E-Commerce Dictionary
Dropshipping
Definition
A retail fulfillment method where a store doesn't keep the products it sells in stock but instead purchases the item from a third party and has it shipped directly to the customer.
Deep Dive
Dropshipping is a retail fulfillment method where the seller does not keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party (like a manufacturer, wholesaler, or another retailer) and has it shipped directly to the customer. This model eliminates the need for the merchant to handle inventory, manage a warehouse, or deal with packaging and shipping logistics, significantly reducing the initial capital investment required to start an e-commerce business.
Examples & Use Cases
- 1An online store specializing in unique gadget accessories sources products from various global suppliers and ships them directly to customers.
- 2A new entrepreneur launches an apparel brand, selling t-shirts and hoodies that are printed and shipped by a third-party print-on-demand service.
Related Terms
E-commerceSupply ChainInventory ManagementThird-Party Logistics (3PL)