GLOBAL SELLING BLOG
What is dropshipping? Know how dropshipping works and its benefits
Dropshipping is an e-commerce model where a third-party handles product procurement, storage, and delivery. Learn more about it in the blog.
Ever wondered how some online stores operate without warehouses full of products? That's where dropshipping comes in. It's one way to run an online business without managing physical inventory.
Take the example of Anand from Mumbai, who runs an eco-friendly home decor store on an e-commerce platform. By teaming up with dropshipping suppliers, Anand can list hundreds of products in his online store without keeping any inventory. When customers order from his website, his supplier handles the shipping directly to their doorstep.
In this blog post, let’s learn what exactly is dropshipping and how it works.
Take the example of Anand from Mumbai, who runs an eco-friendly home decor store on an e-commerce platform. By teaming up with dropshipping suppliers, Anand can list hundreds of products in his online store without keeping any inventory. When customers order from his website, his supplier handles the shipping directly to their doorstep.
In this blog post, let’s learn what exactly is dropshipping and how it works.
What is dropshipping?
Dropshipping is an order fulfillment method where e-commerce businesses outsource procuring, storing, and delivering products to a third-party. When a customer orders a product, the order is forwarded to a third-party manufacturing unit or fulfillment center. It becomes the third-party’s responsibility to manage the product, prepare it for delivery, and finally deliver it.
What is e-commerce dropshipping?
E-commerce dropshipping is a business model in which sellers operate an online store without holding inventory. Instead, they list products on e-commerce platforms like Amazon, and when a customer places an order, the supplier directly ships the product to the buyer. This eliminates the need for warehousing, bulk purchases, and logistics management.1
What is the dropshipping model?
In the dropshipping model, you promote and sell your products on an online storefront. When customers place an order, you forward the order to a supplier. From there, the supplier handles the entire physical fulfillment process, including packaging and shipping the products. In some dropshipping agreements, you may need to manage customer service, while the dropshipping service provider takes care of the physical goods and fulfillment.
How does dropshipping work?
Here is a simple overview of how dropshipping works:
Step 1
Seller opens an online storefront and signs a dropshipping agreement with a supplier.
Step 2
Customer visits the online store and places an order.
Step 3
Once the order is confirmed, seller forwards order details and customer information to the supplier.
Step 4
Supplier packages and ships the product directly to the customer.
Advantages of dropshipping
One of the key benefits of dropshipping is that any Indian seller can start selling their products to customers without much upfront investment. In this section, we explore the potential benefits of dropshipping for Indian sellers who want to build a global brand:
1. Setup and overhead costs
You do not have to store products yourself, which reduces warehousing and storage costs.
2. Multichannel selling
You can attract more customers by selling on multiple platforms – your own website, e-commerce marketplaces, or social media.
3. Global delivery
You can ship to customers worldwide while running your business from anywhere.
4. Low operational cost
Your supplier handles inventory and ships directly to customers. You only pay for products after customers order them.
Disadvantages of dropshipping
1. Quality control
Since suppliers handle products directly, you have less oversight on quality sent to your customers.
2. Delivery timeline
Your supplier handles the fulfillment process and you do not have control over order selection, packaging, shipment, and delivery time.
3. Limited offers
Since you don’t handle order fulfillment, you may not be able to place special offers and promotions, such as bundling or free shipping, to attract customers.
4. Legal liability issues
This problem isn’t very common, but it should not be overlooked either. It is important to check that the suppliers have got their IP trademarked. Maintain a dropshipping agreement contract to ensure the legitimacy of the supplier’s business.2
Key approaches for dropshipping
To succeed in dropshipping, it’s essential to adopt the right strategies. Here are some key approaches to consider:
1. Choose the right product
Focus on products with high demand, low competition, and strong profit margins.
2. Partner with reliable suppliers
Research and vet potential suppliers to ensure they offer quality products, timely shipping, and excellent customer service.
3. Optimize your online store
Your online store is the face of your business. Make your website or e-commerce storefront user-friendly with high-quality images and helpful product descriptions.
4. Promote your store
Effective marketing is key to driving traffic and sales. Use social media ads, email marketing, and search visibility to build your customer base, while focusing on great service to earn repeat sales and positive reviews.
5. Create your brand
Add your brand name and design to products to stand out from competitors.3
Alternatives to dropshipping
As we have seen above, while dropshipping offers several advantages, it also has some challenges. Some alternative methods of order fulfillment for exporters are as follows:
1. Outsource storage and shipping
You can outsource your warehousing and shipping needs to a third-party logistics (3PL) provider. Products are stocked at the third party’s warehouse, and they handle fulfillment on your behalf.
2. Create your own branded products
You can source items from manufacturers, brand them, and sell them directly to customers. This method allows you to build a unique brand and have greater control over product quality and customer experience. However, this involves greater upfront costs as you will need to invest in product development, manufacturing, and storage.
3. Try affiliate marketing
If you prefer not to handle orders, refunds, or customer service, affiliate marketing is an option. As an affiliate marketer, you promote products for an online merchant and earn a commission when customers purchase through your referral link. This model can help reduce startup and overhead costs while allowing you to build an audience and earn money from sales generated through your recommendations.
Fulfillment by Amazon (FBA): An alternative to dropshipping
If you sell your products on e-commerce platforms like Amazon and prefer not to handle inventory storage and fulfillment yourself, consider using Fulfillment by Amazon (FBA). With Fulfillment by Amazon (FBA), you can store your products in Amazon global fulfillment centers while we pick, pack, ship your customer orders, and provide customer service. FBA is designed to help you focus on your business while Amazon stores your inventory and takes care of shipping and last mile logistics (onward and return).
