Dropshipping
A fulfillment model where products ship directly from manufacturer to customer.
1 min readLast updated Apr 2026
Quick Reference
CategoryFulfillment & Operations
Related Terms1
A fulfillment model where products ship directly from manufacturer to customer.
Why It Matters
Dropshipping eliminates inventory risk and upfront capital—you only pay for products after selling them. It's ideal for testing products, expanding catalog with low-volume items, or starting a business with minimal capital. The tradeoff is lower margins and less control.
Practical Example
Scenario
A home office brand tests dropshipping for an expanded monitor stand collection.
Calculation
Own inventory: $25 cost, 50% margin, $12.50 profit. But requires $15,000 upfront. Dropship: $32 cost, 36% margin, $18 profit per $50 sale. Zero upfront. Lower margin, but test validates demand before investing.Result
Dropship test reveals 2 of 5 products sell well. Brand invests in inventory only for winners, avoiding $9,000 in dead stock for the failures.
Pro Tips
- 1Use dropshipping to test new products before committing to inventory
- 2Find dropship suppliers with US warehouses for reasonable delivery times
- 3Build supplier relationships—reliability varies wildly
- 4Consider hybrid: dropship long-tail, stock bestsellers
Common Mistakes to Avoid
Dropshipping commodity products with no differentiation (race to bottom)
Ignoring delivery times—3-week shipping kills customer experience
Not vetting supplier quality—your brand owns the customer experience