What Is Dropshipping?

Dropshipping is a retail business where you sell physical goods online. The one thing that makes it different from typical retail is that you do not need to buy inventory upfront.

What happens in the dropshipping process is a combined effort between you and your supplier. You take care of marketing and processing payments, while your supplier takes care of shipping the order.

Here is how it works:

You choose a product and sell that product online
A customer sees your product ad or website
The customer makes a purchase
You now order this product from your supplier
The supplier ships the item to the customer, not to you

In dropshipping, you are doing what retail businesses do, but you do not need to buy stock at all. You do not need a warehouse, an inventory system—nothing of these things. You only spend money on the product once a customer already completed a purchase from you.

Your profit in dropshipping is the difference between your price and your supplier’s product price. For example, let us say that your supplier sells a short for $19, and you sell the same shirt for $39, your gross profit is $20.

For more details on starting a dropshipping business, read Tradelle's full guide here: What Is Dropshipping & How Do You Get Started?

Updated on: 04/06/2024

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