Drop shipping

What is drop shipping?

Drop shipping is a retail business model where the seller doesn’t keep products in stock. Instead, when a customer places an order, the store forwards it to a third-party supplier who ships the item directly to the customer. This eliminates the need for inventory management, warehousing, or handling shipments, making it an attractive option for ecommerce entrepreneurs looking to launch with low upfront costs.

The drop shipping model allows brands to focus on building their online store, managing customer relationships, and marketing products. Meanwhile, suppliers take care of storage, packaging, and delivery. It’s a flexible and scalable approach that supports a wide product range without the risk of unsold inventory.

What is the drop shipping business model?

The drop shipping business model is ideal for low-overhead ecommerce operations. Here’s how it works:

• A customer places an order on your online store
• You forward the order to your supplier or manufacturer
• The supplier ships the product directly to the customer
• You earn the difference between your retail price and the supplier’s wholesale price, your profit margin

Benefits of drop shipping:

• No need to purchase inventory upfront
• Low startup costs
• Easy to test new products or niches
• Location-independent business model

Challenges of drop shipping:

• Lower profit margins due to reliance on third parties
• Less control over product quality and shipping speed
• High competition in popular niches

Example of drop shipping

Imagine someone launches an online store offering stylish water bottles. Instead of stocking the items, they partner with a supplier. When a customer places an order, the supplier packs and ships the bottle directly to the buyer, the store owner never handles the product. That’s how drop shipping works.

Driftcharge Tip

Choose reliable suppliers and provide excellent customer support. In a drop shipping business, your brand reputation relies heavily on third-party fulfillment performance.

Ganesh Pawar

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Ganesh Pawar is the founder of Driftcharge, a subscription management app designed to help Shopify merchants streamline and scale their subscription businesses. With a deep focus on solving real-world pain points—like legacy account page support, flexible subscription options, and advanced analytics—Ganesh is passionate about building tools that drive growth and retention.