What is dropshipping and how does it work? · E-Commerce Excellence Hub

What is dropshipping and how does it work?

Dropshipping is a popular way to sell online without stocking and shipping goods. That means no inventory, no warehousing costs, no packaging, no last-minute delivery headaches—essentially, you can outsource everything that happens after a shopper makes a purchase.

Dropshipping represents a special type of freedom in the eCommerce space. But as the saying goes, with great freedom comes great responsibility. To successfully launch a dropshipping business, you need to conduct research, build a fully functioning eCommerce website and support your online store with a solid marketing and customer service strategy.

This comprehensive guide will explore the benefits and complexities of dropshipping and outline everything you need to know before getting started with starting a business.

What is dropshipping?

Dropshipping is a type of retail fulfillment business that outsources production, warehousing and shipping to a third-party supplier. If you dropship some or all of your products, you don’t stock or fulfill those items yourself. Instead, when you receive customer orders, you route them directly to manufacturers or wholesalers for direct shipment to customers. You don’t pay for the items until they are purchased by your customers.

This arrangement can be a win-win for everyone involved. Sellers get to focus on curating and promoting items as opposed to managing inventory and warehouses; suppliers get to focus on making and delivering goods without needing a retail operation; and shoppers gain access to products they can’t necessarily find at their local stores.

Dropshipping can be a quick way to start a business, with minimal upfront costs and low risk.

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