Who is a Dropshipper?
A drop-shipper is an individual or a firm engaged in online retail business, who sells the product without actually buying or storing the product through a supply chain. He is a business operator who performs tasks related to customer service and marketing while relying on a third party to deliver the product to the customer. As a drop-shipper, a business operator builds and maintains a healthy relationship with the suppliers and creates an attractive marketing platform.
Dropshipping: Meaning, Working, Benefits and Drawbacks
Dropshipping is a retail business model in which the seller sells the products to the customer without actually keeping physical stock in hand. It is an e-commerce business model where on receiving the order, the seller transfers the order to the third party (manufacturer, Wholesaler, distributor, or other retailer), who directly ships the product to the customer on behalf of the seller. This means the seller sells the product without actually seeing, handling, or storing the product. Therefore, the seller has very little control over the quality, shipment, inventory management, and storage of the product. Dropshippers play a role in the selling and marketing of the product.
The profit earned by the drop-shipper is the difference between the wholesale price and retail price of the product after adjusting all the selling and shipping expenses.
Profit of the Dropshipper = Retail Price – Wholesale Price – Selling Cost
In a modern time where no one has time to visit physical markets, e-commerce, and supply chain has gained popularity which in turn has made the dropshipping business popular as it requires minimum start-up investment and low working capital. Besides this dropshipping business model eliminates the cost of storing and managing the stocks and also lowers the risk of inventory management.
Table of Content
- Who is a Dropshipper?
- How does Dropshipping Work?
- How to Choose the Best Dropshipping Suppliers?
- Benefits of Dropshipping
- Drawbacks of Dropshipping
- Frequently Asked Questions (FAQs)