How Does Dropshipping Work?

Before going into the detail of how dropshipping works, first of all, you need to know what actually dropshipping is. Dropshipping is a process by the means of which a person can run a business like the wholesale Jewelry. It is a useful technique by which a person sells a product to a customer without keeping stock, inventory or managing any warehouse or store. The person who sells a product to the customer via drop shipping is called retailer in business terms, while a person who dropships the product to the customer is called the wholesaler. For example, if a retailer does a business of wholesale Jewelry, he does not have to buy jewelry by himself to sale it. Instead he just needs to receive an order and ask wholesaler to dropship to the customer.

In dropshipping, the retailer receives the payment from the customer and pays off to the wholesaler. Retailer sales the product to the customer as per its retail price while pays cost as per wholesale rate to the wholesaler. In this way, retailer's profit is the amount that comes by subtracting wholesale rate from the retail price. Dropshipping can be of a single product or can be multiple items. Just like in the case of wholesale jewelry, customer can demand more than one jewelry items and retailer asks the wholesaler to dropship it to the address of the customer.

It is not necessary that all wholesalers deal in dropshipping. The wholesaler who deals in it is certified for it and is genuine and trustworthy supplier. Moreover, few retailers fix their profit to a specific percentage instead of above mentioned procedure of subtracting the whole sale price from the retail price.

Dropshipping is mostly common now via online. Retailers make their web site and list the names of products which retailer can provide to the customer via wholesaler. Wholesale jewelry is a good example of such online dropshipping business. Few items can be shown to the customer via pictures and their description, this is how a customer can like and demand for jewelry items by knowing the specifications of that specific product. Once retailer gets an order, he/she simply forwards the details to the wholesaler or supplier and then he/she is responsible to take care of packaging of the products and their shipment to the door step of the customer. The retailer is not concerned with all these tasks. He is just responsible to get the payment and pay off the supplier.

Thus dropshipping gives profit to the retailer with minimizing risks and makes this procedure of business attractive especially for small and home based online business. Wholesale jewelry is a very good example of dropshipping for home based business. One can easily run this business without any investment on buying products and keeping them in warehouses or stores. In this way, retailer establishes his business with the minimum risk of loss as the order delivers on demand only and that delivery is also done by a third person (wholesaler).

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