Dropshipping is a popular business model for eCommerce entrepreneurs. It allows merchants to sell products to customers without having to store or ship the products themselves. So how does a dropshipper make money?
Source Products at a Discount
A dropshipper works directly with a manufacturer or wholesaler to source products at a discounted price. The dropshipper can then sell the product to customers at a higher price, making a profit from the difference in the initial item cost and the selling price.
No Need to Store Inventory
The dropshipper does not need to store any inventory or ship items directly. Instead, the dropshipper will forward the customer’s order and shipment details to the supplier, who will then ship the item directly to the customer.
Make Money from Margins
The dropshipper makes money by setting a higher price for the item than what they paid the manufacturer or wholesaler. The difference between the two prices is the dropshipper’s profit margin.
Dropshipping is a great business model for eCommerce entrepreneurs. It allows merchants to source products at a discount, sell them to customers at a higher price, and make a profit from the difference in the two prices. Dropshippers also don’t need to store any inventory or ship items directly, as the supplier will handle the order and shipment.