What is Dropshipping?

Dropshipping is a retail fulfillment model in which the seller does not hold inventory. When a customer places an order, the seller forwards it to a supplier or manufacturer who ships the product directly to the end customer. The seller handles storefront, marketing, customer service, and payment, but never physically touches the goods.

Definition

The model decouples merchandising from logistics. A dropshipping operator can list thousands of SKUs without warehouse capacity, working-capital tied up in stock, or fulfillment overhead. Margins per unit are typically thinner than in traditional retail because the supplier captures part of the value, and delivery times are usually longer because shipping originates from the supplier's location.

Trade-offs

Dropshipping lowers the barrier to entry for new sellers and allows fast assortment experimentation. The downsides are real: less control over packaging and unboxing, slower and less predictable delivery, harder quality assurance, and limited differentiation when competitors can list identical SKUs from the same supplier. Returns management is more complex because reverse logistics involves a third party.

Frontend implications

A dropshipping storefront must accurately reflect supplier inventory and lead times. Stale stock data leads to oversells; vague delivery promises hurt trust. Real-time inventory APIs from the supplier feed the product detail page, and shipping estimates are calculated per item rather than per order. In composable setups, a dedicated inventory or order orchestration service mediates between the storefront and one or more dropship suppliers.