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What is Dropshipping and How Does it Work?

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What is Dropshipping and How Does it Work?

The digital commerce landscape is hypercompetitive, and those who want to make their income from selling things online need to be able to provide customers with the products they’re looking for at the prices they want. The biggest problem with this is that it requires people selling certain products to have those products, but dropshipping is a way around this. 

What Is Dropshipping?

Dropshipping is a business practice where one retailer takes orders and collects money for inventory that they do not own or control. Instead, the retailer contacts a third party that has the inventory to sell, who then fulfills the order. This is the core of how dropshipping works. These third parties can be anyone from the manufacturer, to a wholesaler, or even another retailer, who pays the overhead and does the logistics needed for maintaining the inventory. This is a popular system for retailers operating both locally, as well as on the regional, national, and even international stage.

What Is Dropshipping On Amazon?

If you are wondering what Amazon drop shipping is, and how drop shipping works on the massive online platform, it’s easier than you think. Retailers that use dropshipping are essentially just outsourcing the order fulfillment duties to another party. These duties include everything from procurement, to long and short-term inventory storage, and even shipping. This takes a significant logistical load off of the front-end retailer and allows for more profit and wider margins. 

The biggest decision that generally has to be made, and often the most challenging, is what products will be sold, and which third parties the operation will partner with.

Benefits Of Dropshipping

Among many others, here are the primary benefits of being a dropshipping entrepreneur. 

Low Capital Requirement

The biggest benefit of dropshipping is that, unlike traditional retailers, you don’t require any physical commercial space, employees, and inventory burdens. This makes dropshipping a much more viable industry than other investments that require more significant amounts of capital. 

Low Overhead

Since you are delegating the inventory logistics to a third party, you won’t have to worry about procuring, storing, shipping, or returns. You can operate with significantly lower overhead than many other retailers.

Simple Scalability

Since dropshipping works with multiple other large manufacturers and suppliers, you can easily scale your business to the number of sales you are doing. Ramp up for holidays, and scale back when needed. As long as you can process payments, your suppliers should be able to ship inventory.

Geographically Ambiguous

There are no requirements for operating a physical location or headquarters, so you can run a dropshipping business from your living room, or a hotel room on the road. Operate while on vacation if you want, there are no limits. 

Opportunities Across Many Channels

When you operate a dropshipping business, you can operate across all potential channels. You can have a presence on all social media, streaming platforms, and even your website. No matter where your potential orders come from, your dropshipping operation can fulfill them equally.

Low-Risk Business Experimentation

Retailers that dropship don’t have to pay for inventory in advance, which makes it much easier to test out specific products and markets. In some cases, market penetration might just be too difficult, but you can find that out without predicating your whole business on that particular product or market.

Amazon Junkies Can Help You Jumpstart Your Dropshipping Business

For more information about what dropshipping is and how you can start a dropshipping operation today, reach out to The Amazon Junkies. You will be able to discuss your business needs with a member of our expert team.

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