Model 1: Manufacturing – Importing
- High Margins
- Complete control over sales process
- Opportunity to use wholesalers/dropshippers
- Significant upfront investment. Usually this is done after you’ve been in biz for a while and earned some money to do this.
- Cash out before cash in
- There’s no easy way to exit the business if you don’t like the busienss or the market isn’t working out so hot. You’re stuck.
Model 2: Wholesaling / Warehouse
Buy product in bulk and store it.
- Business to business sales volume
- Better pricing on products in bulk
- Low Margins (b2b) You’re normally selling to other businesses.
- Higher upfront investment.
Model 3: Dropshipping
(best and easiest to get started with and best in general)
The manufacturer stores the products and ships them out to the customer for you after you sell it. You don’t have to pay any money out for the products. You get cash in first and then contact the supplier to have them ship it out for you.
- Low upfront investment
- Cash in before cash out
- Low risk high reward – growth opportunity
- Get out of a dropshipping business quite easily. Selling the platform is much easier.
- No control over shipping / fulfillment
- Don’t always know what’s in stock