Dropshipping is a retail model in which the seller does not keep products in stock. When a customer places an order on your store, the order is passed to a supplier, who packs and ships it directly to the customer. You never touch the inventory.
How the model works
- You list products from a supplier catalogue on your own online store.
- A customer buys a product and pays you the retail price.
- You forward the order to the supplier and pay the wholesale price.
- The supplier ships the parcel directly to your customer.
Your margin is the difference between the retail price and the wholesale price, minus shipping, marketing and platform costs.
Why sellers choose it
- Low start-up cost, because there is no stock to buy up front.
- Flexibility to test many products and drop the ones that do not sell.
- You can run the business from anywhere with an internet connection.
Where it can go wrong
Margins can be thin, supplier quality varies, and slow delivery hurts customer trust. Cash-on-delivery orders add the risk of refused parcels and delayed remittance.
This is where a platform such as Sourceinfi helps: curated sourcing, quality checks, reliable shipping and managed cash-on-delivery remittance take the heaviest operational work off your plate, so you can focus on marketing.