarantee period. This is a large long term expense, which once again must be considered in setting retail prices.

3. When a dropship vendor orders goods to be sent from the dropship wholesaler directly to the end customer, whose responsibility are the goods when they are in transit? What happens if the delivery gets lost, or Customs impounds the goods, the delivery fails, or the buyer refuses to accept delivery?

   The primary responsibility to the buyer must be met by the dropship vendor. As the public 'face' of the seller dealing with the buyer, the dropship vendor must provide support for the delivery and if the delivery fails, refund or compensate the buyer within agreed terms and conditions. In such difficult cases, the dropship vendor will separately need to be clear with the dropship wholesaler about the liability of the wholesaler towards the vendor.

   In the case of Chinavasion, for example, Chinavasion as the dropship wholesaler will guarantee the goods in transit for unavoidable issues such as lost parcels, but if a delivery fails due to a customer refusing to accept goods, the liability rests solely with the dropship vendor.

   To conclude this point:

   (a) dropship vendors need to make all of their terms and conditions clear with their buyers to cover all possible shipping problems, and

   (b) the dropship vendor needs to get clear terms and conditions from their dropship wholesaler about such eventualities.

   As a final note, Paypal's view on failed deliveries is that if the goods do not arrive with the buyer in time, *for whatever reason within or beyond the control of the seller*, then the *seller is wholly liable*. That means that regardless of the agreement between the dropship wholesaler and the dropship vendor, the dropship vendor will have to refund customers immediately for non delivery cases if the payment was through Paypal.

4. In an international dropship situation, who has responsibility for paying import duties, sales taxes, and other Customs charges when the goods arrive in the destination country?

   It may come as a surprise to the buyer in many cases that they have to pay extra to their courier to receive the goods, or even contact Customs and pay for / negotiate the release of their purchased items.

   In fact, such bad surprises should not occur because it is the responsibility of the dropship vendor to establish clear terms and conditions about import taxes with the buyer before the purchase is completed.

   Because import charges are levied after the goods arrive in the destination country, it is impossible to calculate in advance what the charges will be, and impossible for either the wholesaler or the dropship vendor to pre-pay these costs. If the dropship vendor wishes to protect their buyer against further "hidden" charges, they need to offer to pay back the import taxes and other charges.

   Ebay is in fact alread actively forcing many dropship vendors to reimburse buyer import tax costs in full.

   Advice for dropship vendors? Do comprehensive research on import duties in the countries you're "sending" to including ordering samples for yourself to test the actual import process. And then make your terms and conditions crystal clear for your buyers.

5. If end customers have questions about products they have bought, who do they speak to?

   The person they bought the item from, of course. But many dropship vendors list hundreds of products in their online store or auctions, about which they know little information to support the customers.

   It may be an unexpected time sink for dropship vendors when their customers start asking "how do I do this?" questions about their products and answers must be obtained from the dropship wholesaler first, adding delays to the support process.

   Longer delays can occur because many wholesalers do not expect to provide detailed support either. Since wholesalers mostly sell in volume to retailers, the details of how to install, operate, and maintain complex products such as consumer electronics have to be worked out by the retailers' in-house experts, not by the wholesaler, who is simply sourcing from the factory without too many technical support staff in-house.

   So in an ideal world a dropship vendor should aim to be more like a retailer and become an expert in the product field they are selling in, so they can provide quality advice and support for end customers.

   The dropship vendors who make the effort, and invest the time and money to become this kind of expert, will have a great selling advantage over people who try to sell everything from garden rakes to car radios, thinking of short term profits only.

6. What happens if a German dropship vendor sells an item to a buyer in Brazil, dropshipped from a wholesaler in China,,, and the product gets a fault during the warranty period?

   The buyer will need to ship the item back somewhere before he will get a replacement or refund, unless it's a very generous and trusting vendor! So who will pay for those return shipping costs?

   The dropship vendor often offers to reimburse the original shipping costs first, as a way of fronting the money for the buyer to ship back products to the vendor. However it is also a common option to bypass the dropship vendor and return items straight back to the factory or wholesaler.

   Shipping from Brazil to China, in this example, would probably be a similar cost to shipping back to Germany, so why not. End customers are likely to object if they have to pay the return shipping costs without any guarantee of getting that cost reimbursed, but the wholesaler may have no such policy, leading to a loss by the dropship vendor.

   This is an example of how international dropshipping can get complex and since every dropship program has different policies, this is one key area you should ask about before starting to sell products from a particular supplier.

7. Finally, who refunds the buyer in a dropship return item situation?

   The refund has to match the original transaction, especially in Paypal, so in the case of a returned faulty item to a manufacturer or wholesaler, the vendor would have to make the refund initially, and later deal with the refund to themselves as a separate issue with his supplier.

   If faulty items are being repaired or replaced, the dropship wholesaler would probably send them direct back to the customer, avoiding problems of who pays what to whom, but adding to delays.

   A good option for eBay powersellers is to make a new order from the dropship wholesaler to send a replacement direct to a customer immediately, and add up a few returns over a logner period so as to return them to the supplier in one batch and deal with the returns issue more efficiently. This will also give the dropship vendor a better feeling for the returns percentage and whether they should be satisfied with the quality of the goods being supplied...or not!

This article is courtesy of the Customer Support Dept of Chinavasion Wholesale Ltd. Chinavasion - http://www.chinavasion.com - offers you dropshipping and wholesale supplies of low-priced consumer electronics, sent to you or your customers direct from China. Visit the website now and open an account free, with no obligations.