Dropshipping is a business model where a store owner doesn’t 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. As a result, the merchant never sees or handles the product.
The main advantage of dropshipping is that it allows store owners to run a business without having to maintain a physical inventory or manage shipping logistics. Additionally, dropshipping allows store owners to start an e-commerce business with a relatively low investment, as they do not need to purchase stock upfront.
Store owners can either have their own website to sell the products, or use a marketplace like Amazon or Etsy to list the products for sale. They select products from a supplier and list it on their website for a price, where customers can buy it. Once an order is placed, the store owner purchases the product from the supplier and the supplier ships the product directly to the customer.
A dropshipper is responsible for things like marketing, product research, customer service and handling returns and refunds. The supplier only needs to take care of shipping and handling the products.
The main challenge of dropshipping can be to find a reliable supplier and manage the relationship with them. Additionally, as the store owner doesn’t hold the inventory, they can’t guarantee the stock availability and it may leads to long shipping times or out of stock products.
One example of a successful dropshipping business is Wayfair, an online furniture and home goods retailer. The company operates by dropshipping products from manufacturers directly to customers, eliminating the need for physical storefronts and warehouses. This allows Wayfair to offer a wide range of products at competitive prices, and has helped the company grow rapidly to become one of the largest e-commerce retailers in the United States.