Understanding Dropshipping

What is Dropshipping?

Dropshipping is a type of business model which enables a company to operate without maintaining inventory, owning a warehouse to store their products, or even having to ship their products to their customers themselves. How it works is that the retailer partners up with a dropship supplier that manufactures and/or warehouses products, packages the products, and ships them directly to the retailer’s customer, on the retailer’s behalf.

In simpler terms, this is how dropshipping works:

  1. The customer places an order for a product on the retailer’s online store.
  2. The retailer automatically or manually forwards the order and customer details to the dropship supplier.
  3. The dropship supplier packages and ships the order directly to the customer in the retailer’s name.

Pros of Dropshipping

As a business model, dropshipping has several different aspects that prove to be beneficial, such as:

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Cons of Dropshipping

Just like everything in life, there are some disadvantages that come along with the many advantages of dropshipping. Here are a few cons to the dropship business model: