A Retailer fulfills products orders by shipping the products directly from his store, whereas a Dropshipper does not store products, a Dropshipper fufills product orders directly from the supplier to customer.
While a retailer buys products at wholesale prices, stores the products and resales the products at a mark up price. A dropshiper does not buy product in bulk to store them, a Dropshipper only buys a product when a customer has purchased it and directly from the supplier to the customer.
The work process of a Dropshipper
You can see from the illustration above, that a Dropshipper is an e-commerce entrepreneur, who owns an e-commerce store, you can check out this article to learn about the different platforms you can use to build an e-commerce store and the cost.
When a Dropshipper get an order on his store, he pays the supplier for the product. This follows that a Dropshipper has a supplier who fufills product order to his customers.
There are various dropshipping suppliers, who readily partners with Dropshippers. You can check out our recommendation of the best dropshipping suppliers in the UK, EU and North America!
The order is then fufilled directly from the Supplier to the customer!
The work process of a Retailer
The retailer has a retail store, it could be an e-commerce store, a physical store or both! A customer makes an order from the Retail store!
Unlike the Dropshipper, the Retailer does not fufill orders via a supplier, instead a Retailer already has this products in his store, warehouse, home etc, the retailer goes to where he has stored the products and packages the order and ships it to his customers!
The main difference between a Retailer and a Dropshiper is “order fufillment”. A Dropshipper fufills orders via a third pary supplier whereas a Retailer fufills orders directly to the customer.
What are the advantages dropshipping over Retailing?
- Cheaper to Start;
Dropshipping is cheaper to start compared to Retailing because the Dropshipper does not invest in buying and storing product in bulk. The Dropshipper only pays for product to the supplier whenever he gets an Order
- Passive income;
Dropshipping is easie to automate and turn into passive income! The process of digital marketing, placing an order to the supplier and other fufillment can easily be automated.
- Less Risk;
Dropshipping posses less financial risk than Retailing because a Dropshipper does not invest in purchasing the products in bulk! so if a product turnes out to be non marketable, the Dropshipper can easily switch to marketing a different product without losing money on inventory!
More so, the cost of setting up an e-commerce store and maintaining one is cheaper than a physical Brick and Motar store!
- Market Reseaarch and Digital marketing skills;
Dropshipping helps in learning and developing digital marketing, analytics and marketing research skills. As a Dropshipper you learn what it is to create an e-commerce store, to digitally market a product, to analyze data, to Reseach the market and many other tech skils!
If you are interested in taking our free e-commerce video courses that shows you how to design an e-commerce website, research a product, work with suppliers and market products profitably, then take our free video courses (available in English language only). let's take you from total beginner to an e-commerce expert.
If you have any e-commerce related questions, you can ask on our e-commerce forum. (our e-commerce forum is available in over 25 languages)