Dropshipping
What is the Dropshipping Business Model?
Dropshipping is an eCommerce business model where a store sells products without holding any inventory itself. Instead of stocking items, the store partners with a third-party supplier who manages storage, packaging and delivery.
When a customer places an order through the online store, the business forwards the order details to the supplier. The supplier then picks, packs and ships the product directly to the customer, meaning the store never physically handles the goods.
What are the pros and cons of dropshipping?
Dropshipping is popular among new entrepreneurs because it requires minimal upfront investment. Since there’s no need to purchase bulk stock or rent a warehouse, businesses can get started more quickly and with less financial risk. It also allows a store to offer a wide range of products without managing the complexities of storage or shipping logistics.
However, the model comes with trade-offs. Margins are often lower, as the supplier takes a cut of each sale. And since the store doesn’t control inventory or fulfilment directly, it can be harder to manage stock availability, delivery times or returns.
Customisation options are also limited, as most dropshipping suppliers offer standardised packaging and product options. In the event of supply chain disruptions or shipping delays, the business has little control over resolution — yet is still responsible for customer service.
For many, dropshipping can be a low-risk entry point into eCommerce. But to succeed long term, businesses need to choose reliable suppliers, focus on strong branding and deliver great customer support to build trust and repeat business.
