Dropshipping is a method of retail fulfillment where stores do not actually stock their products. When someone buys a product, the store buys it from another party and then ships it to the customer directly. The merchant neither handles nor sees the product. Dropshipping is different from the conventional retail model in that, in dropshipping the seller does not own an inventory. He or she purchases an order from a third party. The dropshipping model, like everything else, has drawbacks and benefits. You need less capital: this is arguably the biggest advantage. You do not need thousands of dollars to start an ecommerce store. Conventional retailers need to have a huge amount of capital to build their inventory. In dropshipping, you only purchase a product once a customer has placed an order and made the payment. An initial inventory investment is not needed. Easy to start: an ecommerce business becomes much easier to run when you do not handle physical products. You will not worry about a warehouse, packing and shipping, tracking inventory, handling returns, and much more. Low overhead: since you will not be dealing with a warehouse or purchasing inventory, expect low overhead expenses. A lot of people run a dropshipping businesses from their home office with their laptop and only use about $100 per month. The expenses may increase as your business grows but they will still be low. Flexible location: if you have an internet connection, you can manage your dropshipping business from anywhere.
