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Feb 07, 22  |  

Difference Between Dropshipping and Ecommerce: Complete Comparison

Do you intend to open an online store?

Order fulfillment is available in a variety of ways in the online business ecosystem. The two most common models are eCommerce fulfillment and dropshipping.

According to research, the market value of dropshipping was $128.6 billion in 2020. By 2026, it's predicted to have grown by a stunning 370 percent.

Let's compare dropshipping vs eCommerce in this tutorial to see which one is ideal for your business.

Let's take a look at the basic eCommerce procedure before we dive into what dropshipping is and how it works.


The Ecommerce Workflow from Purchase to Delivery

Let's have a look at how an online store operates.

From purchase to delivery, this is the end-to-end workflow.

  1. A customer goes to an internet retailer and buys something.
  2. The customer completes the transaction by paying for the product online.
  3. The item is obtained from a warehouse.
  4. The order is packed and tagged with the mailing address of the buyer.
  5. The goods are delivered to the customer via a shipping company.

The order fulfillment process is made up of the final three parts. For this, businesses leverage eCommerce and dropshipping methods.

Let's look at the basics of dropshipping and how it varies from eCommerce fulfillment.

How Dropshipping Works?

Dropshipping is not a viable eCommerce option. It's just another type of eCommerce business.

Online stores that use dropshipping don't have their own inventory. Instead, they work with a drop shipper, which is an order fulfillment company.

The following are the essential stages to starting a dropshipping business:

  • You own the store and the things it sells, but not the inventory.
  • A customer placed an order and pays for it via the internet.
  • Your dropshipper receives a duplicate order.
  • The goods are chosen by the dropshipper from their fulfillment center.
  • Your clients' orders are packed and sent by the dropshipper.

Please keep in mind that dropshipping is not the same as third-party logistics (3PL). You own the inventory in a 3PL arrangement, but the warehousing is handled by a third party. Only the storage, packing, and shipping are outsourced. The inventory, on the other hand, is owned by the dropshipper in dropshipping.

In a nutshell, you can start a dropshipping business even if you don't have any products in stock. When a customer submits an order, you order the product from your dropshipper.

The workflow of the dropshipping business model is depicted in the infographic below:

Let's compare the difference between dropshipping and eCommerce to evaluate which works better for you now that you know how dropshipping works.

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Similarities Between Dropshipping and Ecommerce

To begin, we refer to the typical eCommerce fulfillment process when we say eCommerce.

Until the order fulfillment step, eCommerce and dropshipping follow the same workflow:

  • A website is created by the online shop.
  • They put the product catalog online.
  • They create the checkout process.
  • They market and publicize their goods.

Dropshipping and eCommerce have a lot of things in common.

Now the question is what is the difference between dropshipping and eCommerce?


Difference Between Dropshipping and Ecommerce

Store owners source products and store them in a warehouse in the typical eCommerce fulfillment process. After a customer placed an order, the business owner orders a product from the dropshipper. The customer receives the products from the dropshipper, who sources, packs, and delivers them.

Let's look at how you can choose a way that works for you now that you understand the fundamental similarities and difference between eCommerce and dropshipping.

The Business Impact of Dropshipping and Ecommerce

Dropshipping and eCommerce are two distinct business models. They each have a different impact on the success of your eCommerce site.

You must compare the influence of different models on the following major business areas in order to determine the optimal method.

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The Start-up Investment

Dropshipping: Because you don't need inventory or a warehouse, you may get started with no money down.

You'll need to buy merchandise and set up a warehouse if you're doing eCommerce. It requires an upfront investment.

Profit

Dropshipping: Buying merchandise from a dropshipping source – a middleman — will result in low-profit margins. You may have to pay for fulfillment services, which will increase the cost of your supply chain.

Ecommerce: Because you buy things at wholesale prices, your profit margins will be substantial. You can also save money on packaging and shipping.

Business Simplicity

Dropshipping: Dropshipping makes it simple to start a business as a newbie. You can save money on product development, storage, and packaging.

Ecommerce is a complicated process because it requires you to buy, store, and package things. You may require a skilled workforce.

Marketing

Dropshipping: You have very little control over the quality of the things that the dropshipper obtains for you. You won't be able to offer personalized items or utilize distinctive branding.

Ecommerce: You have complete control over the product you sell via eCommerce. You have the option to sell your own products and brand them whatever you like. It helps in the development of a strong brand.

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Risk Factor

Dropshipping: Because you don't own any inventory, you have no risk if you don't generate quick sales. However, if the dropshipper does not follow the rules, you may face legal consequences.

Ecommerce: If things don't sell, you'll lose more money. However, because you have entire control over the sales process, you won't have to deal with any legal difficulties with a third party.

Let's take a look at some pointers on when to employ dropshipping and eCommerce based on these important considerations.

When Should You Use A Dropshipping Model?

Here are a few circumstances in which dropshipping is the best option.

  • You're a newbie who wants to get your store up and running quickly.
  • You want to keep your startup expenditures as low as possible.
  • You sell things that don't require branding.
  • You want to keep the hazards of unsold inventory to a minimum.

When Should You Go For An Ecommerce Fulfillment Model?

Here are a few circumstances where you should pick eCommerce fulfillment.

  • You have sufficient finances as well as a qualified workforce.
  • You're promoting your own line of products.
  • You desire complete control over the order fulfillment process.

Final Thoughts:

Order fulfillment options such as dropshipping and eCommerce are both useful. Both have advantages and disadvantages.

When deciding which one would be the best for you, consider the difference between dropshipping and eCommerce, think about how these approaches will affect components of your business such as:

  • The first outlay.
  • Profitability.
  • Business Simplicity.
  • Marketing.
  • Flexibility.

 

Whatever fulfillment strategy you choose, you'll need to build a great store to attract a large number of customers.

Are you ready to start the process of creating an online store? You can do so by visiting our B2B rating & review platform, where we've compiled a list of the best eCommerce development firms.



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