Dropshipping (or drop in shipping) is a business model in which a company sells a product that it does not currently have for the buyer.
Instead of a traditional way of sending an object from a warehouse, a dropshipper will process a subscription, and then buy a product from a third party that will continue sending to the original customer.
Using a business model for a falling ship allows the original company to sell a wide range of products without investing in the initial startup costs that they should have differently.
While a traditional store should have purchased or manufactured its products before accepting orders from customers, dropshipping companies only ever purchase items from a third party by individual orders.
For example, a regular store can order 100 bracelets in bulk before selling them to 100 individual customers on Amazon. Dropshipper will accept an order for one bracelet, and then buy this bracelet at a cheaper price than someone else and this seller sends it directly to the customer. Dropshipper gets a profit and should never physically touch the bracelets. They simply act as an intermediary.
The number of stores using dropshipping method is growing, thanks to Kevin David (and many other online-entrepreneurs), who made it go mainstream with their online courses. If you want to learn more, check out this shopify ninja masterclass review.
Benefits of dropshipping are as follows:
- Low startup costs: Everything that is really needed to start dropshipping business is an online store. There is no need to spend money on the storage of merchandise in the rental of products or warehouses.
- Small team is needed: Since all orders are made by a third party, there is no need to hire additional personnel to manage inventory and marine products.
- Time effective: After the initial setting of the storage, the less time and effort required to keep the dropshipping business in comparison to traditional trade is significantly less.