Dropshipping
Short definition
Dropshipping is an e-commerce model where the seller holds no stock and the supplier ships orders straight to the buyer.
The seller lists the product on their site without physically holding it; once an order arrives, it is passed to the supplier, who ships it directly to the buyer. The model removes warehousing and stock cost entirely and makes it possible to test a product idea with little capital behind it.
Margins usually run lower than stocked selling because the supplier also takes a share; control over delivery time and product quality is limited too, since logistics sit with another party. A customer complaint can stem from a supplier issue the seller cannot fix directly.
Shipping and returns policy need particular clarity under dropshipping; an order made up of items from more than one supplier can also arrive with different delivery times.
Why it matters
Dropshipping is a way to test an e-commerce idea with little capital; but thin margins and limited quality control often mean a move to holding stock becomes necessary once the business grows. That shift usually becomes unavoidable as sales volume and customer expectations grow, and delivery problems left unaddressed feed straight into brand reputation.
