What Is Dropshipping?
Dropshipping is a method of order fulfillment that uses a third-party supplier to ship goods sold by a retailer. This means the retailer doesn’t keep the products in stock but instead transfers orders and their shipment details to either the manufacturer, a wholesaler, another retailer, or a fulfillment center/warehouse, which then ships the goods to the customer.
Dropshipping is a great complement to a traditional eCommerce business as it allows the retailer to avoid the cost and effort associated with maintaining a warehouse and a brick-and-mortar storefront. It frees them up to focus on marketing, advertising, and managing their online presence.
How Does It Work
Dropshipping can work in the form of product reselling, where a company finds products from a variety of sources and makes them available for online purchase all in one place, on their eCommerce store. Additionally, dropshipping can be used to create an online business extension, product creation, or print on demand.
If you’re considering starting a dropshipping business or adding a dropshipping component to your existing store, it’s crucial that you first find your niche, and price your products correctly. You also need to ensure you have the technology in place for getting correct shipping estimates since you will likely be shipping from multiple locations. ShipperHQ is a popular solution that’s available across all the major platforms, but not all shipping apps are as widely supported.
There are a number of eCommerce platforms that you can run a dropshipping business on. Shopify and BigCommerce are two of the biggest and most popular SaaS platforms, so we’re going to focus on how they handle dropshipping. Both offer a number of plans which offer various features and services, which are charged at different rates accordingly.
Benefits of Dropshipping: With more automation, shipping and packaging are handled by manufactuers.
How Does Shopify Handle Dropshipping?
Shopify has a partnership with Oberlo, which will help you find products from suppliers all over the world and add them to your own online store. If you’re currently dropshipping with AliExpress, you can connect your existing products to your Oberlo account.
Shopify has a number of other similar and highly rated apps on their marketplace to enable drop shipping for specific niches, marketplaces, and regions. This includes apps that automatically check and update your prices, including PriceMole and Prisync so that you stay competitive. In addition to ShipperHQ, Shopify’s apps for estimating shipping costs include Shipping Rates Calculator Plus and Estimated Shipping Cost.
Shopify charges a transaction fee of 2%, 1%, or 0.5% for every purchase made on your store (depending on which plan you choose) unless you use Shopify Payments as your payment provider. This can add up quickly when you work with tight margins, as drop shippers often do.
Benefits of Dropshipping: Unlike traditional retailers, online dropshippers do not need to invest in an initial inventory stockpile.
How Does BigCommerce Handle Dropshipping?
BigCommerce has an app marketplace, with a few great product-sourcing apps like Inventory Source, e-ProductPlug, and Modalyst, but none of them are as established and comprehensive as Oberlo.
Like Shopify, BigCommerce also has competitor price-monitoring and price-updating apps available, including Price2Spy and Repricer. As well as ShipperHQ, apps you can use with BigCommerce for estimating shipping include ShippingEasy and Advanced Shipping Manager.
BigCommerce doesn’t charge any transaction fees, no matter which of their “Essentials” plan you opt for. However, BigCommerce plans have sales caps of $50k, $150k, or $400k based on which plan you have. If you reach the sales cap on a lower plan, you’ll be automatically upgraded and billed for a higher plan from the following month, based on your sales growth. If you’re already on the top Essentials plan, you’ll be charged extra for each set amount you go over the limit, or asked to sign up for a custom solution for your needs.
Benefits of Dropshipping: Your financial risk is greatly reduced due to low initial investment and lack of excess inventory.
Which provider is the better option depends on your personal preferences and situation. While both platforms have apps that let you do everything from source products to set up shipping through your suppliers, many consider Shopify’s selection to have a consistently higher quality, and many prefer to use its partner Oberlo for dropshipping.
Want to know more? For an in-depth and personalized approach to dropshipping solutions for your business, reach out to our team of experts. We’ll guide you through the best options based and provide a tailored solution for your business needs.