Dropshipping

What is dropshipping?

Dropshipping is a retail fulfillment method where a store does not keep the products it sells in stock. Instead, when a retailer sells a product using the dropshipping model, it purchases the item from a third-party supplier, usually a manufacturer or wholesaler, who then ships the product directly to the end customer.

How does dropshipping work?

A customer places an order in your online store and pays your retail price. You send the order and a wholesale payment to your supplier, who packs the item and ships it straight to the customer. You keep the difference between the two prices.

What are the trade-offs of dropshipping?

Dropshipping lowers your upfront inventory costs and lets you test products quickly. Margins are often thin, though, and you have limited control over stock levels, shipping times, and packaging quality. Long delivery times from overseas suppliers can lead to complaints and returns, so many sellers vet suppliers carefully before they list a product.

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