How dropshipping works
- You list a supplier's products in your online store, at your own price.
- A customer buys from your store and pays you.
- You pass the order to your supplier and pay them their price.
- The supplier ships the product straight to your customer.
Your profit is the difference between what the customer paid and what you paid the supplier, minus costs like ads, apps and payment fees.
A quick example
You sell a phone stand for $24.99. Your supplier charges you $9 including shipping. A customer orders, you forward the order, and the supplier ships it. Before ads and fees, you keep about $16 without ever touching the product.
Pros and cons
- Pro: low upfront cost. You do not buy inventory before you sell it.
- Pro: easy to test. You can try new products without being stuck with stock.
- Con: less control. Packaging, quality and delivery depend on your supplier.
- Con: delivery times. Overseas suppliers can take weeks, which leads to refunds and bad reviews.
- Con: thinner margins. You pay more per item than you would buying in bulk.
What to check before you start
- Where your supplier ships from, and their real delivery time
- Product quality, by placing your own test order
- Your profit per order after ads and fees
Delivery time is where most new dropshipping stores struggle. Our guide to dropshipping shipping times covers how to fix it, and our dropshipping on Shopify guide walks through the full setup.
