Drop shipping

What is drop shipping?

Dropshipping is a special form of eCommerce. Retailers offer their goods in their online shop, but do not store them themselves but with the manufacturer.

This is how the model works in detail: Customers place their orders in the retailer’s online shop. Only order acceptance and billing are then handled by the shop or the retailer. The goods are delivered by the manufacturer or wholesaler. As a customer, it is often difficult to tell whether it is a drop shipping model or not – there is no mandatory labeling so far.

The terms direct trade, drop shipment or direct shipping are also used as synonyms for drop shipping.

Pros of drop shipping

Easy entry into online trading

Especially for companies or startups that are just beginning to trade online is drop shipping a suitable concept. They do not have to directly buy or rent their own warehouse for expensive money, but can use the resources of a manufacturer or wholesaler.

Easy testing of new products

Neue Produkte lassen sich mit einem Dropshipping-Modell einfach am Markt testen.
Sind die Tests erfolgreich, haben Händler auch über einen kleinen Zeitraum relativ gute Wachstumsmöglichkeiten und können schnell skalieren.

Favorable prices for customers

Customers benefit from direct trading because they have access to a broad range of products. In addition, the products are often comparatively favorable.

Cons of drop shipping

Low profit margin for retailers

Often the same products are sold cheaper by a competitor via a dropshipping shop. For this reason, retailers often have to settle for low margins and/or ideally find a niche market for themselves. Another option is to invest a lot of money in marketing in order to stand out from the market and be more present than the competition.

Little influence on customer satisfaction

Even if the online shop is modern and convenient for consumers, retailers have little influence on all processes that follow, such as shipping and delivery, and cannot influence the customer experience directly.

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