What is Reverse Dropshipping and How Does it Work?

Raena Mazahernasab
Written by Raena Mazahernasab
Posted on January 05, 2023
You’re now probably running a dropshipping business or are gathering data and…

You’re now probably running a dropshipping business or are gathering data and information about it to start your business. In both ways, you chose the right article to read! Because sooner or later, you’ll come across the word “reverse dropshipping” in your dropshipping business. So let’s dive into this topic and talk about everything you need to know about reverse dropshipping.

What is the simplest definition of reverse dropshipping?

Reverse dropshipping, also known as "white labeling," is a business model in which a retailer sells products under their own brand name and has the manufacturer ship the products directly to the customer on the retailer's behalf. So as a regular dropshipper, you buy products mostly from Chinese suppliers and sell them to people in other countries. What if you do it vice versa and sell some products to people in China? Well, that’s what is called reverse dropshipping. You buy products from European or American suppliers and sell them to people in the countries that manufacture them massively and sell them to other countries at low prices.

What are the Specifications of a Good and Bad Dropshipping Supplier?

One thing to mention is that China is repeatedly mentioned in this blog because it has the biggest and cheapest wholesale market; however, India, Indonesia, Thailand, and other Asian countries are also targeted in reverse dropshipping.

Why would Chinese people buy products from a reverse dropshipping business?

If you’re wondering why Chinese people would prefer your products over the suppliers in their country, you should know that a huge number of Chinese people tend to buy products from western countries like the US more than before. Plus, you’re not going to sell any product to any Chinese person in reverse dropshipping. Only high-quality and expensive products are sold in reverse dropshipping, and mostly rich Chinese people from the upper class tend to purchase them. Let’s admit that Chinese people can distinguish between products manufactured in their country and those from other countries more than anyone else. So those who have a more luxurious lifestyle often prefer to have everything with high quality and standards in their houses.

Best and Worst Dropshipping Products Ideas to Sell

What is the difference between reverse dropshipping and regular dropshipping?

As mentioned, in reverse dropshipping, the process is reversed, and instead of buying cheap products from Chinese suppliers, you buy products from other countries and sell them to people in China. So instead of buying cheap products, you buy high-quality and expensive ones that are not manufactured in China. Also, you’ll be targeting the people of certain countries. So everything in your dropshipping business needs to be in line with the culture and tastes of local people. While in the regular model, your business is followed by worldwide rules and standards.

What are the pros and cons of reverse dropshipping?

If you’re not sure whether to start dropshipping in a reversed model or not, it pays off to know about the pros and cons of reverse dropshipping. Let’s talk about the advantages it brings to you.

The advantages of reverse dropshipping

  • A large number of customers: In reverse dropshipping, you can target more than one country as many people in eastern countries are willing to spend money on western products. So people from the upper classes in China, Indonesia, the Philippines, etc., can be your target customers.
  • Higher benefit: High-quality products are more expensive to buy. But the profit you make is relatively higher because your target buyers are wealthy people who like to spend their money online.
  • Less competition: The number of people running dropshipping businesses is way more than those who do reverse dropshipping. So you’ll have fewer competitors to overtake and fewer challenges on the way!
  • Low overhead costs: Reverse dropshipping allows merchants to avoid the costs associated with stocking and storing inventory. This includes warehouse space, storage fees, and shipping costs.

  • Flexibility: With reverse dropshipping, merchants can offer a wide range of products without committing to large inventory purchases. This allows them to easily test new products and adjust their product offerings based on customer demand.

  • Fast turnaround time: Because the merchant does not need to physically receive and store inventory, they can process and ship orders much faster. This can lead to happier customers and a more efficient business operation.

  • No need for a physical storefront: Merchants can operate a fully online store with reverse dropshipping, eliminating the need for a physical storefront and the associated costs.

The disadvantages of reverse dropshipping

  • Not knowing the language of your target customers: You might have to write some of the texts translated into Chinese on your online store. Also, if a problem comes up during the process of ordering the products, the customers will come to you. And it could be much of a problem if they can’t speak good English.
  • Not easy to find a supplier: In regular dropshipping, you have great sources to find the best supplier. Because the countries you buy products from usually export their goods to other countries. You just need to check AliExpress to find your supplier. But in reverse dropshipping, you buy things from the countries that tend to import products. So finding the right supplier requires you to reach out to each one directly.
  • Difficulties for finding marketing tools: You may already know what types of marketing tools work well for your country's people. But do you think you can easily find marketing channels in a country like Indonesia you haven’t even traveled to and barely know the language and culture? Of course not! That is one of the biggest challenges of reverse dropshipping.
  • Strict laws and regulations: In reverse dropshipping, the country you buy products from, sell products to, or both are not your homeland. So you need to know everything about trading policies and regulations in those countries. Some countries have strict rules for taxes and trading some products such as medicine or food. So you need to be aware of all the rules and policies of the country you have business with. If your niche product is medicine or food, you’ll have a hard time dealing with countries’ trading regulations. Therefore, reverse dropshipping might not be an option for you.
  • Unstable situation: The target countries in reverse dropshipping are mainly developing and getting modernized; however, you are likely going through a tough time dealing with unstable situations of the country, especially in terms of economy.
  • Dependence on supplier: Reverse dropshipping relies on the supplier to properly fulfill and ship orders. If the supplier experiences delays or errors, it can negatively impact the merchant's business and reputation.
  • Lack of control: Because the merchant does not handle the physical inventory, they have less control over the quality and condition of the products they are selling. This can lead to customer dissatisfaction and returns.
  • Higher product costs: Because the merchant is not purchasing the products directly, they may have to pay higher prices for the products. This can impact their profit margins and make it more difficult to compete with other retailers.
  • Limited customization options: With reverse dropshipping, merchants may have limited options for customizing or branding the products they sell. This can make it harder to differentiate their business from competitors.

