Understanding the Basics of Dropshipping: What It Is and How it Works

What is Dropshipping?

Dropshipping is a business model where the retailer doesn't keep the products in stock. Instead, they partner with a manufacturer or supplier who holds the inventory and fulfills orders on behalf of the retailer. When the retailer makes a sale, the supplier ships the product directly to the customer.

How Does Dropshipping Work?

The dropshipping process involves three main players: the retailer, the supplier, and the customer. The retailer sets up an online store and lists the products they want to sell. When a customer places an order, the retailer forwards it to the supplier who then ships the product to the customer. The retailer earns a profit by selling the product at a markup price.

Advantages of Dropshipping

• No need to hold inventory

• Low start-up costs

• Flexible location and work hours

• Wide range of product selection

• Ability to test new products without committing to inventory costs

Challenges of Dropshipping

• Higher product costs due to the supplier taking care of inventory and shipping

• Difficulty in controlling product quality and shipping times

• Competitive market with many dropshippers selling the same products

• Dependency on supplier for smooth operations

• No control over shipping and handling processes

If you're interested in learning more about dropshipping, check out these resources:

• Oberlo

• Shopify

• AliExpress