Etsy is the most popular multi-vendor marketplace for independent artists, craftspeople, and small creative businesses. Dropshipping companies often take on much more of the customer service, although they may still refer customer service to the manufacturer for product-specific issues.Įxamples of multi-vendor marketplaces include: In a multi-vendor marketplace customer service regarding account or payment issues might be handled by the marketplace, but product questions and shipping issues are handled directly by the seller. Whereas dropshippers usually pay a wholesale price to the manufacturers for the goods sold, multi-vendor marketplaces take a percentage of a seller’s sales.Ĭustomer service is usually handled differently with multi-vendor marketplaces than with dropshipping businesses. The way that multi-vendor marketplaces generate revenue is also different than businesses that are exclusively engaged in dropshipping. Some ship from their own warehouses in addition to allowing sellers to fulfill orders. Some marketplaces require their sellers to ship all their own products or allow sellers to use their own dropshipping partners. Multi-vendor marketplaces may operate on a mixture of fulfillment models. What’s the difference between a dropshipping business and a multi-vendor marketplace?Ī multi-vendor marketplace is a much broader category of store than a dropshipping business. They keep zero inventory and all products are shipped direct from manufacturers. Houzz, on the other hand, is a popular dropshipping business for home improvement and decor items that has stayed true to the dropshipping model. They still use the dropshipping model for a lot of their products, but have also developed a more traditional online retail side of their business. They also started warehousing inventory and doing some of their own fulfillment. Over time, they’ve actually established their own manufacturing relationships and developed branded products. They bought from vendors, marked up the prices, attracted customers, and made profits off of their sales. All the products were listed in one place, making it feel like a physical brick-and-mortar store. When they started out, they didn’t make anything they just listed an array of home furnishings on their online store, manufactured by a variety of other companies. One of the most well-known dropshipping companies is Wayfair. As a dropshipper, you leave it to your trusted manufacturers to create high-quality goods so you can focus on your core competencies - using your marketing abilities to find the right customers and your customer service skills to build loyalty. All a manufacturer has to do is make great products, find dropshipping businesses like yours to work with, and then sit back and fulfill orders. For them, it’s a lot easier to sell their products wholesale to retailers or dropshipping companies.Ī dropshipping business model can be a great way for both manufacturers and online stores to focus on the core parts of their company that they’re actually good at. They may create products people want and need, but they don’t want to worry about the rest of the effort required to sell to consumers. Why don’t manufacturers just make their own websites and sell directly to the consumer? Why partner with a dropshipping company? Not every manufacturing company is interested in dealing with managing an eCommerce site, marketing, and expanding their customer service team. You’re also responsible for attracting customers to your website, paying your manufacturers’ wholesale price for the products you’ve sold, and handling most of the customer service. You then make those products purchasable on your website or eCommerce platform, mark up the price to cover your overhead and generate a profit, then send any orders directly to the manufacturers to fulfill. You may be wondering, “What exactly do I do if my dropshipping business doesn’t make, store, or ship any products?”Īs a dropshipper, it’s your job to find products that you want to sell and source them from companies that are willing to ship directly to your customers. What is dropshipping?ĭropshipping is a business model where an online store sells direct-to-consumer without designing or manufacturing any products, warehousing actual inventory, or shipping orders. Read on to determine if starting a dropshipping business is right for you and learn how to set yourself up for success. If you’re looking to start an online store and don’t want to deal with managing inventory, product development, manufacturing, or shipping, a dropshipping business model may be the perfect fit.īut how do you start a dropshipping business? It may seem easy because you’re selling products that other people create and ship, but there’s still a lot of planning, setup, and management involved.
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