Dropshipping
Dropshipping is a retail fulfilment model in which the seller does not hold the stock it sells: when a customer places an order, the seller passes it to a third-party supplier or manufacturer, who ships the goods directly to the customer. The seller never physically handles the product — it markets and sells, while the supplier holds inventory and fulfils.
The appeal is low upfront cost and risk: no inventory to buy or warehouse, easy to start and scale, and a wide catalogue without stock commitment. The trade-offs are thin margins, less control over quality, fulfilment speed and stock availability, and reliance on the supplier — problems with shipping or defects still fall on the seller's brand. Common in e-commerce and marketplaces, dropshipping contrasts with holding-and-fulfilling models and blurs into arrangements where a brand uses suppliers or 3PLs to ship directly to consumers. Understanding dropshipping is useful for grasping the range of e-commerce fulfilment models and their logistics and control implications.
Dropshipping lets anyone run a store without owning inventory — low risk and easy to scale — but hands control of quality, speed and stock to the supplier while the seller's brand takes the blame for problems. It is a defining low-barrier e-commerce model, and understanding its logistics trade-offs explains why fulfilment control matters even when you never touch the product.
How does dropshipping work?
The seller passes customer orders to a supplier who ships directly to the customer; the seller holds no inventory.
What are the downsides of dropshipping?
Thin margins and limited control over quality, fulfilment speed and stock availability, with reliance on the supplier.