Not familiar with dropshipping? You should be! This retail fulfillment method is where a store doesn’t keep its own stock, but instead ships directly from a third party to the consumer. In simpler terms, it’s when you buy from a manufacturer and then send the products directly to the customer without ever having to touch it.

Many entrepreneurs have turned to dropshipping as a fast and easy way to run their business. Read on and find out if it’s the right choice for you.

Why Dropshipping?

The biggest difference between dropshipping and a traditional retail model is that you don’t have to stock inventory. Instead of needing to have a certain amount of items in stock, that responsibility is shifted to the manufacturer who will fulfill your orders.

For example, you can launch an online store selling jewelry and have the orders sent from a wholesale silver jewelry provider directly to your customers, instead of having to keep boxes of jewelry in your home ready to ship out at any time. It’s a great option if you’re just starting out because it’s accessible for even first-time business owners. You can run a dropshipping business on your own hours, and test different ideas and products without incurring major costs.

What Are the Start-Up Costs?

One major advantage of dropshipping is that it requires less capital. You don’t need to spend thousands of dollars on inventory before you can even launch your store. Instead, you don’t have to purchase even one product until you’ve made a sale and received payment from your customers. The only costs you will incur upfront are starting your e-commerce website through a platform such as Squarespace or Shopify. 

Is It Difficult To Run?

A dropshipping business is easier to run than a traditional e-commerce business. Without physical products, you don’t have to worry about things such as packing and shipping your orders, tracking inventory, storing your merchandise and managing stock levels. Instead, these aspects of your business have been outsourced and you can spend your time focusing on other tasks. Packing and shipping orders, tracking their delivery and handling returns could take up most of your time, but with that being handled by your wholesaler or manufacturer, you can work on optimizing your website or marketing your business.

What Do You Need to Run a Dropshipping Business?

Honestly, very little! You’ll need a laptop and an internet connection and that’s about it. You can work from any location, since you’re not tied to a brick-and-mortar store or wherever your inventory would be kept. Your ongoing costs will only be for maintaining your website and online presence.

What Kind of Products Can You Sell?

Since you don’t have to pre-purchase a lot of stock, your inventory can be flexible. You can choose a niche, such as jewelry or kids clothing, but you still have the opportunity to explore your options within those niches. You can choose trendy items and take advantage of new ideas, or stick to tried-and-true basics. If a manufacturer adds a new item, you can automatically list it on your shop for no extra cost and see how it does. This way, you can figure out what your customer base is looking for and orient your store toward more sales.

Can You Scale?

If you’re a traditional retail business, scaling up is an exciting and nerve-wracking time. Receiving more orders means needing to do more work: getting more inventory, shipping more packages and dealing with more customer support. With dropshipping, you’ll still have to handle customer support, but the increase in inventory and shipping needs remains out of your hands. Your business can handle a boom in sales much more easily than other methods of selling.  

If you’re looking to create passive income or dip your toes into entrepreneurial waters, a dropshipping business might just be the right choice for you.