How Dropshipping Works

Dropshipping refers to the process of selling goods without holding any inventory. Instead, you purchase items from a third-party supplier and have them shipped directly to your customers, who pay you after they receive their orders.

If you are still asking what is dropshipping, it is an excellent way for small businesses to get started with ecommerce because it requires less capital than traditional online retail stores. You can also sell about anything online if you know where to look.

Dropshipping businesses stand out for the following reasons;

Low risk – If you’re worried about starting an online store, you can try dropshipping first, as it doesn’t require any upfront costs except for setting up your online store. If it doesn’t work out, then at least you haven’t spent hundreds or thousands of dollars on a product range that may not sell at all.

Low investment – There are no upfront costs with dropshipping, meaning you can start small and grow your business organically over time without spending thousands of dollars upfront on inventory and storage space.

No storage space required – With dropshipping, you don’t need any storage space or warehouse to store your products, as they will be shipped directly from the supplier to your customer’s homes or offices.

Easier to scale– Dropshipping is easier to scale. The process works in a way that you don’t have to order products yourself but tell your supplier what to ship and when. This makes it possible to hire several employees and manage multiple orders simultaneously.

Less inventory required- Since you don’t need any inventory, the dropshipping business also means less capital expenditure (CAPEX). You can start your store with just a few hundred dollars and get started with no upfront cost. You don’t need to buy products upfront or pay for storage space or rent, as the supplier or retailers cover all these costs.

Faster turnaround time- With dropshipping, there is no need for inventory management or shipping times involved. The products will be shipped directly from the manufacturer or wholesaler to your customer’s address without any delays in between. This means a faster turnaround time compared to traditional e-commerce stores, where selling and shipping are done separately.

Here is what you need to venture into dropshipping business;

  • Set-up an online store
  • Find a manufacturer or supplier
  • Create an online store with Shopify or another platform
  • Add products to your store and connect it to the manufacturer or supplier
  • Customers place orders on your website, which are fulfilled by the manufacturer or supplier directly
  • You don’t have to worry about shipping, inventory management, or customer service

Key Takeaway

Dropshipping is a process of selling products without having to stock them. The company that sells the product does not have to store the inventory, handle shipping or deal with returns. This means you can order products from suppliers and sell them without worrying about having enough inventory. You can also drop ship multiple items to different customers simultaneously, which is a great way to scale your business quickly.