Dropshipping is a retail method where the seller doesn't keep the inventory of the products and whenever he gets an order on his store, he just orders it with his wholesaler on behalf of his customer who then ships it directly to the end customer.
So in dropshipping the product never comes in contact with the seller.
Dropshipping is different from standard retail method because in standard retail method a seller needs to keep an inventory of products.
Shopify is used by lot of ecommerce sellers to do dropshipping business in multiple micro niches.
Dropshipping is really nice business model because of multiple factors, but most importantly because you can start a business with very little capital
There is very little capital required upfront to start a dropshipping business as there is no upfront inventory that needs to be bought. This means there is much less risk.
Dropshipping as a business has virtually no barriers to entry. There is very little learning as the complex operations of the ecommerce business such as buying inventory, warehousing products, picking and packing, order processing etc are outsourced to the manufacturer or wholesaler.
Also there are platforms like shopify which can be used to setup an online store in no time.
There is no location constraint when starting a dropshipping business. You can be sitting on a beach in Hawai and do your business.
Although dropshipping is a great business, but there are lot of constraints associated with the business model as well.
One of the issue with starting a dropshipping model is that margins are generally low. As the overheads of starting a business are so low and almost anyone can get started , it is highly competitive. This sequeezes out the margins.
Lot of time suppliers who are sending the actual product end up sending a wrong product or to a wrong address, and since you are face of operations , you will have to manage the wrath of customer.
There can be branding issues with dropshipping model as sometimes the vendor doesn't add your branding on the product and will infact try to cut you out by adding his contact details in the product.
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