In this post, I will delve into the world of wholesale dropship companies and explore the issue of membership fees. Seasoned merchants do not mind paying membership fees to their drop ship suppliers because they know it goes into providing a good service for them. After all, the quality and reliability of the supplier is so crucial in the retailer`s success as an online seller, the retailer knows that it is worth paying a membership fee.
Why Do Wholesale Dropship Companies Charge Membership Fees?
Most dropship companies charge fees for their services. Although some argue otherwise, membership fees go towards supplying the retailer with the best service possible. These services include inventory data, fast shipping, wide selection of products, and perhaps most importantly, true wholesale prices.
Some drop ship suppliers do not charge any fee. In that case, they build in their profits into the product they sell. With so-called wholesale prices that are not as low as they should be, these dropshippers fail to keep their retailer customers ahead of their competition.
Offering Useful Data to Customers
Some wholesale dropship suppliers make sure that the membership fee goes towards supplying a great service to their customers. Great service comes with great data. There are different types of data that helps the retailer maximize their profits.
Up-to-Date Inventory Data
I believe the most important one is up-to-date inventory data. This data helps the online retailer to avoid overselling. Overselling simply means to sell an out-of-stock product that the retailer listed, even though their supplier has ran out it. It is one of the biggest setbacks a retailer can have. Nothing feels worse than telling a customer that the item they bought is actually out of stock. Overselling often can lead to losing the costumer. Acquiring new customers is more expensive than servicing your existing customers. That`s why overselling is so terrible. Losing repeat business can be quite a setback to a retailer`s business.
Online e-commerce platforms such as eBay and Amazon frown upon overselling. They strongly urge their sellers to avoid it because it hurts their reputation. Besides, if you oversell in one of those marketplaces, it is likely that your seller rating will hurt. For instance, on Amazon, if you have a low seller`s rating, you are not likely to win the Amazon buy box. Winning the buy box put you in a serious advantage over your competitors.
Overall, it is significant that a wholesale dropship company supplies its retailers with up-to-date inventory data, which is updated as often as several times a day.
Different Type of Drop Shipping Fees
Per Order Drop Shipping Fee
Some dropship companies will charge retailers for every order they get through their online store. This fee does not include the shipping fee. This type of fee might be a viable option for online retailers, who does not have much activity. However, if you are a retailer with a lot of traffic, the drop shipping fee for every order you get may add up to a much bigger amount compared to monthly or annual drop shipping fees.
Monthly and Annual Drop Shipping Fee
Some dropshipping companies, on the other hand, will charge retailers a monthly or annual fee in exchange for good service. If you are a retailer with good activity, this type fee can be much more economical in the long run.
As the quality of drop shipping is so vital in your online business, paying the fee is much definitely worth it, unless you have the means to take on inventory risk and stock hundreds and thousands of products yourself.
How Do Dropship Companies Offering Free Membership Make Their Profit?
Dropship companies that offer free membership often make their profits by adding overhead costs to the products they sell. This means high wholesale prices for the retailer. With high wholesale prices, the retailer`s profit margin would be very low. Then, the question arises: Is it really worth it?
Moreover, suppliers offering free membership may fail to provide the retailers with latest date, up-to-date inventory, fast shipping, and good customer service.
Overall, drop shipping is a very important service for an online retailer, who does not want to stock hundreds and thousands of products themselves. It is completely worth it to pay a fee in order to get the best service available!
Examples of Potential Problems with Some Free Drop ship Suppliers
Suppliers that you can find in Aliexpress.com are located in China. This means the transit times for the products are very high! Customers take issue with these transit times and often cancel their orders. Cancelled orders are big headaches for retailers.
Most suppliers on aliexpress.com are hardly reliable and hard to communicate with. There are even suppliers providing fake branded products.
It is so much harder to provide good customer service to your online customers. It is hard to foresee potential problems with customs, lead times, transit times, and the condition of the products. After all, they are being processed and shipped from the other side of the world if you are located in the United States.
Unless Aliexpress e-packet premium shipping is available for a product, there is no order visibility. This means your customers, who purchased your products, do not have any tracking number to be able to locate their packages. Besides, only small products are eligible for premium shipping, which still takes up to 14 days.
Merchants report problems with some other free drop shipping companies. Dx.com is one of them. Customers, who have used dx.com for their drop shipping suppliers complained about long transit time and high wholesale prices (overhead costs). Moreover, as their own website admits, they do not always have up-to-date inventory data. Dx.com warns, “Stock and Availability shown on this site is for your reference only. While we strive to provide the most accurate and timely stock and availability information, availability information may become out of date and may change between the time you added an item to cart and the time your order is received.”
Such problems may always arise when people are dealing with free drop ship suppliers. Free service is not always a good thing. Sometimes you have to pay to for a good service, and make your profit as a result of that good service. When you make considerable profit with your reliable wholesale dropship company, the membership fee you paid for their services will amount to such a small number.
Find Your Dream Wholesale Dropship Company
It is not easy to find the best supplier available for you. Before you make a commitment, make sure to communicate with your suppliers and clear any doubt that you may have. greendropship.com offers over 20,000 natural, organic, gourmet and specialty products at real wholesale prices while also providing fast shipping, inventory data that is updated regularly throughout the day, and latest high resolution images available for the products so you can stay ahead of any packaging changes.
Learn more about the opportunities we have to offer. Contact us through live chat, email or over the phone if you have any questions or concerns.