With dropshipping, store owners can sell products to their customers without actually stocking the items themselves. Dropshipping isn’t something new. Zappos started dropshipping back in 1999. Amazon and Sears use this business model, too. If big names don’t catch your attention, look at the regular guys making their way and sharing their stories as dropshippers on Reddit. Nowadays, up to 33% of the entire ecommerce industry uses dropshipping as a primary inventory management model.
In the simplest terms, after a dropshipper sells a product, he or she buys it from a supplier and has it shipped directly to the customer. Typically, the process works as follows. An ecommerce merchant posts products on his or her website, from which a customer places an order and pays for the item. Then, the merchant fulfills the order by placing an order for that same product from the supplier who sends it to the customer. When merchants decide to host their ecommerce shops through Shopify, apps make the process simpler and more streamlined by acting as the connective tissue between the supplier marketplace and the front end of the ecommerce shop from where the merchant items are displayed for sale and purchased.
What is drop shipping and how does drop shipping work?
What is a drop shipper and where can I find drop shipping suppliers?
What are the benefits of drop shipping?
What are the disadvantages of drop shipping?
What kind of profit margins can I expect with drop shipping?
Lower Capital Requirement: With drop shipping, you don’t need to invest thousands of dollars in inventory. Instead, you only purchase a product when you have an existing order to fill.
Wider Product Selection: When you don’t have to pre-purchase all the items you sell, you can offer a significantly larger number of products to your customers.
Reduced Risk: Without thousands invested in inventory, the risk involved with starting an online store is dramatically reduced. If things don’t work out, you aren’t stuck with thousands in inventory you have to sell at a loss.
Location Independence: Because you don’t have to worry about fulfillment or running a warehouse, it’s possible to run a drop shipping business from anywhere with a laptop and an internet connection.
Highly Scalable: Because you don’t need to manually fulfill each order, it’s relatively easy to scale a drop shipping business.
Lower Barriers to Entry: Because you don’t need capital or a warehouse more people drop ship which increases competition.
Lower Margins: Because there’s more competition margins for drop shipping businesses are usually lower. This makes it harder to grow early on because you can’t afford to advertise as much to acquire a customer.