The internet has made starting a business easier than ever. You only need an idea, a supplier, and a website to sell goods or services online with little effort. There are minimal startup expenses, but there are huge potential rewards, so much so that during the 2020 shutdown, many new online businesses were started in the US. A large number of those businesses are drop shippers. In this article, we will know what is the difference between eCommerce and dropshipping.
eCommerce is the general term for the online sale of products or services. Mostly, it refers to online stores. When a business uses the traditional eCommerce method, it has a website listing its products. Customers select the items they want to buy. They put them in their shopping cart, proceed to the checkout, and pay using a debit or credit card. The order is received by the business, which processes it. They will have a warehouse where they can pick up the inventory, pack it, and then use a courier to deliver it to the customer. Larger businesses like Amazon might employ their delivery personnel.
Pros
Cons
Dropshipping is also a form of eCommerce which follows a completely different process. It is a business method that is currently growing. You need a supplier and a website, but you don’t need any physical store to store any inventory. In dropshipping, the company usually sells products that they don’t have physically. This dropshipping is common in most fashion brands where they have only websites. The customers select the products and buy them. However, the order passes to the supplier who makes the products and sends them to the customer. Here, the drop shipper acts as a mediator.
Pros
Cons
eCommerce and dropshipping have the same workflow until they reach the order fulfillment level:
eCommerce and dropshipping use different business methods. They both have different impacts on the performance of your eCommerce site. You have to compare the impact of these models on the following aspects.
eCommerce: Setting up a warehouse and purchasing merchandise are both necessary. It needs money up in advance.
Dropshipping: You can get started with no initial investment required because you don’t need inventory or a warehouse.
eCommerce: If you buy things at wholesale prices, your profit margins will be huge. The price of shipping and packaging can be reduced as well.
Dropshipping: As you buy products from a dropshipping supplier, your profits will be low. You can face additional costs in your supply chain due to the possibility of paying for fulfillment services.
eCommerce: you have total control over the goods you sell. You are allowed to brand and sell your products. It helps the development of a strong brand.
Dropshipping: you need more control over the quality of the products the dropshipper sells for you. You won’t be allowed to use unique branding or sell customized goods.
eCommerce: This method is complicated because you must buy, store, and package your goods. You might require an experienced staff.
Dropshipping: For new companies, dropshipping makes doing business easy. You can save money on initial product expenses, packing, and storage.
eCommerce: If products don’t sell, the loss will be more. However, since you are in complete control of the sales process, you won’t have to worry about solving issues with a third
Dropshipping: If you don’t have any inventory, you are at no risk if sales are low. But you can be at legal risk if the drop shipper doesn’t follow the rules.
eCommerce and dropshipping are two useful and popular fulfillment methods with pros and cons. Carefully consider the impact of these models. You must create a vast customer base no matter which eCommerce shipping strategy you choose. If you are looking to start a business and build an online store, we can help. At Ayatas Technologies, we have over 15 years of experience providing eCommerce solutions to different businesses. For more details, contact us at (916)836-8099 or Request a FREE Consultation below.