Dropshipping is an e-commerce model where the seller doesn’t own any inventory or handle any of the shipping responsibilities. When a customer makes a purchase, the seller processes the order and transfers it to a third-party supplier—like a wholesaler or manufacturer, for example—who prepares and ships the order. The seller only pays the supplier for an item after someone buys it, which makes dropshipping a popular option for entrepreneurs who want to start an online store quickly and with minimal overhead.
Dropshipping is an e-commerce model where the seller doesn’t own any inventory or handle any of the shipping responsibilities. When a customer makes a purchase, the seller processes the order and transfers it to a third-party supplier—like a wholesaler or manufacturer, for example—who prepares and ships the order. The seller only pays the supplier for an item after someone buys it, which makes dropshipping a popular option for entrepreneurs who want to start an online store quickly and with minimal overhead.
According to Precedence Research, the global dropshipping market is forecast to reach almost USD 352 billion in 2024, $435 billion in 2025 and surpass around $825 billion by 2033.
If you’re planning to start an e-commerce business, you might be weighing your options for managing inventory and delivering products to customers. One popular method to consider is dropshipping, which gives entrepreneurs a fast way to build a catalog of products and sell products online without inventory.
How does dropshipping work?
Dropshipping is a way to sell stuff online without keeping products in stock or manually handling any of the shipping responsibilities.
In a traditional retail setting—whether brick-and-mortar or online—the business owner must maintain a warehouse full of inventory. When someone buys an item, the store itself handles the transaction and then ships that item directly to the consumer.
The customer places an order from your e-commerce store
The order is automatically forwarded to your supplier
Dropshipping supplier prepares, packs, and fulfills the order
The customer receives their order from the supplier
With the dropshipping model, however, there’s no physical inventory to manage. When a customer makes a purchase, the store processes the order and transfers it to a third-party supplier—your dropshipping partner—who then prepares the order and ships the products out to the customer. The store owner only pays the supplier for an item when someone buys it; they’re not responsible for producing it, storing it, or shipping it themselves. This dropshipping process allows you to focus on marketing and customer service without worrying about inventory levels or warehousing costs.