Dropshipping is a method of order fulfillment where a business does not keep the products it sells in stock. Instead, the seller purchases inventory as needed from a third party—usually a wholesaler or manufacturer—to fulfill orders.
The biggest difference between dropshipping and the standard retail model is that the seller doesn’t own the stock or inventory – they act as the middleman.
What Is Dropshipping ..?
How Does Dropshipping Work?
The dropshipping process is essentially a relationship between a customer-facing store and a supplier.
There are two common approaches to adopting a dropshipping business model. The first is to seek out one or more wholesale suppliers located in anywhere else in the world on your own using a supplier database. Examples of popular online supplier databases include AliExpress, SaleHoo, Ebay and Worldwide Brands.
Dropshipping is often seen as a no-hassle, get-rich-quick scheme. But it’s not. Just like any other e-commerce website, it takes dedication to get your startup running and successful. Done well, dropshipping companies can become reliable and convenient partners to growing e-commerce businesses to expedite order and fulfillment processing.
Procedure ( is dropshipping legal )
Dropshipping is a retail fulfillment method where a store does not keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer.
The basic procedure for dropshipping is as follows:
- Set up an online store: The first step in dropshipping is to set up an online store to showcase the products you want to sell. This can be done through a website, online marketplace, or social media platforms.
- Choose a supplier: Once you have your online store set up, you need to choose a supplier who can provide the products you want to sell. There are many suppliers available, including manufacturers, wholesalers, and distributors.
- Select the products to sell: Once you have chosen a supplier, you need to select the products you want to sell. The supplier will provide you with the product information and images, which you can then use on your website.
- List the products on your website: After you have chosen the products to sell, you need to list them on your website. You can use the product information and images provided by the supplier, but you should also write your own product descriptions to make your website unique.
- Receive orders and payment: When a customer places an order on your website, you will receive the payment for the order. You then forward the order and payment information to the supplier.
- Order fulfillment: The supplier will then ship the product directly to the customer. You do not have to handle the product or manage the shipping process.
- Customer support: As the retailer, you will be responsible for customer support. You should be available to answer any questions the customer may have and handle any issues that may arise.
In summary, the dropshipping procedure involves setting up an online store, choosing a supplier, selecting products to sell, listing the products on your website, receiving orders and payment, forwarding the order to the supplier for fulfillment, and providing customer support.
Benefits Of Dropshipping
Here are some more reasons why dropshipping is such a popular e-commerce business model for businesses big and small.
- Less upfront capital required
Probably the biggest advantage to dropshipping is that it’s possible to launch an e-commerce store without having to invest thousands of dollars in inventory. Traditionally, a brick-and-mortar or e-commerce retailer has to tie up huge amounts of capital purchasing inventory.
With the dropshipping model, you don’t have to purchase a product unless you’ve already made the sale and have been paid by the customer. Without significant upfront inventory investments, it’s possible to start dropshipping and become successful with very little money.
Additionally, because you’re not committed to selling through any inventory purchased upfront, like in other business models, there’s less risk involved in starting a dropshipping store.
- Easy to start
Running an e-commerce business is much easier when you don’t have to deal with physical products. With dropshipping, you don’t have to worry about:
Managing or paying for a warehouse
Packing and shipping your orders
Tracking inventory for accounting reasons
Handling returns and inbound shipments
Continually ordering products and managing stock level you don’t have to worry about it.
- Flexible location
With dropshipping, a successful business can be run from just about anywhere with an internet connection. As long as you can communicate with suppliers and provide timely service and support that meets customer expectations, you can run and manage your business.
- Wide selection of products to sell
Since you don’t have to pre-purchase the items you sell, you can offer an array of trending products to your potential customers. Plus, you can rotate or change your dropshipping products list without having to worry about unsold inventory.
- Easier to test
Dropshipping is a useful fulfillment model for both launching a new store and for business owners looking to test the appetite customers have for additional product categories, e.g., accessories or wholly new product lines. The main benefit of dropshipping is, again, the ability to list and potentially sell products before committing to buying a large amount of inventory.
- Easier to scale
With a traditional retail business, if you receive three times the number of orders, you’ll usually need to do three times as much work. By leveraging dropshipping suppliers, most of the work to process additional orders will be done by the suppliers, allowing you to expand with fewer growing pains and less incremental work.
Scams
Drop shipping has also become a feature of internet-based work at home schemes posted on social networking services. Scam artists will promote drop-shipping as a work-from-home scheme, selling victims a list of businesses that can place drop-shipping orders. These businesses may not be wholesalers but act as intermediaries between retailers and wholesalers without other businesses or individuals having their own products to sell.
These middlemen often charge prices that leave little profit margin for the victim and require a regular fee for using their services. In 2019, a Gimlet Media podcast Answers All investigated the drop-shipping phenomenon and explored how drop shippers micro-target their clients, but found micro-shipping to be a somewhat dubious industry, despite some well-known promises. – Known drop-shipping proponents, few drop shippers actually make any profit.
In 2016, Buzzfeed News published an article exposing unscrupulous drop-shippers in China, detailing how customers receive goods as advertised, or no product at all.
One result of drop-shipping is that customers who receive a drop-shipped package realize they overpaid for the product, return the product to the seller, and then reorder the same item directly from the manufacturer. The cost of processing the return and the loss of the unsalable returned product can result in significant losses for the drop shipper.
Global Dropshipping Market
Start Your Dropshipping Business In 2023
Whether you’re interested in finding a side hustle, starting a new full-time enterprise, or changing the business model behind your existing online store, dropshipping may be the answer you’re looking for.
Yes, dropshipping comes with a number of built-in complexities you’ll need to address. But with careful planning and consideration, you can anticipate and resolve those issues to create a thriving, profitable dropshipping business.
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