Dropshipper and Reseller Ultimate Flashcards

Which calculation gives a product's true profit per sale in dropshipping?

Answer: Selling price minus product cost, shipping, fees, and ad cost

Real profit subtracts every variable cost—product, shipping, transaction fees, and advertising—from the sale price.

What is 'breakeven ROAS'?

Answer: The ad-spend return at which profit equals zero

Breakeven ROAS is the return on ad spend where revenue exactly covers all costs, yielding no profit or loss.

A reseller should issue a 1099-K-relevant record because:

Answer: Payment processors report gross sales to the IRS

Payment processors report gross transaction volume on Form 1099-K, so sellers must track income for taxes.

Which supplier red flag most strongly suggests a scam wholesaler?

Answer: Charging large upfront membership fees to access prices

Legitimate wholesalers earn from product sales, not steep fees just to view their catalog.

What does MOQ stand for in supplier negotiations?

Answer: Minimum Order Quantity

MOQ is the smallest quantity a supplier will sell in a single order.

Why does diversifying sales channels (own store, Amazon, eBay) reduce business risk?

Answer: It avoids dependence on a single platform's rules or bans

Spreading sales across channels protects revenue if one platform suspends the account or changes policy.

A customer requests a return for a defective item shipped from overseas. The cost-effective resolution is usually to:

Answer: Offer a refund or replacement without requiring return shipping

Return shipping overseas often costs more than the item, so refund-or-replace preserves goodwill at lower cost.