By Retail Brew Staff
less than 3 min read
Definition:
Dropshipping is retail without the warehouse. Instead of buying inventory upfront, retailers partner with third-party suppliers—usually manufacturers or wholesalers—which ship products directly to the customer. A shopper places an order on an e-commerce site, and the seller forwards the order to a supplier, which packs and ships it under the brand’s name. It’s a scalable way for digitally native brands to test market fit or expand SKUs quickly, or a way for brands to dip their toe in the retail pool without diving in headlong.
Origins of drop shipping
Dropshipping traces its roots to mail-order catalogs in the 1960s, when retailers sold goods they didn’t stock, relying instead on wholesalers to ship directly to customers. Sears and JCPenney, for example, used third-party suppliers to fulfill remote orders.
In the early 2000s, eBay sellers started flipping products without ever handling inventory. Then came Shopify (2006) and AliExpress (launched globally in 2010), and dropshipping became a cottage industry.
Dropshipping in context
“Goody has no inventory or warehouses, with the brands dropshipping, a cinch for most of its brands that are DTC and already doing so. (For companies with no shipping departments, Goody connects them with logistics vendors.)”
“While dropshipping networks (like AliExpress or SaleHoo) already let stores purchase items from a third-party supplier, Canal’s value proposition lies within its ‘curated network’ of high-quality brands, it said.”
