What is dropshipping?

You would have heard of dropshipping too much these days. Have you wondered what it is? Dropshipping is actually the mode of business, which doesn’t require you to store the products that you are actually selling. So, in business this type, you as the online storeowner will never get to see the things that you are actually selling.

How it works?

So how is the actual sale made? In this business mode, the individuals or businesses sell the products that are manufactured and even delivered to the customers by a third party already contracted for this purpose.

Dropshipping requires you to keep the list of the products that you are going to sell. The other operational parts would be handled by the wholesalers. Basically, you are the intermediary handling the customer and the seller together.

With this basic knowledge, you might be fully inclined to opt it as your online business. But like every other business, there are some advantages and disadvantages associated with it. So, in this article, I have discussed these advantages and disadvantages so you can know more about it.

Benefits of dropshipping business:

1. No investment needed:

You don’t have to worry about the investment required for this type of business because you don’t need to keep the stock or maintain any kind of store for your business, so it won’t require you capital investment of any kind.

2. Supply chain management expertise not required:

You don’t need to be an expert in supply chain management to manage your online store and business because the handling of the production of goods and shipping is the requirement of the wholesaler, not you. So, this gives you an advantage over the traditional form of business.

That being said, dropshipping business owners save a great amount of cost on maintaining a physical location for stocking products and human resource to run the whole supply chain system, compared to conventional e-Commerce businesses.

3. Low risks:

The risks associated with obsolete inventory or the excessive maintenance of goods won’t be there. So, you can actually consider this business less risky as compared to the other business.

4. Wide variety of product offerings

You can choose a wide variety of products to be sold through your store. There is no limitation of selling a limited amount of good. Similarly, you can choose to sell even a limited number of products that are trending and bought by the customers.

5. Scalability:

You can increase the scope of your business depending upon the traffic that you can generate for your store, so the size of the business is totally in your control.

Cons of Dropshipping:

Analyzing the benefits would have made you believe that dropshipping is without any problems. However, this is not the case. Here are some of the drawbacks of dropshipping business, so you can go through them and make the ultimate decision.

1. Extreme Rivalry:

The low barrier to entry results in higher rivalry in the dropshipping business. This is because, there are chances that the same product can be sold by a number of stores, so you can expect how difficult would it be to maintain competitiveness.

2. Low Profit Margin:

The high competition in the market also results in lower profit margin. Both the customers and suppliers can exert pressure on your business, leading to a little room, which you can earn money.

3. Logistic challenges:

Although, you don’t have to go for the logistic directly but it is you who is going to generate the tracking number for delivery to the customer and supplier. So, as your business would expand this process will get difficult. Moreover, you’ll have to rely on the wholesaler completely, it can have an impact on the reputation of your stage, but you can’t manage it.

Key factors for dropshipping business’s success:

If you want to succeed in the dropshipping business, you must focus on the following factors. Managing these factors will result in better outcome for you in terms of good business reputation and higher profitability, which is actually great. So, what do you think?

a. Chooses the right wholesaler:

You’ll have to find the productive wholesaler for your dropshipping business, if you really need to earn money and continue your business in the end. This is because the efforts of the wholesellers actually result in the creation of the reputation of your store. Hence, you must value your wholeseller.

b. Traffic generation:

In any online business, you need to generate traffic and take steps to optimize the conversion rates, as well. In order to achieve this, you can use different techniques like better description of the products stating the benefits of your product along with the use of nice pictures of the product. Believe me, such steps work and they can compel your customers to go for the product that you are selling. So, this is what you want right?

c. Add value

In order to compete in the industry, you must add value in one way to the other. So, in your dropshipping business, you can offer good experience to the customers. Through this way, they will come back to your store for more purchases. Addition of value can help you in standing out from the competition, thus better results.


Now, when you know what dropshipping is in its true sense, you can analyze the odds for your success and invest your time and effort in the right kind of business. Because, it can really help you in starting your online business as it is a low investment business. So, get the most advantage through it.