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Imagine a business where you could sell whatever you wanted without having to handle the product physically and being able to charge whatever price you wanted to charge on it. This is essentially what dropshipping amounts to. It is a wonderful business model; you're going to learn all about it inside and out in this chapter.
There are some disadvantages as well that would be remiss of me not to remind you hof. I'll cover those as well since it is unrealistic for you to assume that everything will always beat hunky-dory. Either way, let's jump in and look at what dropshipping is.
Dropshipping is the process where a middleman retails a manufacturer's or wholesaler's product. The middleman, in this case, is you, the store owner. The store owner takes care of all of the marketing aspects and drives traffic to the order pages, and the wholesaler takes care of product fulfillment, such as delivery and packaging.
In some cases, you can even have the manufacturer brand the product with your own name and have them ship it to your customers. This business model is of immense help to the manufacturer and wholesaler since they get to focus on investing in what they know best, which is manufacturing the product.
You get to focus on what you know best, which is to drive traffic and bring in sales. In effect, you're a one-person marketing team for the wholesaler's products. What's not to like? The customer will order the product via your website or sales channel and will pay you money. In turn, you pay the wholesaler at their quoted price, and you pocket the profits.
The great thing about this business model is that it reduces inessential costs for all parties involved. Your startup costs are significantly lower than traditional retailers'. This doesn't mean you can start for free. As I'll explain later, it is in your best interest not to do so. However, you get to skip all of those painful inventory and purchasing costs. In essence, you get to run your business on a consignment basis from the wholesaler, which is to say that you pay only when you receive an order from a customer.