We briefly went over dropshipping on our page What Shipping Strategy Should I Use?, but I’d like to dig deeper into it here. First off, what is dropshipping? Dropshipping is when an E-Commerce retailer relies on a third-party to handle the shipping and inventory of their E-Commerce store. In other words, the business that owns the E-Commerce store doesn’t handle the shipping and inventory themselves.
How Does Dropshipping Work?
- A customer purchases items from your E-Commerce store. The checkout process is seamless and the purchaser is notified that you have received their order.
- The order is sent to the warehouse for fulfillment.
- The dropshipper ships the products for you with your packaging and branding. The customer never sees the dropshipper’s information.
- An automated email is sent out to inform the customer their purchase is on it’s way.
What’s the catch? Sounds too good to be true right? Well, with all things there is an upside and downside.
The Upside
- Dropshipping frees up your time. – You don’t have to fulfill your own store orders. That means you don’t have to worry about managing inventory, renting warehouse space, and figuring out the best way to pack and ship the order.
- Dropshipping is scalable. – As your store grows you don’t have the added pressure to buy more space for inventory or hire more people for order management.
The Downside
- Dropshipping isn’t free. – Whichever dropshipper you choose will have pricing plans to choose from. You’ll have to find the best dropshipper that fits your price point without sacrificing your profit margins too much.
- Dropshipping is out of your control. – There is always a risk with using a third-party to control a part of your business, and this is no different. If the dropshipper makes a mistake on an order it’s going to fall on you to communicate what went wrong to the dropshipper and work it out together to fix it. There needs to be a lot of trust between you and the dropshipper of your choosing.
I want to use a dropshipper – where do I start? There are many guides out online right now going more in depth on how to find a good dropshipper.
The Top 3 Dropshipping Services:
Conclusion
Owning an E-Commerce store does not necessarily mean you need to warehouse your own products, a third-party can do that for you!
That third party is called a dropshipper, and they receive orders from your store and fulfill them all while keeping track of your inventory for you.
There are pros and cons to using a dropshipper, so do your research to find what would best fit your business.
