What is Dropshipping?

A retail fulfillment business model where the seller accepts customer orders without maintaining inventory. Instead, when a customer makes a purchase, the seller purchases the item from a third-party supplier who then ships the product directly to the customer.

How it works:

1. Customer places an order on the seller’s store
2. Seller forwards the order details to their supplier
3. Supplier packages and ships the product directly to the customer
4. Seller pays the supplier while keeping the markup as profit

Key advantages:

• Low startup costs (no inventory investment required)
• Reduced overhead (no warehousing costs)
• Location independence (can be operated from anywhere)
• Scalability (easy to add new products)
• No inventory management or risk of unsold stock
• Flexibility to test different product niches

Key challenges:

• Lower profit margins (typically 15-45% compared to traditional retail)
• Limited quality control over products and packaging
• Dependency on supplier reliability for shipping and fulfillment
• Potential shipping delays and complications
• More complex order tracking and customer service
• Increased competition due to low barriers to entry
• Supply chain visibility issues

Ideal for: Entrepreneurs looking to test business ideas with minimal upfront investment, digital nomads, and those seeking a side hustle with flexible operations.