Definition

Dropshipping is a retail fulfillment method where an online store doesn’t keep its products in stock. Instead, when a customer places an order, the store forwards the order and customer information to a third-party supplier. This supplier then packages and ships the product directly to the customer under the retailer’s brand.

Here’s how it works:

• A customer places an order on the dropshipping store (e.g., your website selling yoga equipment).
• You, the store owner, forward the order and customer details to a third-party dropshipping supplier (e.g., a wholesaler with yoga mats).
• The supplier then fulfills the order by packaging and shipping the product directly to the customer.
• This eliminates the need for you to manage inventory, warehousing, or shipping logistics.

Examples in B2B and B2C eCommerce:

B2C (Business-to-Consumer):
An online store selling phone cases might dropship from a manufacturer, offering a wider variety without upfront inventory costs.

B2B (Business-to-Business):
A company supplying office furniture might dropship specialized ergonomic chairs, catering to niche customer needs without large stock purchases.

Types

Types of Dropshipping:

Standard Dropshipping:
The most common type, where the supplier handles everything from storage to shipping.

Inventory-Based Dropshipping:
A hybrid model where you stock some popular items while dropshipping others for a wider selection.

Wholesale Dropshipping:
You purchase products in bulk from a supplier at a discounted rate, then store and ship them yourself (higher upfront cost, potentially higher profit margins).

Benefits

Benefits of Dropshipping:

Low Startup Costs:
No need for initial inventory purchases, making it easier to launch an online store.

Scalability:
Easily add new products without worrying about storage space or overhead.

Flexibility:
Test different product lines without a major financial commitment.