Here is how Wholesalers work

1. Let us say XYZ Manufacturer makes a product called Widgets. We.ll say that Widgets has been around for years. It is a very well known brand name product. It will without a doubt give you the shiniest widgets on your block, and everybody wants some.
2. XYZ Manufacturers makes Widgets, but they do not sell it directly to the public. They.re a manufacturing operation. They.re far too busy making widgets to go around building stores all over the place. They need wholesale distributors; companies who will take their product and distribute it to the places that will sell it.
3. For years, XYZ Manufacturers has sold Widgets to a company called SWP Distributors. The founder of SWP Distributors knew back in the old days when Widgets were made by hand, out in the chicken house.
4. Today, SWP Distributors buys Widgets by the truckload. They pay $5.00 a case for it, which is a very good price. It is such a good price, it has It is own name: the Manufacturers’ Wholesale Price.
5. However, SWP Distributors does not sell it to the general public either. They are a distributor. They distribute Widgets.

SWP Distributor Wholesale works with a chain of retail stores called Widgets R Us. This place was founded by a retail business visionary that saw the incredible potential of Widgets a long time ago. Today there are Widgets R Us retail stores on every street corner in every major city in the country. Widgets R Us buys truckloads of Widgets from SWP Distributors for $10.00 a case.

1. So, SWP Distributors makes $5.00 on every case of Widgets they sell to Widgets R Us retail stores. This makes SWP Distributors very happy.
2. Cases and cases of Widgets arrive in the stockrooms of Widgets R Us stores everywhere. The Widgets R Us employees open those cases, and pull 12 cans of Widgets out of each case. With their pricing guns, they stick a price of $4.50 on each and every can.
3. Widgets R Us stores make a total of $44.00 on each case of Widgets. (12 cans x 4.50 per can = 54.00, minus the 10.00 they paid for the case = 44.00).
4. Widgets R Us is even happier than SWP Distributors.
5. However, the happiest people of all are the people who can stroll into Widgets R Us and purchase a can of Widgets for only $4.50. They think this is a great price, and they.re walking around with the shiniest widgets in town.
6. Remember: The manufacturer sells to the distributor wholesale, the distributor wholesaler sells to the retailer, and the retailer sells to the end user (the customer). The manufacturer, the distributor and the retailer all make money because the customer is willing to spend money for the product.
7. Drop Shipping has been around for a long time, too. Probably as long as mail order catalogs; maybe longer. If you want to use a buzzword to impress a corporate type, call it .second party addressing.
8. Above, we talked about the manufacturer-distributor-retailer relationship. When you use drop shipping to sell products on the Internet, (or anywhere else), YOU become the RETAILER in that relationship.
9. It should be noted here, if only to keep the Punctuation Police happy, that if you use the method of drop shipping in your business, YOU are not the drop shipper. The company(s) who supplies the products to your customers for you is the drop shipper. YOU become a .Stockless Retailer.