Dropshipping, a prominent eCommerce fulfilment model, allows businesses to sell physical products without the need to hold inventory. This approach has become increasingly popular due to its simplicity in setup and minimal initial investment. In dropshipping, when a customer places an order, the retailer then orders the item from a third-party supplier, such as a wholesaler or manufacturer, who ships it directly to the customer. This method removes the need for direct product handling by the retailer.
The model’s attractiveness lies in its operational efficiency and scalability. Retailers can offer a diverse product range without the risks and costs associated with inventory storage. As of 2019, the dropshipping market’s revenue projections stood at a significant $587.5 million, indicating its rising adoption.
However, dropshipping is not without its challenges. These include lower profit margins due to higher product costs compared to bulk purchases, slower shipping times due to reduced control over logistics, and potential issues with product quality and availability, given the retailer’s limited supply chain oversight.
An emerging trend within dropshipping is ‘Print on Demand’ (POD). This variation allows retailers to offer customized products, such as custom hoodies, t-shirts, mugs, or books, printed individually as orders are received. POD combines the flexibility of dropshipping with the ability to offer unique, personalized products, enhancing customer appeal. While POD addresses some standard dropshipping challenges, such as inventory management, it also introduces specific considerations, like the need for high-quality designs and reliable printing partners to ensure product quality and customer satisfaction.