What is dropshipping?
In layman's terms, dropshipping is a business model that allows you to sell products, without keeping inventory.
Over the last five years, dropshipping has become one of the more popular online business opportunities, and it's easy to see why.
Why is dropshipping so popular?
How does dropshipping work?
We all know what brick and mortar retail stores are. We see them on busy roads, in malls and shopping centers.
What's the difference between eCommerce and traditional retail stores?
Ecommerce stores are online retail stores. Shoppers can't touch (try on/physically inspect) the items they buy before purchase. They also don't have the item immediately after purchase, as products get shipped to the customer.
So why do people make use of eCommerce?
Convenience. It's easier buying something off your phone than going into a store. You save time and hassle.
How does dropshipping (as a form of eCommerce), work?
Dropshipping is merely a form of supply chain management.
Supply chain management (SCM) is the management of the flow of goods and services from production to consumption.
It involves the movement and storage of raw materials, of the work-in-process inventory, and the finished goods from the point of origin to the point of consumption.
That's the big difference between dropshipping and other forms of online retailing.
Instead of keeping stock, a dropshipper merely passes on the order received from the customer, to the supplier. The supplier fulfills the order by shipping the product to the customer.
Traditional brick and mortar retail stores face a lot of challenges today, which is why dropshipping has risen in popularity.
For many budding entrepreneurs, dropshipping sounds like a viable option, especially when compared to traditional retail stores.
Some major challenges for brick-and-mortar stores are
- You need to put up shop (buy inventory, do
shopfitting, branding etc.)
- Pay rent and utility deposits.
- Have cash reserves to pay employees, marketing, etc.
Starting your own retail store is very costly!
- Location, location, location! Your shop needs to visible, accessible and in an area frequented by shoppers.
- Rent is extremely expensive in prime spots.
- You need to find the right premises that will ensure a lot of feet.
- You might have direct competition next door or across from you.
- You need to hire people to tackle the many facets of a retail store:
- You need staff to sell your products.
- Staff to handle merchandise/inventory.
- Someone to handle finances, marketing, etc.
- And then you also have to deal with staff problems.
Dropshipping definitely has more alluring benefits if you compare the two business models.
With dropshipping you
- Need much less start-up cash. You only need about 10% of what you would need for a traditional retail start-up.
- There's no need to worry about premises, stock or even staff.
Is dropshipping a scam or legit?
It seems like everyone has an opinion on dropshipping these days.
Some get lyrical about it, pointing out the amount of (dare I say "instant"?) millionaires that dropshipping has created.
Then there are those who believe it to be a terrible business model. Some even call dropshipping a scam.
If you go to
To quote from Dropshipping 101 by Daniel Threlfall:
To make matters worse, dropshippers will sometimes resort to shady tactics to sell and one-up the competition. All of this has led people to believe that it’s a
(You can download a free copy of the e-book by clicking on the eBook cover below.)
I love the fact that the dropshipper on the cover is engaged in a balancing act.
That tells you everything you need to know about dropshipping… You will need a lot of skill and patience to get it all to balance out and work.
But it can be done!
This guide is here to help you.
Getting back to the quote from Dropshipping 101.
Dropshipping doesn't have to be full of fraudsters and scammers. You can help rebuild the dropshipping name by being honest and hardworking.
If you incorporate good business practices into your core values, people will notice and you will eventually gain a loyal following.
Showing that you’re in it for the long run will show people you are a legitimate business. In time, this will translate into loyal repeat customers.
So don’t stress about dropshipping’s bad rap.
First-time buyers won’t know you’re a dropshipper until they’ve received their first products, anyway. And by the time they receive their purchases, it won’t matter.
As long as they receive good quality products that are delivered on time, they won't mind that you are a dropshipper.
Most people don't know what dropshipping is, anyway!
Where did dropshipping start?
Some say dropshipping started in the 1950s when mail order companies were born. The manufacturers fulfilled these orders, not the mail-order company.
The mail order company was essentially a dropshipper, as they didn't keep any stock and also didn't fulfill orders themselves.
It's a little more difficult to figure out where modern day dropshipping, as we know it, originated.
Savvy entrepreneurs, and even big companies, have been using the dropshipping method for years.
Amazon was probably the first major online dropshipper in the world.
Amazon started off by using Seattle-based book distributors to drop ship for them. Today they are one of the biggest retailers in the world.
Many of the "dropshipping gurus" lay claim to making the dropshipping method "famous". The one with the most valid claim is probably Franklin Hatchett.
Franklin started dropshipping way back in 2009. He says that dropshipping, as we know it now, started in 2004 with a site called chinavasion.com.
In Franklin's eCom Elites course, he claims that he is the one to have made Drop Shipping via Shopify, a viable business model. Franklin made people aware of Shopify back in 2015 when he talked about the dropshipping method on a YouTube video. This video went viral, getting over 300 000 views.
Today, dropshipping is still going "strong" with more and more dropshippers entering the market daily.
Those selling dropshipping courses (or tools), will tell you that dropshipping is still viable in 2020. But you would expect nothing less coming from people who make a living off of dropshippers.
Remember the 90% failure rate...
Unless you have unlimited time and money, you should be doing your homework first. Using this guide should be the start of your dropshipping journey and should help you in the right direction.
Starting a successful dropshipping business is not as easy as it was a few years ago.
Start your dropshipping journey the right way. Go to Step 1.