If you haven’t been doing business under a rock or meditating in a cave somewhere in the Himalayan mountains, you’ve most likely heard of dropshipping and the hype that’s associated with it.
It’s the new in-thing to do, especially if you are a digital nomad and living in Chiang Mai (or another half a dozen nomad hubs).
Everyone starts off being a dropshipper, making thousands of dollars from it and then retiring at a beach somewhere. Bali anyone?
Jokes aside, dropshipping is a great way to make some serious moolah, but what is the difference between dropshipping and eCommerce? And how can you get in on the action if dropshipping is right for you?
Experts predict that eCommerce retail sales will be around $4.13 trillion in 2020. That’s not something any self-respecting entrepreneur can ignore.
If you are interested in learning the difference between dropshipping and eCommerce, read on.
1. Dropshipping Has Significantly Lower Upfront Costs
Three main initial investment expenditures are different in dropshipping and eCommerce businesses. Let’s go into detail for each.
Warehouse Costs
The main point to make about dropshipping is that you are not holding inventory somewhere in a warehouse with sweat dripping down your brows. You don’t have to fret about the future of your cash flow and financial statements anywhere as heavily with dropshipping.
As the name implies, the inventory is shipped directly from the supplier’s warehouse over to the customer in dropshipping. You don’t buy any merchandise from the supplier ahead of time.
You form a business connection with the supplier. The supplier’s system will be triggered when someone purchases an item on your website. They then ship that item out to the customer.
The great thing about dropshipping and why digital nomads love it is because it’s a form of passive income. You might be lying on a beach sipping a mojito or fast asleep in bed, and your retail business is still humming along. Bazinga!
In an eCommerce business, you buy, hold, and ship the inventory yourself. You play an active role in it.
Manufacturing/Procuring
As you might imagine, if you are not manufacturing or procuring inventory, your costs regarding this are eliminated.
The ideal dropshipping scenario is when you are selling something with huge potential but still relatively unknown. The fidget spinner’s example comes to mind – as the article says, you don’t choose the fidget spinner’s life. It chooses you.
You choose the item you want to sell and find a supplier for it, usually in the United States or China. They will ship the item to the customer when the customer hits that green buy button.
In eCommerce, you decide what you want to manufacture, find a factory that will do it for you, or build the factory yourself. You manufacture the items at a massive upfront cost to you.
You then store these items in a warehouse somewhere, and you wait, twiddling your thumbs. Or using a fidget spinner that you bought from some dropshipper living in the glorious land of smiles.
Employees
In a dropshipping business, without warehouse or shipping costs, you have no real need for employees. If you are terrible at building websites, you might have a website designer or a virtual assistant. Besides that, you don’t need anyone else, usually.
For eCommerce businesses, the story is quite different. Even if you are not storing the items in your own warehouse, you will be holding it somewhere. And it will need to be packed up and shipped out, which needs employees, not to mention the third-party logistics prover’s fees.
The cost of all this adds up fast, faster sometimes than the rate at which you are selling your eCommerce retail goods.
2. Dropshipping Can Be Done Part-Time Initially
The great thing about how dropshipping works is that you can start small and build up over time, even if you have no initial experience.
You don’t need to quit your full-time corporate job, give up all your ties, and move to Thailand to start this thing unless you want to, of course ;)
With eCommerce businesses, it’s hard to start them part-time because they need a full-time investment of time and money. It’s possible, but only if you never sleep more than 4 hours a night ever again.
3. Dropshipping Is Low risk and Flexible to Pivot Niche.
If you have always dreamt of becoming an entrepreneur, but your risk threshold is relatively low, then dropshipping is the thing for you. Due to its low upfront costs, the dropship lifestyle is an ultra-low risk.
If you find that the niche you chose doesn’t sell well, you can always pivot to another without too much hassle. Change up your domain, your website, and supplier, and you are good to go.
Of course, once you decide on a niche with an eCommerce business, you are stuck with it until you get rid of all your inventory.
4. In Dropshipping, You Don't Get to Sell Your Own Brand.
A significant difference between dropshipping and eCommerce retail businesses is that in dropshipping, you are trailing on the success of an already successful brand. For example, you can use various online tools to spy on your competitors and their ads and marketing efforts … for, you know, a little inspiration.
With eCommerce businesses, the digital marketing strategy is all up to you. As it’s a brand new product that you create, you get the final say in everything. That kind of creativity might be something you are seeking. Or not.
we suggest you read this article : Building Your Brand
Dropshipping and Traditional Ecommerce Are Completely Different Beasts
If you thought that dropshipping and eCommerce were the same, you are mistaken. They might both be selling retail goods on a website, but the two are entirely different on the back end.
Some folks will love the flexibility and low-risk nature of dropshipping. Others will like the creativity and authority of a traditional eCommerce business, to each their own.
If you are looking for a turnkey dropshipping option, create a free trial account and go live in minutes!
