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What is Dropshipping and Why Is It So Popular?

by Compendent ·  2 min read  ·  June 29, 2021

What is Dropshipping and Why Is It So Popular?

With record numbers of people currently shopping online – especially due to the COVID pandemic – the ecommerce industry is currently in its prime. 62% of US consumers shop online more now than before the pandemic, and one UK survey even found that 74% of respondents across all age groups now feel comfortable buying products online because of the coronavirus outbreak. It’s a new era and many potential entrepreneurs are looking for ways to capitalise.

One such method that is proving popular is Dropshipping. For those who haven’t, Website Builder Expert describe Dropshipping as:

‘Dropshipping is a business model where you, the retailer, don’t have to store or even handle any stock. Customers order products through your online store, and you alert your supplier. They in turn process, package, and ship the product directly to the customer.’

Being a relatively straight-forward business model to setup and run, it’s unsurprising so many have taken to Dropshipping. Often when stores run out of in-demand products, customers turn to dropshippers, whose marked-up items mean they can turn a good profit in a short amount of time. Besides their own online outlets, many dropshippers operate on online marketplaces such as Amazon and eBay meaning purchasing is straightforward for already signed-up consumers.

For traditional brick-and-mortar stores, Dropshipping is a great way to test selling new inventory. They can trial new items without too much risk, and test selling to new markets. Many stores also use it as an additional way to fulfil their customer orders if they run out of inventory. This flexibility is one of the reasons why the Dropshipping market is estimated to be worth up to $550 billion by 2025!

However, there are various downsides to the Dropshipping model, the main one being competition. Due to its popularity, marketplaces are congested with dropshippers offering similar items that are competing against official sellers and retailers with lower prices. Marketing channels are also filled with dropshippers advertising items, meaning it can be difficult to generate sales at first. Advertising is one of the cost areas that can quickly spiral out of control for dropshippers when attempting to find willing consumers for their items. It’s important to understand an item’s target buyer, as well as to test and optimize marketing approaches to ensure selling success.

For more information on setting up and running a Dropshipping business, check out Website Builder Expert’s new infographic about it below:

Filed Under: Business Tagged With: eCommerce

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