What is Dropshipping?
Dropshipping is an order fulfillment method where a merchant sells the goods that someone else has produced. Unlike other merchants, dropshippers do not need to purchase goods, rent a warehouse, and control delivery. Their job is to promote products and seek customers. The supplier does the rest: provides a storage space, organizes the manufacturing process, maintains the supply chain.
The dropshipping scheme for online stores is pretty simple. Firstly, you should choose a supplier and sign a contract with them. The second step is to choose products from this supplier and set a price for them in your online store. When a buyer places an order in your online store, you forward the order data to the supplier. The supplier sends the order to the buyer. You either pay to the supplier for the goods for which the buyer paid you, leaving yourself the difference between the purchase and retail prices; or the supplier independently accepts payment from the buyer and returns the commission to you.
Despite the downsides, dropshipping is a good model for aspiring entrepreneurs with little capital, especially if you are good at marketing.
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