Dropshipping is a way of selling products online without holding any stock. A customer orders from your store, you pass the order to a supplier, and the supplier ships the item straight to the customer. You never handle the product. You still own the sale, and with it the customer relationship, support, returns and the legal duties that come with selling.
How dropshipping works, step by step
- You list products. You make items available through your own online store or a marketplace.
- A customer orders from you. They pay you, and your store is the one they deal with.
- You send the order to the supplier. Some sellers do this by hand. Ecommerce platforms can also connect a store to suppliers through integrations, as Shopify’s help material describes.
- The supplier packs and ships. The parcel goes directly to the customer.
- You manage the aftermath. You keep the customer informed about order status and handle support. How returns are divided depends on your arrangement with the supplier. Marketplace rules can make you responsible for returns whatever the supplier agrees.
Who the supplier can be
Suppliers may be manufacturers, wholesalers, warehouses or independent makers. Dropshipping is not one fixed arrangement. Sellers use it to resell a supplier’s product, to extend a local retailer’s reach online, or to bundle products into a new offer. Shopify’s guide names AliExpress as one example of a supplier directory. It is a place to start looking, not an endorsement.
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What you still own as the seller
Outsourcing storage and shipping does not outsource accountability. These are the points that matter most.
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You are the customer’s point of contact. That means handling questions, refunds, returns and exchanges, even though you never touched the goods.
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Product safety and legal compliance
Shopify advises merchants to check product safety requirements and certifications for the markets they sell into. Merchants must also comply with the laws that apply to their business and customers, platform terms and other relevant policies. These duties depend on where you and your customers are located. Shopify’s guide is general information, not legal advice.
Honest delivery promises
Shopify recommends the following:
- State processing times, shipping information and any additional fees before purchase.
- Tell customers about delays or changes.
- Disclose third-party fulfillment and the shipping origin.
- Publish your refund policy.
- Order from a prospective supplier yourself first, so you can judge processing and delivery time before customers depend on it.
Supplier performance becomes your reputation. Customers blame the store they paid, not the warehouse behind it.
Does Amazon allow dropshipping?
Only on specific terms. Amazon Seller Central’s Drop Shipping Policy for the U.S. store says: “Drop shipping, or allowing a third-party to fulfill orders to customers on your behalf, is not acceptable unless it is clear to the customer that you are the seller of record.”
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- Your identity must appear on packing slips, invoices and external packaging.
- Information identifying any other seller must be removed.
- You must process customer returns.
This means buying from another Amazon seller and having them ship to your customer under their own identification is not an allowed shortcut. The page describes the U.S. store, so check the policy for any other Amazon marketplace you use. Other marketplaces and platforms have their own rules.
Is dropshipping profitable?
The model alone does not tell you. The sources reviewed give no dependable typical margin or success rate, so treat any earnings promise or universal profit claim with suspicion. Your results depend on:
- the products you choose;
- your supplier’s terms and prices;
- marketing costs;
- fulfillment and shipping costs;
- the time and cost of support and returns.
Dropshipping compared with holding your own stock
Amazon’s seller guide frames the fulfillment choice around how much control you want, how fast you need to ship, your target margin, and how you will handle returns, refunds and replacements. Those factors give you a framework for comparing dropshipping with stocking products yourself.
| Factor | What to compare |
|---|---|
| Product quality and packaging | Dropshipping gives you less direct control, because the supplier packs the order. Holding stock lets you inspect items and control the packaging. |
| Shipping speed and reliability | With dropshipping, both depend on the supplier. Test it by placing an order yourself. |
| Upfront inventory | Dropshipping avoids buying stock in advance. Holding stock requires that capital. |
| Support and returns | You are responsible either way. Dropshipping adds a dependency on the supplier to resolve problems. |
| Costs and margin | Compare supplier pricing, shipping, marketing and returns handling against your target margin. No typical figure is established. |
| Legal and marketplace rules | These vary by jurisdiction and platform. Check them before you list anything. |
Before you start
- Read the platform’s current fulfillment and seller-of-record rules.
- Confirm the supplier will ship unbranded, or under your branding, if the platform requires it.
- Agree in writing how returns, damaged goods and out-of-stock items are handled.
- Check safety and certification requirements for each market you sell into.
- Place a test order to measure real processing and delivery times.
Frequently Asked Questions
What is a dropshipper?
A dropshipper is the seller who runs the storefront and takes the customer’s order but does not stock the goods. A supplier fulfills the order. The dropshipper stays responsible for the customer relationship.
Do I need to hold any inventory?
No. The supplier holds the stock and ships it. You still need to know that the supplier has the item available and can ship it in the time you promise.
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Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
