B2B Dropshipping: What You Need to Know About This Business Model

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The image shows a distributor with trucks being filled
B2B dropshipping is an evolution of the traditional dropshipping model , adapted for the business-to-business market. It allows companies to sell products without the need to maintain a physical inventory , using third-party suppliers who ship the products directly to end customers. This article provides a comprehensive overview of B2B dropshipping, including how it works, advantages, challenges, and strategies for success.

Summary
Understanding B2B Dropshipping
Traditional B2B/B2C model
Direct sales, resale or B2B2C
B2B Dropshipping
What do I need to get started with B2B dropshipping?
Advantages of B2B dropshipping
Challenges of B2B dropshipping
How to be successful selling through B2B dropshipping
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Conclusion
Understanding B2B Dropshipping
B2B dropshipping focuses on the resale of products. This model is greece whatsapp database beneficial for manufacturers, industries or distributors that offer highly customized products or products that are difficult to transport and store. In this way, companies that will sell to the end customer can expand their product portfolio without increasing the operational costs associated with storage and inventory management .

To understand how B2B dropshipping works and what the revolution is, the first step is to understand how sales are traditionally made in B2B.

Traditional B2B/B2C model
Flowchart explaining how the traditional, b2b and b2c sales model works.
The traditional model involves a B2B negotiation, usually brokered by a sales representative, between company 1 and company 2. These companies can be manufacturers, wholesalers or distributors in any segment. The order is placed through this representative, paid by company 2 and invoiced by company 1, from which point company 1 delivers the products to company 2. Therefore, both companies need to store inventory. From then on, company 2 can repeat this process by selling the products to other companies or to a consumer.

Read also: The main differences between a B2B ecommerce and a B2C ecommerce.

Direct sales, resale or B2B2C
Flowchart explaining how direct sales works
The difference between the B2B2C model , also known as direct sales , and the traditional model is that the reseller (Company 2) does not need to invoice, it places the order with Company 1, which will invoice the end customer directly (which could be another company or a consumer). Company 1 passes the order on to Company 2 in the form of a commission or credit for future purchases. In the most popular examples of this model, we see companies that have resellers who are mostly individuals, such as Avon and Tupperware . However, this model is becoming popular among distributors in various segments who sell to retailers.

B2B Dropshipping
Flowchart explaining how b2b dropshipping works
B2B dropshipping is the perfect model for companies that have highly customized products, such as carpet manufacturers , where the end customer can choose the pattern, shape, dimensions, border, etc. In this way, decoration stores (Company 2) can have only one product on display, so Company 2 does not need to store stock of each model , placing the order with Company 1, which will invoice and deliver the order directly to the end customer. The financial transfer from Company 1 to Company 2 can be either in the form of commission or credit.