3 Reasons Why Dropshipping Is the Future of E-Commerce

I’m a first-year business student getting my MBA, and we’ve been hearing a lot about how dropshipping is playing a role in the way that retailers are planning out their sales. I know that e-commerce is becoming more and more important to traditional brick and mortar businesses, but I don’t fully understand exactly how dropshipping works. What is dropshipping and why is it so important to the future of e-commerce? What makes it so advantageous?

You’re totally right that dropshipping is becoming more and more common as more businesses focus their efforts on online retail. Put simply, dropshipping refers to a shipping arrangement in which the retailer is never involved with the mailing out of merchandise. Instead of having to store their inventory on site, pick out products to fill an order, package the products, and ship them out, everything is handled by the distributor. This helps to simplify the eCommerce process for a variety of reasons, outlined below.

One of the most popular reasons why dropshipping is catching on is that it cuts down on overhead. Businesses used to have to hire employees to handle the picking and packaging of orders. They also had to spend money buying and storing their inventory, which could really add up and increase the number needed in order to meet their bottom line. This helps streamline the online sales process while also eliminating extra costs. For example, a small business focusing on selling wines could struggle to compete with big-box liquor stores. However, thanks to e-commerce, you’d only need to find a reputable wine distributor who is capable of fulfilling dropshipping orders in order to stay competitive, even as a small business.

Another reason that dropshipping is catching on is that it allows businesses to invest their resources into marketing their products better. If you have a business like Modalyst dropshipping handling your shipments, you can have the peace of mind necessary to spend time and energy in other areas of your business. Marketing your products is just one example of this, and it’s worth noting since the return on investment is so high with digital marketing platforms. When you consider how much money you save on overhead using a dropshipping company, and then factor in the fact that social media’s ROI allows you to double, triple, and in some cases, quadruple your marketing spend, it’s clear to see how reinvesting the money you would spend mailing packages out yourself can be a major boon for business.

One final factor that makes dropshipping so appealing is its scalability. Particularly when thinking about startups and other small businesses, being able to grow rapidly is crucial to staying competitive in the industry. A company like Modalyst can ensure that you’re never at a loss for a product or have to delay orders since they have experience partnering with major eCommerce platforms including Wix and Shopify. Beyond shipping scalability, it’s also worth noting that if you’re only having to scale your customer service and marketing teams, it also becomes easier to scale quickly. All of this makes it easier to focus on the big picture decisions that you need to be making as a new business owner, rather than becoming mired in the nitty-gritty of day-to-day operations.

As you can see, there are myriad benefits to using dropshipping as your eCommerce solution. Customers are demanding the ability to buy goods online, but that doesn’t necessarily mean that you’ll need to incur extra costs as a business owner opening up an e-commerce platform. Thanks to dropshipping, you can focus on the big picture strategizing you need to build your business. Beyond freeing up your time and energy, dropshipping also will ensure that you can maximize your budget by eliminating costs like overhead and storage fees. All of these benefits combine to make a very efficient e-commerce option for businesses of all industries and sizes.