What is a dropshipping e-commerce website?

If you've thought about starting your own e-commerce store, you may be wondering how to access an inventory of products or where to store them.
Under the traditional business model, retailers are responsible for the order fulfillment process from start to finish. That often means renting warehouse space for products, managing supply chain and inventory management, and controlling shipping costs.

However, there is an alternative business model for fulfilling customer orders placed through an online store: dropshipping.

Want to get in on the action? Here's everything you need to know about the benefits of dropshipping for online store owners and how to get started today.

What is dropshipping?

Dropshipping is an order fulfillment method in which a company does not keep the products it sells in stock. Instead, the seller purchases stock from a third party - usually a wholesaler or manufacturer - as needed to fulfill orders.

The main difference between dropshipping and the standard retail model is that the selling merchant does not stock or own inventory - he acts as a middleman.

How does the dropshipping model work?

The dropshipping process is essentially a relationship between a customer-facing store and a supplier.

There are two general approaches to adopting a dropshipping business model. The first is to search for one or more wholesale suppliers worldwide yourself using a supplier database. Examples of popular online supplier databases include AliExpress, SaleHoo, Amazon and Worldwide Brands.

If you are not interested in finding suppliers for all the products you want to sell, you can use an app that connects you and your store to thousands of suppliers. There are apps for this that help independent business owners find products to sell.

Such an app allows you to browse through AliExpress, for example, and directly import the products of your interest that is connected to your store, at the click of a button. Once a customer has purchased a product, you can fulfill their order in the DSers app.

Fortunately, such an app automates most of the dropshipping process. As a store owner, all you have to do is check that the information is correct and click the order button. The product is then shipped directly from the AliExpress supplier to the customer, wherever they are in the world.

Advantages of dropshipping

Here are a few other reasons why dropshipping is such a popular e-commerce business model for both large and small businesses.

1. Less initial capital required

Probably the biggest advantage of dropshipping is that it makes it possible to start an e-commerce store without having to invest thousands of dollars in inventory. Traditionally, a brick-and-mortar or e-commerce retailer needs to build up huge amounts of capital purchasing inventory.

With the dropshipping model, you do not have to buy any product unless you have already made the sale and have been paid by the customer. Without significant inventory investment upfront, it is possible to start dropshipping and become successful with very little money.

Moreover, because you are not required to sell pre-purchased inventory, as with other business models, there is less risk involved in starting a dropshipping store.

2. Easy to start

Running an e-commerce business is much easier when you are not dealing with physical products. With dropshipping, you don't have to worry about:

Managing or paying for a warehouse
Packing and shipping your orders
Maintaining inventory for accounting reasons
Handling returns and incoming shipments
Constantly ordering products and managing inventory levels

3. Low overhead costs

Because you don't have to deal with buying inventory or managing fulfillment centers, your overhead costs are quite low. In fact, many successful dropshipping stores are run as home-based businesses, requiring little more than a laptop and a few recurring expenses to operate.

As you grow, these costs will likely increase, but they will still be low compared to those of traditional physical businesses.

4. Flexible location

With dropshipping, a successful business can be run from virtually anywhere with an Internet connection. As long as you can communicate with suppliers and provide timely service and support that meets customer expectations, you can run and manage your business.

5. Wide selection of products to sell

Since you don't have to buy the items you sell in advance, you can offer your potential customers a range of popular products. Moreover, you can rotate or change your list of dropshipping products without worrying about unsold inventory. If suppliers have an item in stock, you can offer it for sale in your online store at no additional cost.

6. Easier to test

Dropshipping is a convenient fulfillment model both for launching a new store and for entrepreneurs who want to test whether customers are hungry for additional product categories, for example, accessories or entirely new product lines. The main advantage of dropshipping is, again, the ability to list and potentially sell products before you commit to buying a large amount of inventory.

7. Easier to scale

If you receive three times as many orders at a traditional retail store, you usually have to do three times as much work. By using dropshipping suppliers, most of the work of processing additional orders is done by the suppliers, allowing you to expand with fewer growing pains and less incremental work.

Revenue growth always involves extra work, especially with regard to customer support, but companies using dropshipping score particularly well compared to traditional e-commerce companies.

Personally, we recommend Shopify or a very comprehensive dropshipping course that teaches all the features to go one step further.