Dropshipping

With dropshipping, the merchant only buys the goods once a customer has ordered. Storage, packaging and shipping are handled by the supplier. That drastically lowers startup risk and capital requirements, which is why dropshipping is often used as an entry point into e-commerce.

The downside: thin margins, little control over delivery times and product quality, interchangeable assortments and intense competition. Legally, the merchant remains fully responsible to the customer for returns, warranty and product safety — even if the supplier is on another continent.

The models that succeed long-term usually treat dropshipping as a complement — for assortment extensions or market tests — rather than as the entire business. Merchants who scale eventually bring fulfillment and quality control under their own responsibility.