Difference Between Dropshipping & Ecommerce: What You Need To Know

So if you have been looking into the retail space at all over the past few years, then you must have heard terms like “dropshipping” and “marketplace” being used by everyone.

Everywhere you look, it seems like everyone wants to get into “get into dropshipping” or “sell on a marketplace” or “dropship with some sort of company.”

You will see all these terms and sentences being used in social media, industry publications, blogs, and even in tradeshows. So by now, you must be wondering what all these words mean? Right?

Well, we can tell you from the start that they don’t all mean the same thing. These are different types of e-commerce businesses that allow you to fulfill customer demands. So first, let’s talk about what these are.

  • Dropshipping: So dropshipping is a simple method of a specific type of order fulfillment by a business or individual.
  • Dropship Program: This is an e-commerce model where retailers can create curated, extended aisles to meet customer’s demand.
  • E-commerce Marketplace: A marketplace is an online forum which, like its name suggests, is a place that allows hundreds if not thousands of brands to sell their products.

Now that you know what they are, you should know the difference between dropshipping and marketplaces.

So now, we will get into a detailed description of each e-commerce model to better help you understand the difference between them.

What Is Dropshipping?

The basic dropshipping is a shipping or fulfillment method where a customer places an order with a multi-vendor retailer. The retailer does not send the products to the customers; the actual manufacturer or brand is the one who sends the product.

The dropshipping retailer does not have any physical products in its store. What it does is the retailer takes the order info and sends it to the manufacturer, who then ships it to the customer.

The dropshipping process is a very streamlined approach to e-commerce that has many perks. That’s why more and more e-commerce enthusiasts are looking towards dropshipping as a viable business option.

With drop shipping, the retailer doesn’t have to worry about stocking products and managing warehouses. However, they can offer a wide variety of SKUs from their existing suppliers and also allows them to try out new vendors and product categories without much investment.

As for the manufacturer, they can reach a larger number of people ensuring new revenue streams. Dropshipping allows manufacturers to try out SKU mixes and product categories within their listed retailers, a move that would be considered highly risky in traditional wholesale/retailer dynamics.

Now dropshipping isn’t a failsafe option. Like any retail option, it too can be a failure if not handled properly.

If you are not utilizing the proper technology and due diligence when setting up a dropshipping website, then you may lose all control of things like shipping processes, inventory data, and product information.

So you have to work smart and hard to find the right strategy to implement and ensure success. Now that you know what dropshipping is let’s talk about what dropshipping programs are.

Dropshipping Programs

The dropshipping programs available today are allowing retailers to carefully curate, market, and sell specific suppliers’ products online, increasing the range of products on offer.

Not only does drop shipping programs help you expand your inventory, but it also helps you as a retailer gain new audiences and revenue streams.

Companies that offer drop shipping programs for retailers are usually manufacturers or other big retailers.

It allows these big wholesalers to get their products out to more people and ensure that they are expanding their reach by working with more and more retailers.

So that’s all you needed to know about dropshipping and dropshipping programs. Now, let’s talk about the other half of the story; let’s talk about e-commerce marketplaces.

E-Commerce Marketplace

As we said earlier, e-commerce marketplaces are online forums where thousands of brands sign up to sell their products. Now, many e-commerce marketplaces offer drop shipping programs for retailers as well.

These marketplaces act as consumer-focused hubs that allow you to sell products alongside a host of different brands. Amazon, eBay, Alibaba, and Walmart are some of the most prominent marketplaces out there.

These marketplaces work as a central high-traffic hub for brands to set up their brands and sell their products.

The brands are responsible for selling and shipping the products within the e-commerce marketplace platforms, so it’s not all about the marketplace.

Individual brands are responsible for their success within the marketplaces. Now, e-commerce marketplaces look like a lucrative model with Amazon becoming the 4th most valuable company in the US within 22 years, and then there’s Walmart and eBays success.

However, starting an e-commerce marketplace isn’t as easy as setting up other e-commerce ventures.

Usually, retailers want to retain some merchandising power, carefully-choose brands, and opt to sell third-party products. They do it through an efficient, well-organized dropship program for maximum profit.

So that’s all you need to know about e-commerce marketplaces. Now, let’s show you some critical differences between e-commerce marketplaces and dropshipping.

E-Commerce Marketplace Vs. Dropshipping: 5 Key Differences

So now that we have talked in details about both e-commerce marketplaces and dropshipping, let’s take a look at the critical differences between the two:

  • People who distribute the product in marketplaces are called sellers, and people who distribute for dropshippers are known as suppliers.
  • Marketplaces have to disclose if they use a third party other than the retailer when shipping.
  • Marketplaces have reviews and feedback systems that encourage customers to review the seller’s product and services, ensuring a community of loyal customers grows as time goes by.
  • Dropshippers do not disclose the shipping details.
  • Marketplaces are a free place, meaning they do not control what products are sold usually. However, dropshippers have full control over what type of products they want to sell.

So there you go; hopefully, these points answer your question as to “what is the difference between e-commerce and dropshipping?”

Now, if you are looking for more information on dropshipping, then feel free to contact DropshipUSA for more info. Our developers will be more than happy to answer any of your queries.

So feel free to get in touch. Now, that’s about it for today. We will come back soon with something new about dropshipping. Until then, see ya!

Originally posted in: https://dropshipusa.io/blogs/news/difference-between-e-commerce-and-dropshipping

Freelance Writer | Entrepreneur | Digital Marketer