What is Dropshipping?

Dropshipping is an e-commerce model where an online store sells products it does not keep in its own warehouse. The customer orders from the store, the store forwards the order to a supplier, and the supplier packs and ships the product.

How Does It Work?

In the basic flow, the seller lists supplier products, controls pricing and product content, and sends order details to the supplier manually or through automation. The seller’s margin is the difference between the customer price and the supplier cost, shipping, returns, payment fees, and advertising spend.

The model can be useful for testing demand without buying inventory upfront. The tradeoff is operational control. Stock accuracy, packaging quality, delivery time, and return handling are largely dependent on the supplier, but customers still blame the store when something goes wrong.

Key Risks

Supplier stock data may be outdated
Delivery times and tracking can be inconsistent
Low margins may not cover advertising costs
Many stores may sell the same undifferentiated product
Return and customer service responsibilities can be unclear

Business Use

Dropshipping can help test a product idea or a niche market. A business that wants to build a durable brand needs stronger supplier agreements, quality control, customer communication, and integration infrastructure. In an e-commerce site or marketplace flow, stock and order synchronization are the most important technical parts of the model.