Pros & Cons of Working with Single Supplier vs Multiple Suppliers
Whether you are a newbie making your way towards financial freedom or an experienced seller and have solidified your online business, the question of whether you should work with multiple sources or focusing on just one is a question that can linger on for ages before one will act according to his form of the right answer.
To better understand the pros and cons of each side, we decided to partner up with some of the best dropshipping mentors and leaders out there. We are sure that reading this article will help you choose the right path that will suit your needs. P.S, my personal opinion is at the bottom.
Jack Pitman: “First, it is important to understand that you don’t have to PICK whether you work with one supplier, or if you work with multiple. The reality is that either way, you can learn to be more profitable with one supplier, or you can learn to be more profitable with multiple suppliers. Either way, you can earn money.”
Ori Kasuker: “When people ask me this question, I will pick my answer according to the seller’s experience, and the answer would be different for beginners from the one that experienced sellers will get, and that is because there’s a major difference in terms of operating the business with one supplier to several sources”.
Working with One Supplier in Dropshipping
Jack – “One supplier is a higher risk. Say something happens with your ordering account, you can always work around these things, but they can be overwhelming. Imagine having 50 orders a day, and suddenly, your supplier cancels ALL of your orders. Talk about a headache!
One supplier is, however, somewhat smoother. You don’t have to check where the orders are from when you fulfill them. It is faster to find the item. It is easier to set up efficient systems with one specific supplier, because the return process, item posting process, everything is all the same cause you are using one supplier. You learn the quirks. You make systems to speed things up and catch the mistakes.”
Ori – “For drop shippers beginners, I will always recommend choosing a single supplier (while emphasizing on super-fast shipping), given that this method is much simpler – Market research consumes less time, along with listing items and fulfilling orders, and it’s easier to handle returns and customer service – Complicated issues for the novice seller.
There are also downsides to focusing on just one source, nevertheless, a beginner will be better off using this method in order to minimize risks and dealing with the pressing concerns of the business, until he gets the handle of it.”
What are the Advantages of Multiple Sourcing?
Soufiane ARABI – “In my opinion, relying on multiple sources is better than relying on one! Multiple sources will get our stock diversified, and give a choice to the buyers. Besides, the prices could be different from a source to another for the exact same products, so it is necessary to make deep products search, and that’s just some of the many multiple sources advantages.
In the other hand, relying on one source is not a good idea especially because of the fact that we put all our eggs in one packet, again, we have to diversify to make sure everything is stable!”
Jack – “Multiple suppliers are safer in dropshipping business. If one ordering account has trouble, you aren’t faced with EVERY order having a problem, because you order from multiple places.
In a perfect world, we would only see items that are available from multiple sources, because we would always have a backup. Unfortunately, that doesn’t end up happening as often as one might hope.
Using multiple suppliers will also better educate you as a drop shipper. Most of us use Amazon and Walmart, HIGHLY competitive sources. If you can find a source with items for sale that aren’t for sale on Amazon and Walmart, you will naturally have much less competition. So, if you get good at using multiple suppliers, you will most likely experience fewer issues to do competition compared to a drop shipper who exclusively uses one supplier.”
Ori – “Once the merchant knows everything there’s to know about his supplier and works flawlessly with it, it is definitely recommended to expand by creating business relations with other sources for these reasons:
- Lowering item’s prices – There are many sources that are selling the same products, sometimes even using the same shipping methods. Collaborating with several suppliers simultaneously, you can get the best price and profit margin almost every time while attracting more buyers.
- Additional sources as a backup – Other than the best price one can get when expanding his suppliers’ arsenal, the seller will be protected in cases where there are issues and problems with orders that can be fulfilled by more than a single source.
- Reaching many types of consumers – Most merchants seek sources with fast delivery times even when it’s on the expense of the final price, however, there’s are many customers that would prefer paying less rather than getting their merchandise faster. By working with multiple suppliers, even the ones with slower shipping, we can target a wider audience that wouldn’t have ordered at a higher price.
- Business expansion – This is derived from all three reasons so far; working with multiple sources will definitely expand our business operation, reaching more types of buyers, varied niches, prices etc.”
So Which Method is the Right for You? Single or Multiple Sourcing
Jack – “What I do? I use a combination of both. At the moment, I list exclusively from Walmart.
However. When an order is placed, then I will check Amazon for the item, because of the cheaper shipping price. Long story short, all of my items include a (+$6) markup because I only post items that are NOT eligible for free shipping. So, when these items are available on Amazon, they will be $6 cheaper because Amazon shipping is free.
When it comes to scaling the bulk style of posting, I am limited to 200,000 to 300,000 “eligible” items on Walmart. If I want to scale past this point, using multiple suppliers becomes a necessity. Another note about multiple suppliers is that you will need to have multiple pricing structures, what works with one supplier is not necessarily best with another supplier.”
Ori – “To conclude, the goal for every seller should be working with multiple suppliers, but there’s are more important things to pay attention to at the beginning of the road – mainly developing the skill set a good trader needs and the experience with one online source before it’s time to expand. “
Jack Pitman is an expert on Walmart dropshipping and has over 8000 followers on his YouTube channel. Join them on this link.
Soufiane ARABI is a professional drop shipping mentor working with Amazon and eBay for 2 years and running the eCom business mastermind in France. To Soufiane Facebook page.
Ori Kasuker is a gifted eBay seller, working with the drop shipping method for almost a decade and is the CEO and founder of the E-Commerce School in Tel Aviv.
There is, however, another solution. An innovative startup called Spocket aims at combining many great sources to drop ship from under one roof, and offer their customers a wide range of products from a variety of suppliers, all willing to ship on demand, no up-front costs. having all your suppliers consolidated on an easy-to-use app where a discount off the retail price has already been negotiated for you can come in super-handy for many drop shippers.
〈 My personal opinion 〉
As the host of the debate, I can’t take sides and have to be neutral, right? Alas, I am also a seasoned drop shipper and have an opinion on just about anything. So here’s what I think:
I believe in focusing on one supplier, learn its ways and master its product range. Doing so will increase the probability that one can find more ways to lower his costs and build a solid rapport with the source site while offering great value to his customers.
I feel as if mastering with one source can be related to vertical growth, and working with multiple suppliers should be considered as horizontal.
“When your solution is based on making incremental or horizontal progress, it means that you have competition. With competition, your competitors can pressure you on margins, which results in much of your profits being competed or whittled away. On the other hand, vertical progress is about creating something new. Either through patents or first mover advantage, you have the ability to capture value through high margins and achieve capital accumulation to accelerate your market dominance.” Steve Imke on Horizontal vs. Vertical Progress.
So, one supplier vs. multiple suppliers on dropshipping – What is your opinion? Comment below and join the debate!