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What is “dropshipping”?

Learn how dropshipping works and whether it’s the right fulfillment method for your online business.

Overview

Dropshipping is a fulfillment model that allows you to sell products online without holding any inventory. When a customer places an order in your store, the product is shipped directly from your supplier to the customer. This makes dropshipping an accessible and low-risk way to start an e-commerce business.

How Dropshipping Works

The dropshipping process involves three main steps:

  1. A customer places an order in your online store.
  2. You forward the order to a third-party supplier or manufacturer.
  3. The supplier ships the product directly to the customer on your behalf.

As the merchant, you are responsible for choosing the products, setting the prices, and providing customer service — but you don’t handle the physical products yourself.

Key Benefits of Dropshipping

  • Low Startup Costs

    You don’t need to invest in large quantities of inventory or pay for warehouse storage. This reduces financial risk.

  • Scalability

    Since you’re not responsible for packing or shipping orders, it’s easier to scale your business.

  • Wide Product Selection

    You can offer a broad range of products without worrying about managing stock levels.

  • Location Independence

    Run your store from anywhere with an internet connection.

Considerations and Challenges

  • Lower Profit Margins

    Because products are purchased individually, you may earn less per sale compared to bulk buying.

  • Inventory Sync Issues

    If your supplier runs out of stock, your product availability may be affected.

  • Limited Branding Control

    Since the supplier handles fulfillment, custom packaging or brand presentation options may be limited.

  • Shipping Complexities

    If you work with multiple suppliers, shipping costs and times may vary significantly.

Is Dropshipping Right for You?

Dropshipping is ideal for entrepreneurs looking to launch a business with minimal investment. It is especially useful for testing new products or markets. However, it’s important to research suppliers carefully, build strong customer service practices, and focus on digital marketing to stay competitive.