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Dropshipping is a sales and delivery method that enables businesses to sell products, without actually keeping any in stock.
When a buyer place an order, the seller then forwards the buyer details to, and money, to the actual supplier – which is normally called the dropshipper.
Below follows an overview:
Step 1: The Buyer place order from Company A (Seller)
Step 2: Company A (Seller) request a product dispatch from Company B (Dropshipper), directly to the customer
Step 3: The product is shipped directly from the Dropshipper, without ever being handled or processed by the seller.
“How does dropshipping work?”
The seller charge a higher price than the dropshipper does, and keeps the difference when the payment between the two is settled.
The seller may pay the dropshipper on an order to order basis, or after a certain number of orders or time period.
From a seller perspective, this is ideal, as the seller can offer a whole range of products without investing in a large stock.
The Dropshipper benefits too, as they don’t need to invest in sales and marketing, as this taken care of by their sellers (which are sometimes called affiliates).
For the buyer, it shouldn’t make any real difference. Ideally, this should offer lower prices, as the risk is reduced for the wholesaler and seller.
However, when applied in the real world, dropshipping far from the shortcut to success many online sellers hope for. Especially when it comes to dropshipping operations involving buyers in the West, and dropshippers in Asia.
Keep reading, and learn why drop shipping is probably not a sound strategy for your eCommerce business. Continue Reading →