Why choose Fulfillment by Amazon (FBA)?
● Inventory management: You focus on growing your business while Amazon stores your inventory and handles shipping and last-mile logistics (onward and return).
● Prime delivery: FBA products are eligible for Amazon Prime, giving Prime members free international delivery.
● End-to-end logistics: Amazon provides 24/7 customer service for enquiries, returns, and refunds processing in local languages.
How does FBA work?
Step 1: Set up your selling account on Amazon.
Step 2: Create your product listings/shipments.
Step 3: Prepare your products and package and label them correctly.
Step 4: Ship products to Amazon fulfillment centers, and we will take care of packing, shipping, delivery, and customer service.
Our cross-border carrier shipping solution, Amazon Global Selling SEND, helps FBA sellers on Amazon ship their products globally at competitive rates.
Step 2: Create your product listings/shipments.
Step 3: Prepare your products and package and label them correctly.
Step 4: Ship products to Amazon fulfillment centers, and we will take care of packing, shipping, delivery, and customer service.
Our cross-border carrier shipping solution, Amazon Global Selling SEND, helps FBA sellers on Amazon ship their products globally at competitive rates.
Amazon Global Selling: Easy e-commerce exports and hassle-free shipping
If you are a business owner and you want to sell your products to the world, Amazon Global Selling enables you to list and sell ‘Made in India’ products on 18 Amazon global marketplaces. As an e-commerce exports program, Amazon Global Selling provides support and guidance at every step of your export journey, connecting you to Amazon’s Service Provider Network for tailored compliance, payments, and logistics support.
Registered sellers can choose to ship their products by themselves through Merchant Fulfilled Network (MFN) or they can opt for Fulfillment by Amazon (FBA) and outsource order fulfillment to Amazon including packing, storage, delivery, and returns. Amazon Global Selling simplifies the process of international shipping to the world, helping businesses navigate customs and reach a vast audience.
Registered sellers can choose to ship their products by themselves through Merchant Fulfilled Network (MFN) or they can opt for Fulfillment by Amazon (FBA) and outsource order fulfillment to Amazon including packing, storage, delivery, and returns. Amazon Global Selling simplifies the process of international shipping to the world, helping businesses navigate customs and reach a vast audience.
Frequently Asked Questions
1. What is a dropshipper?
A dropshipper is a retailer who sells products without keeping them in stock. Instead, they source items from suppliers who handle storage and shipping.
2. What are dropshipping suppliers?
Dropshipping suppliers are manufacturers, wholesalers, or distributors who fulfill orders on behalf of retailers by shipping products directly to customers.
3. Should you start dropshipping? Is dropshipping right for you?
Dropshipping can be viable for those looking for a low-cost, low-risk business model. However, there are several challenges involved, including reduced control over product quality, damage to brand reputation due to delayed deliveries, etc.
4. How does one choose the best dropshipping suppliers?
Select suppliers based on product quality, shipping times, customer reviews, and reliability.
5. Do dropshippers ship internationally?
Yes, many dropshippers offer international shipping, but costs and delivery times vary based on supplier locations and customer destinations.
6. Is dropshipping profitable?
While dropshipping offers low startup costs and easy scaling, success depends on choosing unique products, finding reliable suppliers, and strong marketing to overcome slim margins and competition.
7. Can dropshipping be done with Amazon?
Amazon sellers can opt for Fulfillment by Amazon (FBA) which offers an easier alternative to dropshipping. With FBA, you can store your products in Amazon global fulfillment centers while Amazon picks, packs, ships your customer orders, and provides customer service. FBA is designed to help you focus on your business while Amazon stores your inventory and handles shipping and last mile logistics (onward and return).
Published on September 27, 2021.
Updated on April 17, 2025.
Source:
1. https://www.drip.com/blog/e-commerce-dropshipping
2. https://blinkstore.in/blog/what-is-dropshipping-business-in-india/#why-should-you-start-dropshipping
3. https://mailchimp.com/resources/how-to-start-a-dropshipping-business/
Updated on April 17, 2025.
Source:
1. https://www.drip.com/blog/e-commerce-dropshipping
2. https://blinkstore.in/blog/what-is-dropshipping-business-in-india/#why-should-you-start-dropshipping
3. https://mailchimp.com/resources/how-to-start-a-dropshipping-business/
Related blogs
Found this blog informative? Share it with your network
Sell in North America with Amazon Global Selling
Limited period offer. *Terms and conditions apply
Want to learn about Amazon Global Selling?
Seamless logistics solution for international shipping
Ship directly to international fulfillment centers at competitive prices. Book, pay and track shipments without any hassles from India to the world.
Disclaimer: Whilst Amazon Seller Services Private Limited ("Amazon") has used reasonable endeavours in compiling the information provided, Amazon provides no assurance as to its accuracy, completeness or usefulness or that such information is error-free. In certain cases, the blog is provided by a third-party seller and is made available on an "as-is" basis. Amazon hereby disclaims any and all liability and assumes no responsibility whatsoever for consequences resulting from use of such information. Information provided may be changed or updated at any time, without any prior notice. You agree to use the information, at your own risk and expressly waive any and all claims, rights of action and/or remedies (under law or otherwise) that you may have against Amazon arising out of or in connection with the use of such information. Any copying, redistribution or republication of the information, or any portion thereof, without prior written consent of Amazon is strictly prohibited.
*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.
*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.
© 2024 Amazon.com, Inc. or its affiliates. All rights reserved
