What Is Drop Shipping?


Retailers and resellers know that one of the most frustrating aspects of running a shop is the shipping process. Especially if you’re running an e-commerce shop and don’t keep your products in stock, you know it can be a headache to order from a third party and get merchandise to the customer in a timely manner. This differs from traditional retail pretty significantly. That’s why dropshipping is such a valuable asset for retailers.

Dropshipping Basics

Dropshipping put simply is when you order your stock as-needed from a different manufacturer and have it delivered to your customers. Typically, it follows three steps. The customer places their order. You then (either automatically or manually) send that order on to the dropshipping supplier. The supplier packages, ships, and delivers the order. It’s helpful since it eliminates the need for you to have physical product storage, an expensive brick and mortar lease, or products collecting dust on shelves.

Many entrepreneurs pursue the drop-shipping model because it is relatively inexpensive and doesn’t require much in the way of overhead costs. There’s also much less risk in running an e-commerce site with drop shipping options. This is due to the fact that if your products aren’t selling, you’re not actively losing money. This doesn’t necessarily mean that drop shipping businesses are easy, per se.

For instance, if anything goes wrong with the product or the shipping process, you’re liable to be held responsible as you’re the face of your business. The industry also faces fairly high levels of competition and slightly lower profit margins compared to traditional retailers and wholesalers. Plus, since you can’t directly control your inventory or the shipping process, there are quite a few variables that you’re unable to account for in your business.

Who Should Invest In Dropshipping?

First-time entrepreneur looking to get your toes wet in the e-commerce sphere? Try dropshipping. Retail vet with a physical store that’s looking to test out new products before introducing one into your inventory? That’s right: Try drop shipping. Ready to start a business but don’t have massive amounts of capital to fund a startup? If you guessed that you should try drop shipping, you’re right on the money.

To get started, you have to find a dropshipping partner. Luckily, there are plenty of qualified drop shipping retailers and providers that are on the lookout for new partnerships. It’s important to note, however, that you need to verify they work with your e-commerce platform of choice. Whether you’re building a Shopify site, a Wix web page, or a Squarespace business, your provider has to be compatible.

On the other hand, you shouldn’t invest in drop shipping if you’re not willing to put the time, patience, and creativity into your business. The last is particularly important. Since you’re going to be going head-to-head with the product suppliers at times, you need to realize that you won’t be able to out-market them from a financial standpoint. 

Finding alternate and crafty means of securing new customers will be paramount to your business’s success. The drop shipping industry is also notorious for thinner profit margins. There are several entrepreneurs who are running incredibly valuable businesses that only see a small percentage of the overall revenue at the end of the day. If you’re interested in chasing thick profit margins, you may want to look elsewhere.

Starting a dropshipping business is excellent for beginners and vets alike but just because it’s easier to set up doesn’t quite mean it’s easier to run. Do your research and find a niche that you think is underrepresented in the market. By differentiating yourself from the competition, you’re setting yourself up with a stronger chance of success.