Setting up a business is easier than ever thanks to the internet. You can sell a product or a service online with little hassle but all you need is an idea, a supplier, and a website.
Start-up costs are minimal, but the potential gains are huge. So why not try it out for yourself?
There are so many options for you to try out. But is e-commerce the same as dropshipping? This is a common question for a lot of beginners.
In this article, we will clear a lot of doubts. So do read on and find some helpful information.
Is E-Commerce the Same as Drop Shipping?
To understand what is the difference between e-commerce and drop shipping we must know what these words mean.
Running a company that sells goods or services online is called e-commerce.
Most of us are familiar with this term and buy plenty of things online using an e-commerce website or app, but fewer people know there are different types of e-commerce – dropshipping being one of them.
What is E-Commerce?
Firstly, let’s start with e-commerce. e-commerce is the umbrella term for selling goods or services online.
It mostly refers to online retail businesses. You’ve likely shopped online before and contributed to the massive economic growth e-commerce has seen over recent years.
It’s a huge industry, and all estimates forecast e-commerce to overtake every other form of shopping in the coming years.
Some Examples of e-commerce businesses include: Asos, Boohoo, Amazon, Alibaba, JD.com, Wayfair and eBay.
There are literally millions of others selling all manner of items, including clothes, technology, food, jewellery, homewares, and just about anything else you can imagine.
Methods of E-Commerce
When a company follows the traditional e-commerce format, they have a website listing products for sale and consumers choose products they want to buy. They add them to their basket and checkout, making a debit card payment.
The company receives the order and processes it. They’ll have a warehouse where they pick the stock from, pack it up, and send it to the customer via a courier. Larger companies like Amazon may use their own delivery drivers.
Work Chain in E-Commerce
e-commerce businesses effectively utilise a well-planned chain, with various departments involved along the way. From the marketers, to inventory managers to the warehouse staff and customer service agents.
Smaller businesses might not have dedicated teams, but the process remains the same.
The product comes directly from the manufacturer and they sell it from their warehouse, taking stock from their own site, and handling the order in-house every step of the way.
Now let us see what drop shipping means.
What is Dropshipping?
Dropshipping is a form of e-commerce, but it follows a different process. It accounts for around a quarter of all e-commerce sales, but like e-commerce, it’s a business model that is growing in prevalence.
So, what exactly is dropshipping? Well, you still need a website and you still need suppliers, but you don’t need a physical store.
When a company dropships, it means that they sell products they don’t physically have.
Method of Drop Shipping
It’s common in the fashion industry, specifically personalized goods. A user will log on to a website, browse the items online, add the ones they want to their basket, and then they’ll checkout.
Behind the scenes, the company they bought from passes the order to their supplier who creates the products and sends the items out from their depot. The original company does all the customer service and fronts the operation but they never even touch the product.
Some Examples of dropshipping companies include Hyogo, Gadgetox, Bluecrate, Inspire Uplift and so on.
Generally speaking, the customers won’t know their product has been dropshipped. That’s because all their contact is with one company.
Dropshipping is a bit like a company forming a deal with another company – as Peugeot and Citroen did, and how Apple and Samsung work together. Dropshipping customers typically have no idea that two companies are behind one order.
Which is Better E-Commerce or Drop Shipping?
Dropshipping: You have minimal control over the quality of products the dropshipper acquires for you. You won’t be able to sell custom products or use unique branding.
Whereas in an e-commerce business, you have complete control over the product you sell. You can sell your own products and brand them as you wish.
So I hope in this article you could understand the difference between drop shipping and e-commerce and both are definitely not the same.
Thank you for reading this article. Do add your thoughts and comments below!