How Does Dropshipping on Shopify Work?

Every day, more and more Shopify sellers and other eCommerce pros are making the move to dropshipping. Thanks to not having to keep inventory on hand, this method is an attractive and potentially profitable prospect, while also being quite convenient.

However, if you’re considering dropshipping for your eCommerce business, there are quite a few things you need to consider. From the definition and process to the benefits and drawbacks, here’s everything you need to know about how dropshipping works on Shopify. 

Dropshipping Definition

Dropshipping is the practice of selling products without keeping those items in stock. Instead, when a store sells a particular item, the seller then purchases the product from a third party and has it shipped directly to the customer. This means the seller never has to keep the products in stock or handle them. 

Typically, the third party a store dropships through is a wholesaler or manufacturer.

How Dropshipping on Shopify Works

According to Shopify, there are two common ways most sellers go about dropshipping on the platform. 

The first involves using supplier databases to find suppliers located in North America or anywhere in the world. And the second is to use a Shopify app that easily connects you to suppliers.

For the second method, Shopify recommends Oberlo, which was developed by Shopify and helps business owners find products to sell. Oberlo connects directly to your Shopify store and enables you to browse AliExpress. Once you find a product you want to sell, simply import it to your store with the click of a button. 

When a customer buys a product, you’ll fulfill the order through the Oberlo app. This process is automated, so all you need to do is check that the order details are correct and click “Order.” The item is then sent from the AliExpress dropshipping supplier directly to the customer (wherever in the world they are).

Benefits of Dropshipping on Shopify

In order to determine whether dropshipping is the right approach for your Shopify business, you need to consider the benefits and drawbacks. 

Just a few benefits of dropshipping on Shopify include… 

• Convenience: Without having to keep inventory on hand, it’s easy to get started, test and scale your dropshipping business. 
• Profitability: From requiring less capital to having low overhead, dropshipping on Shopify leaves you a lot of room to make money. 
• Flexibility: A dropshipping operation can be run from essentially anywhere with an internet connection. 
• Lots of Options: When you dropship on Shopify, your choices when it comes to products to sell are virtually limitless. 

Drawbacks of Dropshipping on Shopify

On the flipside, dropshipping on Shopify does also come with a few potential drawbacks that you need to weigh. Some of the most common ones include… 

• Limited Customization: Because your products are housed by a third party, you don’t have a lot of control over the branding or design of the items you sell.
• Supplier Mistakes: Using a third party supplier means that you may have to deal with unhappy customers when they make an error. 
• Shipping & Inventory Complications: Most sellers who use dropshipping go through multiple suppliers, which means you may have items being shipped through several different couriers and methods. It can also be difficult to keep track of what’s in stock with every supplier (but there are apps designed to help you sync up and mitigate this issue).
• Lots of Competition: Tons of sellers are now dropshipping. That means there is a lot of competition out there, and because of the lack of overhead costs, many sellers offer items at rock-bottom prices.

Final Thoughts

Dropshipping on Shopify can be a very profitable and convenient business venture. And with apps such as Oberlo, sellers can easily find products to sell, list them in their store and fulfill orders — all without having to keep any inventory in stock. 

And while dropshipping offers low overhead, easy startup and impressive convenience, it also comes with a few potential drawbacks to consider, such as limited branding and customization, possible supplier errors and tons of competition. 

If you decide that dropshipping on Shopify is the right move for your eCommerce business, make sure you set yourself up for success. That includes researching suppliers to ensure you can depend on them to ship items expediently and provide high-quality goods. 

Finally, once you’ve done all this work to shore up your product offerings and dropshipping methods, don’t drop the ball when it comes to your customer service. After all, the last thing you want to do is lose a sale because you left a customer hanging for too long after they sent you a question. 

That’s exactly why Replyco exists. We enable eCommerce sellers to consolidate messaging from all of their selling channels into one easy-to-use inbox. And with our live chat widget that can be installed on any selling website (including your Shopify store), we help Shopify sellers respond to customer inquiries during crucial moments in the buying process. Want to learn more about how you can meet your shoppers where they are, while also saving time and effort all without breaking the bank? Take a full tour of our features. Or get started with your free trial today!