What is dropshipping?

What is dropshipping?


Official definition


According to the official definition, dropshipping is a supply chain management method in which the retailer does not keep goods in stock but instead transfers the customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer. As in retail business, the majority of retailers make their profit on the difference between the wholesale and retail price, but some retailers earn an agreed percentage of the sales in commission, paid by the wholesaler to the retailer. In simpler words, dropshipping is a business model which enables a person to sale a product or a range of products for profit, without taking any inventory. (Source: https://bit.ly/1LUdXba)


In other words


Dropshipping is a quite recently invented model, especially for people who are new into the business domain and have troubles with opening a business of their own. The most important part of the dropshipping concept is that it allows one to sell a product online, even without the product being in one’s hands. In order to start a dropshipping business, the most basic tools needed are a computer, an online store and an elementary understanding of how to market and sell online. Thus, with dropshipping, instead of purchasing a large amount of inventory, it is possible to partner with a dropshipping supplier and list their merchandise for sale. Next, once an order is received, it can be forwarded to the supplier for fulfilment. Then, the supplier will ship the product directly from their warehouse to the costumer and charge the retailer only for the price of the shipped item.

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