What is Dropshipping and How it Works

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While dropshipping has developed a bad reputation over recent years due to the false perception that it’s nothing more than a get-rich-quick scheme, this perception couldn’t be further from the truth.

Simply put, if it was that easy, everyone would be making millions of dollars off of the dropshipping model…

With that said, in what follows, we’ll be diving deep into the world of dropshipping. More specifically, we’ll be defining the dropshipping model and detailing how it works. Further, we’ll share its many benefits whilst noting its evident disadvantages. Finally, we’ll provide an overview of how to set up your very own dropshipping business via a generalized step-by-step guide.

So, if you’re eager to make a quick buck or you’re interested in creating a sustainable source of passive income, this article is for you!

What is Dropshipping?

Widely referred to as the digital version of a traditional brick-and-mortar retail store, dropshipping is a business model whereby the seller completes and fulfils buyer transactions without keeping any inventory or overhead.

Instead, based on what’s needed, the seller will purchase the necessary inventory as defined by the orders that have been made in real-time, typically via wholesale or third-party manufacturers.

While dropshipping carries some level of controversy behind its strategy, largely because it’s perceived as a “get rich quick scheme”, if you will, it’s undeniable the success that it’s had since its inception, making those who have partaken millions of dollars in revenue if executed properly.

The Benefits of Dropshipping

As mentioned, dropshipping is a popular online business model widely used as a means of passive income. Requiring little start-up capital and zero overhead, dropshipping boasts several benefits to be discussed.

While dropshipping doesn’t come without its disadvantages, the pros far outweigh the cons, making it a more than lucrative eCommerce strategy for those eager to enter the online business arena.

So, If you’re looking for a more passive way to earn money, or you just want a more flexible work-life balance, there’s no better strategy than setting up a dropshipping eCommerce store.

With that said, below are several of the most commonly reported benefits of dropshipping…

  • Low Barrier-to-Entry
  • Lack of Upfront Capital Investment
  • Work Flexibility
  • Product and Industry Selection
  • Scalability

As mentioned, dropshipping doesn’t come without its disadvantages. While we won’t be going into too much detail here, you can expect low-profit margins, inventory bottlenecks, manufacturer errors, and supply chain difficulties to be potential hurdles when running a dropshipping eCommerce business.

Nevertheless, if you get the margins working for you rather than against you and you play the volume game correctly, you’re in for the ride of your life as a dropshipping entrepreneur.

How to Create a Dropshipping Online Store

Depending on which platform you decide to run your dropshipping store on, the following steps will vary slightly during the setup phase. While Shopify is the likely destination for most, there are other platforms available for signup…

With that said, the following is a broad overview of how YOU can create and set up your very own eCommerce dropshipping business online…

Step One

Step number one and certainly the most obvious requires you to Create your own personal eCommerce website. By using a reliable platform like Shopify, you can create your online store that’s both user-friendly and functional; a recipe for online success…

While curating your website, it’s important to also consider UI/UX design as a top priority. While ease of use and functionality are also vitally important, it means nothing without an attractive and engaging interface. Thanks to platforms like Shopify, the process is fairly simple.

Step Two

Once you’ve chosen your respective platform to curate your dropshipping website on, it’s now time to pick your niche. Picking your niche, however, isn’t as simple as choosing a product from thin air and running with it…

Instead, ensure that you do the necessary research so that you increase the likelihood of success. As you can imagine, product choice is everything when it comes to dropshipping. Not only do you want the product to be trendy but you also want it to be one that will capture the attention of your consumers at high volumes.

Step Three

Once the store is live and the product(s) have been hand selected, it’s time to gather traffic to your website. While in a perfect world this would happen on its own, unfortunately, it’s not that simple.

Instead, think SEO, keywords and paid advertising!

Step Four

Finally, once you’ve proven that your strategy is working, it’s time to automate the process. While this is easier said than done and will likely not happen in the first months of operation, it is the intention and ultimate goal of an eCommerce dropshipping business.

Of course, there’s more to the story when creating a dropshipping online store, however, above are the basics to consider prior to diving deeper into the world of dropshipping itself…

In Summary

While dropshipping isn’t the perfect business model, it provides entrepreneurial rookies and experts alike to start a business with ease. Disregarding the evident disadvantages of shopping because every business model comes with some, the benefits far outweigh the cons.

Using the right approach with the proper know-how and consideration, anyone can be successful in dropshipping.

With that said, there’s no better time than right now to build your very own eCommerce dropshipping store. If it’s something you’ve been eager to do but have hesitated on up until now, decide today that it’s time to act!

Good luck!

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