Should Australian Toy Retailers Use Dropshipping or Wholesale?

As a toy retailer, you’re always taking risks when putting out a new toy. You won’t know precisely how well it will be received until it’s actually on shelves, so you’re understandably reluctant to buy the toy in bulk from a wholesale supplier.

However, you can mitigate the risks. Instead of buying toys in bulk from wholesale suppliers, you can test the waters by dropshipping toys instead. Read on to learn about whether you should use wholesale or dropshipping for your toy retail business.

Dropship and Wholesale Differences

Purchasing something wholesale means buying items in bulk directly from the manufacturer. Buying in bulk gives you a generous discount for the items, allowing you to sell them at your store for a higher price.

With dropshipping, you don’t actually buy or own the stock. Instead, your customers’ orders are passed on to your dropshipping supplier, who then ships the products on your behalf.

Benefits of Dropshipping

Easy to Start and Maintain

Unlike wholesaling, dropshipping doesn’t require much capital for purchasing inventory. You only buy a product then resell it to a customer when they order it. As a result, you can start a toy dropshipping business with little money.

Additionally, your dropship supplier handles much of the work. You don’t have to have to worry about packaging, shipping, tracking inventory, or managing a warehouse. This also means you have low overhead costs, allowing many dropshipping businesses to be home-based.

Less Risk

Because you’re not committing to buying a large amount of inventory, you’re not taking much of a risk by offering any particular toy. This also allows you to do real-time market research.

If you’re thinking of buying a branded toy wholesale but have reservations, you can test the waters by dropshipping a similar toy first. This gives you valuable data on the projected popularity and sales of the branded toy.

Easier to Scale

Because you’re sourcing your products from a dropshipping supplier, it is much easier to scale. You can do a dropshipping business from anywhere, sell anything your dropshipping supplier is offering, and experience few growing pains when expanding, as the logistics involved in dealing with an increase in orders is handled mostly by the supplier.

Benefits of Wholesaling

Greater Profitability

Compared to dropshipping, purchasing wholesale stock is more profitable. This is because wholesale suppliers provide a substantial discount for bulk orders, and discounts typically grow along with your order. If your business is successful, wholesaling provides greater profit margin growth.

However, this comes with greater upfront and overhead costs. Wholesaling is great for those with a bigger capital but not for those with little to start with.

A Branded Experience

Wholesale puts you in charge of the logistics of ordering toys and delivering them to your customers. While this means you have more responsibilities, you also get to customise the delivery and unboxing experience. You can make favourable impressions on your customers, foster brand loyalty, and increase the chances of repeat purchases.

Selling Established Products and Brands

Wholesale allows you to sell products and brands that people are already familiar with. Coupled with a good delivery experience, you’ll build a good reputation which will attract new consumers when you decide to expand your product range.

Should You Dropship or Wholesale?

Both dropshipping and wholesaling have their merits, and there are several factors to consider when choosing either one. Generally, you will want to dropship if you want to expand your product range, need to test how new products will perform and don’t have many resources.

Dropshipping is also great for those that want to sell to a specific niche. Dropshipping has a low barrier to entry, meaning there’s a lot of competition. Focusing on a niche allows you to stand out from the competition, even if they’re selling the same products.

Meanwhile, wholesaling is a good option if you have a lot of money to invest, are ready to foster a long-term relationship with a supplier, and have the skill and experience to handle the logistics associated with storing, packing, and shipping your stock. This isn’t to imply that dropshipping isn’t hard work, but there’s definitely a lot less to worry about.

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