Does Dropshipping Work in 2022? [Pros and Cons of Dropshipping]

How to start a reverse dropshipping business?

Made up your mind to start doing reverse dropshipping finally?! Then let’s see how you can do it:

See what your target customers want to buy!

You might know what the most profitable dropshipping products are. But remember that your target customers are from certain countries. So you need to come to a deep understanding of these people’s needs and tastes. Then choose the best niche product for your reverse dropshipping.

Reach out to suppliers in the US or Europe

As mentioned earlier, one of the downsides of reverse dropshipping is that it is rather challenging to find a supplier on the internet and some platforms like AliExpress; however, keep searching till you find one and reach out to it directly. Then make dropshipping cooperation with them.

Choose the best ecommerce platform

When it comes to choosing the best ecommerce platform for your business, there are a few key factors to consider. These include the cost of the platform, the features and tools it offers, and the level of support and resources available. One platform that stands out in all of these categories is Selldone. Selldone is a cloud-based business operating system that provides everything a business owner needs to create and manage an online store, including a marketplace builder. One of the unique features of Selldone is its no-plugin approach, which makes it much easier and faster to set up and manage an online store. In addition to its marketplace builder, Selldone also offers a range of other enterprise-grade tools, including an online point-of-sale system.

Another key benefit of Selldone Business OS is its cost. While many ecommerce platforms charge monthly fees or take a percentage of your sales, Selldone operates on a transactional basis, meaning you only pay a small percentage for each transaction you make. This makes Selldone an especially cost-effective option for small businesses and startups. If you're looking for a reliable, feature-rich, and cost-effective ecommerce platform, Selldone is a great choice. Its all-in-one approach, no-plugin approach, and transactional pricing model make it an ideal solution for businesses of all sizes.

Translate the labels and descriptions

In addition to English, you need to write the labels and descriptions for products in Chinese or any other countries targeted to. Many websites have the option of switching the language. You can use that option for your website and get help from a native speaker to translate the lines.

With all the challenges and barriers to reverse dropshipping, it is one of the best ways to make money online. Most dropshippers haven’t even tried this business model. So why won’t you be among those who started doing reverse dropshipping and are making high profits?

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What is reverse dropshipping?

Reverse dropshipping, also known as "white labeling," is a business model in which a retailer sells products under their own brand name and has the manufacturer ship the products directly to the customer on the retailer's behalf. It is a reversed dropshipping model that switches the supplier and the customer’s positions in the regular model. Meaning that instead of buying cheap products from suppliers in China, you buy high-quality and expensive products from Western countries and sell them to people in China or any other country with a big wholesale market.

Can you get rich off of dropshipping?

Dropshipping is one of the most profitable online businesses. With a good strategy and marketing methods, you’ll be running a successful online store and make thousands of dollars per month.

Can you lose money with dropshipping?

Dropshipping is fast and cheap to start. You can start running an online store with no money. That said, there are always returns or refunds that can lead to losing money for dropshippers.

Is reverse dropshipping legal?

Yes, it is totally legal unless you sell the products against the trading policies and rules in the target countries.

What are the benefits of reverse dropshipping?

Some benefits of reverse dropshipping include:

  • Low upfront costs
  • Flexibility
  • Brand building
  • Efficiency

What are the drawbacks of reverse dropshipping?

Some drawbacks of reverse dropshipping include:

  • Lack of control
  • Lower margins
  • Reputation risk
  • Competition

Is reverse dropshipping right for my business?

Whether reverse dropshipping is right for your business will depend on your specific needs and goals. It can be a good option for businesses with limited capital or those looking to quickly test new products or markets, but it may not be as suitable for businesses that want more control over the production and fulfillment process or that require higher profit margins.

What are the top reverse dropshipping suppliers?

Some popular reverse dropshipping suppliers include:

  • Alibaba
  • Global Sources
  • ChinaBrands
  • DHgate
  • SaleHoo

What are some success stories of businesses that use reverse dropshipping?

Here are a few examples of businesses that have had success with reverse dropshipping:

  • Casey Neistat: This filmmaker and entrepreneur used reverse dropshipping to quickly launch his own line of sunglasses and generate over $1 million in sales in the first month.
  • The Honest Company: This natural and organic personal care products company used reverse dropshipping to test and validate demand for their products before committing to large inventory orders.
  • Kylie Cosmetics: Kylie Jenner's cosmetics line used reverse dropshipping to quickly scale and reach $420 million in sales in just 18 months.

What should I consider when selecting a reverse dropshipping supplier?

When selecting a reverse dropshipping supplier, consider the following factors:

  • Reputation: Choose a supplier with a good reputation in the industry and a track record of delivering high-quality products on time.
  • Pricing: Compare prices from multiple suppliers to ensure that you're getting the best deal.
  • Communication: Look for a supplier that is easy to communicate with and responsive to your needs.
  • Product selection: Consider the range of products the supplier offers and whether it aligns with your target market.
  • Dropshipping policies: Make sure the supplier has clear and fair policies in place for returns, replacements, and other issues that may arise.

Raena Mazahernasab
Written by Raena Mazahernasab
Published at: February 23, 2022 January 05, 2023

More insight about What is Reverse Dropshipping and How Does it Work?

More insight about What is Reverse Dropshipping and How Does it Work?