In today’s e-commerce landscape, entrepreneurs are constantly faced with a big decision: Should I dropship or source my products directly from manufacturers? At first glance, both models seem viable. But when it comes to building a sustainable, long-term business, the differences become crystal clear.

Let’s break it down—and explain why sourcing often gives you the edge in growth, control, and profit.

What Is Drop Shipping?

Drop shipping is a fulfillment model where you sell products without holding inventory. When a customer places an order, it’s forwarded to a third-party supplier (often in China), who ships the product directly to the customer. Typically this means that a customer orders stock from a wholesaler from pre-made products ready to go.

Here are some of the advantages drop shipping offers to entrepreneurs –

Pros to Drop Shipping:

  • Low startup cost – As drop shippers typically purchase from stock, the MOQs (minimum order quantities) are often very low, so it doesn’t take a ton of capital to begin.
  • No need to manage inventory – With drop shipping you can more readily order exactly what you need and get it immediately, so usually the amount of inventory you have to hold isn’t terribly high.
  • Simple to launch – You can sign up with a platform like Shopify or Amazon and they can handle everything from packaging to shipping to customers, and more.

Cons to Drop Shipping:

  • Thin profit margins – Due to the ease of access of drop shipping, your competition will be high, most markets in which people drop ship are overly saturated, so you’ll need to keep lower prices to stay competitive in many situations.

    On top of this, most drop shippers usually deal with a fulfillment service such as Shopify or Amazon. These services take up a huge portion of the profit margin, usually somewhere from 20-40% of the product’s selling price, which is huge considering you still have to pay for the product, and the shipping of the product to the Amazon warehouse.

  • Less control over product quality and shipping – When you drop ship, you typically have very little control over the quality of the product.

    Most of the time you’ll be ordering from an online store and you’ll have little idea of if the manufacturer has good quality standards and practices.

  • Branding is difficult or impossible – Branding with drop shipped goods can be difficult. Drop shipped goods are often mass produced from factories that won’t make much profit on a smaller order that needs to be customized.

    The other option would be to have it ordered, and shipped, and delivered to a third party company that could handle the branding for you. This tends to add a lot more cost to the product and it’s not often worthwhile.

What Is Product Sourcing?

Sourcing means buying products directly from manufacturers, often in bulk, and managing your own inventory (either directly or through fulfillment partners). Global Trade Specialists specializes in this model—connecting U.S. businesses with vetted, reliable factories in China.

Pros:

  • Higher profit margins – With sourcing, we help clients make their custom products. They get to set the price with less market influences than drop shippers as their ideas are unique and there is less competition.

    The quality is often much higher as you have more control over who you are buying from. We source from vetted factories that can provide the value you need to get the most value out of your product, increasing your profits.

  • Full control over branding, packaging, and customization – Making custom products allows for custom branding and packaging much easier. Options such as engraving, embroidering, screen printing and more become much more accessible and cost effective when you source directly.

  • Better quality assurance – Having sourced from verified manufacturers, we make sure they keep best practices for manufacturing including those inline with ISO 9001, or any other needed certification.

    We make sure we source from suppliers that are quick to respond, and flexible on the rare times there are issues to ensure the best experience.

  • Long-term supplier relationships – With drop shipping, it is often the case that the lowest price wins which can make for a lot of turnover in suppliers.

    With sourcing, longer term relationships are much more conducive to success. Having a supplier you can rely on and trust to consistently make your product timely and effectively goes a long way to ensuring a lucrative launch.

Cons

  • Requires more money to start – Companies that manufacture to wholesalers will often continuously produce the same product over and over again, sometimes never stopping.

    With custom sourcing and manufacturing, time is needed to set up tooling and mold costs to start on an order. With this, manufacturers will often only accept larger orders to make it worth their while to work on an order.

    Then there are the mold and tooling costs too. These are usually only needed once on a first time order.

  • Longer time to launch – There is a little more time it takes to get a new product started through sourcing.

    A factory has to be vetted to make sure that it can produce your product. Then there is the time it takes to produce tooling and samples.

Which Model Wins for Long-Term Growth?

While drop shipping might offer a quick and cheap way to test the waters, it rarely scales well. You’re limited in how much you can control the customer experience, pricing power, and product uniqueness.

Sourcing, on the other hand, enables you to:

  • Build a real brand
  • Negotiate better pricing over time
  • Add new custom products

Invest in Quality and Differentiate Yourself

At Global Trade Specialists, we help entrepreneurs and small businesses transition from drop shipping to sourcing—often saving them 20–50% per unit and improving margins dramatically.

Case Study

One of our clients, a small pet accessories brand, started with a drop shipping model. After inconsistent shipping and multiple customer complaints, they approached us for help.

Within 60 days, we were able to:

  1. Help them source a higher-quality product
  2. Designed custom packaging
  3. Reduced their landed cost by over 30%

Now, they have control over their brand and have grown their business consistently year over year.

Ready to Scale Beyond Drop shipping?

If you’re serious about scaling your business, building a strong brand, and increasing your profit margins—sourcing is the way forward. We have over three decades of experience in supplier vetting, product development, quality inspections, and shipping logistics.

We’re your bridge between ideas and reliable Chinese manufacturers. If you are looking to take your business to the next level, contact us now!