What Is Dropshipping and How Does It Work?

Dropshipping is a retail business model in which an ecommerce merchant sells physical products without keeping inventory in stock. The retailer acts as an online storefront where customers purchase goods, and orders are fulfilled by a third-party manufacturer or wholesaler.

In other words, a dropshipper is an online intermediary who facilitates transactions between the supplier and the customer without ever handling the product.

For entrepreneurs, dropshipping is a low-cost and low-risk way to sell online because it requires no ownership of inventory or operational facilities.

In dropshipping, customers place orders and make payments on the retailer’s site. The retailer then buys the ordered goods from the dropshipping supplier, who receives the original order information and ships the product directly to the consumer.

The customer pays the merchant who then pays the supplier. The merchant never handles the goods, but for the customer, the buying experience is no different from any other ecommerce purchase.