Dropshipping: what is it and how does it work?

Dropshipping is a sales model according to which the merchant sells a product to an end user, without physically possessing it in his own warehouse.

Once the sale has been made, the seller will send the order to the supplier who, in this case, is called "dropshipper", who will ship the product directly to the end user.

In this way, the seller is exclusively concerned with advertising the products, without the related tasks related to the packaging and shipping processes which are the responsibility of the supplier.

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Advantages for the retailer

The advantages for those who intend to open a dropshipping e-commerce are many: first of all they can create a business, without the need to invest large capital.

Secondly, for starting the business, they do not need neither warehouses nor employees , but they can work wherever they want, even on a beach in Thailand, because the only thing they need is an internet connection and a good computer.

Third, they can sell their goods both on their own site and on e-commerce and online auction sites, such as eBay and Amazon.

Lastly, they can decide to advertise their goods as they see fit, word of mouth, social networks, Google Adwords and so on and so forth.

Advantages for the Dropshipper

Many people ask themselves: “Why would a company give dropshipping products to someone else and not sell them themselves?”. There are actually many reasons and the Dropshipper has great benefits from using this system. Here are some:

First of all, the supplier can expand his sales network by deciding in a strategic manner for his business whether to sell independently offline and then online via dropshipping, whether to sell partly online on his store, partly through affiliates.

Second, through this type of sale the dropshipper has greater penetration of online markets and can explore new countries and open markets through online sales, without worrying about local cultural and linguistic problems and differences.

Benefits for the Customer

Most of the time the customer doesn't even realize whether the product is sold directly by the seller, or sent via dropshipping; it is true that, often, you can expect a lower price due to the fact that both the shipping and storage costs of the goods have been cut.