If you are working in retail or have an online business, you probably heard of dropshipping. For the past few years, this has been a buzzword in the world of online business and retail (just take a look at Ecom Empires for refference), much like AI in programing or Khabib Nurmagomedov in MMA. But what is dropshipping (or drop shipping, however you want to write it)?
What is Dropshipping?
Dropshipping is a retail fulfillment method in which the seller doesn’t stock product it sells in a warehouse of its own. Rather, you buy the item you have an order from the customer from a 3rd party, usually a wholesaler. This wholesaler then ships the product directly to the customer.
You’ll probably agree that this is much faster than if the wholesaler sends the item to you and you to the buyer. In fact, as the seller, you never have any contact with the product itself.
Today, dropshipping is a highly profitable business (as you can learn from numerous success stories on the Internet, but it really became popular about 12 years ago when AliExpress gained a foothold in America. Before 2006, most people never even heard of this term, let alone considered that it might earn them a ton of money. Once people began to understand the benefits that this business model brings, such as low entry cost, it took on like wildfire to such an extend that huge ecommerce businesses such as Zappos are now basically dropshipping businesses or at least base their business around it.
What’s the Difference Between Dropshipping and Standard Retail?
The main distinction between a dropshipper and a standard retailer is that the first doesn’t own the product he sells, while the retailer does. That means the dropshipper doesn’t keep items in a warehouse or otherwise stock his inventory.
Instead, the dropshipper buys the product when he needs them from a wholesaler or directly from the manufacturer and fulfills orders that way.
Is Dropshipping for You?
You likely heard many successful dropshipping stories and thought “okay, if they did it, I can do it to”. But to every success story, there is at least one flop. You see, dropshipping is not easy, not quick and not for everyone. Think carefully before you jump the bandwagon.
If you are looking for a low-risk, low-investment way to earn money online, dropshipping could be the right choice for you. It’s also a pretty good starting business for novices or someone who already has a store, but wants to try selling a new item they typically don’t keep in stock. That way, the risk is significantly lower if it turns out the customers aren’t interested in that particular item.
On the other hand, if you are thinking about starting dropshipping because you are looking for a quick buck, then this business model is probably not for you. Another thing that might pull you away from it is the fact that you’ll have much less say regarding customer satisfaction since they’ll be in as much contact with the wholesaler (who’ll send them the item) as they’ll be with you.
Okay, I hope this article helped you understand dropshipping a bit better and whether it is something you want to pursue. If you have any questions, please let me know in the comments below. Also, if you haven’t already, sign your email to try Purchase Order Plus software for free. POP will help you handle purchase orders much easier on your mobile devices.