{"id":9886,"date":"2021-08-02T10:00:12","date_gmt":"2021-08-02T09:00:12","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=9886"},"modified":"2026-01-29T09:39:08","modified_gmt":"2026-01-29T09:39:08","slug":"build-dropshipping-strategy-ecommerce-business","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/build-dropshipping-strategy-ecommerce-business\/","title":{"rendered":"How to build a dropshipping strategy for your e-commerce business"},"content":{"rendered":"
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\n\t\t\t\t\t\tHow to build a dropshipping strategy for your e-commerce business\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

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The internet can be a rabbit hole in entrepreneurial money-making schemes, particularly when it comes to e-commerce.<\/p>\n\n\n\n

One of the most hyped e-commerce business models in the past few years is dropshipping.<\/p>\n\n\n\n

Dropshipping can be profitable, but it’s not necessarily the get-rich-quick strategy that some YouTubers can often make it out to be. Like all e-commerce business models, it takes time and effort to be successful.<\/p>\n\n\n\n

In this article, we want to give you a clear and realistic view of what dropshipping is, what it entails and how you can create your business from it.<\/p>\n\n\n\n

Here’s what we cover:<\/p>\n\n\n\n

What is dropshipping?<\/a><\/p>\n\n\n\n

Why your small business can benefit from dropshipping<\/a><\/p>\n\n\n\n

The challenges of dropshipping for retailers<\/a><\/p>\n\n\n\n

How to find and secure an excellent dropshipping supplier<\/a><\/p>\n\n\n\n

How your dropship supplier affects your financial management<\/a><\/p>\n\n\n\n

Final thoughts on dropshipping<\/a><\/p>\n\n\n\n

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Download your How to take your business online-only guide and start your e-commerce company today<\/a><\/div>\n<\/div>\n\n\n\n

What is dropshipping?<\/h2>\n\n\n\n

Dropshipping is a retail fulfilment method where a small business<\/a> doesn’t keep the products it sells in stock.<\/p>\n\n\n\n

Instead, when a small business sells a product using the dropshipping model, it purchases it from a third party that ships it directly. As a result, the small business seller doesn’t have to handle the product directly.<\/p>\n\n\n\n

You’ll need to partner with a dropship supplier to ship the product for you after a customer makes an order via your e-commerce<\/a> store or through an online marketplace such as Amazon or eBay.<\/p>\n\n\n\n

This way, you can run an e-commerce store without holding product inventory.<\/p>\n\n\n\n

Your dropshipping supplier does all the distribution work, shipping goods the customer has ordered with you to their address.<\/p>\n\n\n\n

Here’s how the dropshipping process works<\/h3>\n\n\n\n

1. Your customer purchases a product for \u00a3100 from your online e-commerce store.<\/p>\n\n\n\n

2. You purchase the product from your supplier for \u00a375, which makes you \u00a325 profit.<\/p>\n\n\n\n

3. The supplier ships the product directly to your customer.<\/p>\n\n\n\n

Why your small business can benefit from dropshipping<\/h2>\n\n\n\n

Here’s some of the benefits you can get from dropshipping.<\/p>\n\n\n\n

Lower startup costs and risk<\/h3>\n\n\n\n

If you’re thinking of starting an e-commerce business<\/a> with minimal upfront investment or risk, then dropshipping might be a good way of you satisfying your entrepreneurial urges. It’s a popular option because it means you don’t have to carry inventory.<\/p>\n\n\n\n

Dropshipping is perhaps the easiest and cheapest of all e-commerce business models.<\/p>\n\n\n\n

If you’re more interested in marketing products and anticipating trends, and less so in the actual creation of a product, then dropshipping might be for you.<\/p>\n\n\n\n

Any e-commerce business offers a low barrier to entry, as you don’t require the funds needed to run a traditional brick and mortar retailer.<\/p>\n\n\n\n

Lower overheads<\/h3>\n\n\n\n

Since you don’t need to maintain physical inventory, you won’t have as many managerial overheads, such as managing infrastructure and shipping or tracking inventory.<\/p>\n\n\n\n

Easier to scale<\/h3>\n\n\n\n

Dropshipping businesses might get bigger quickly because fulfilment doesn’t rely on how much physical space you have for products or workers to ship out orders.<\/p>\n\n\n\n

Dropshipping can help you if you have fluctuating sales throughout the year.<\/p>\n\n\n\n

Broader product offerings and flexibility<\/h3>\n\n\n\n

Removing the need for storage means you can offer a broader range of products. In addition, you can operate your store from anywhere, changing your range of products if the market demands.<\/p>\n\n\n\n

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Download your How to take your business online-only guide and start your e-commerce company today<\/a><\/div>\n<\/div>\n\n\n\n

The challenges of dropshipping for retailers<\/h2>\n\n\n\n

Reliance on suppliers<\/h3>\n\n\n\n

The benefit of using suppliers to perform all your distribution is also a negative, as you’re pretty much entirely at the mercy of suppliers when it comes to stock.<\/p>\n\n\n\n

It means you have less control over the customer experience.<\/p>\n\n\n\n

If you sell an item in your online store, but your dropshipping supplier has a six-week delay in shipping, it will be your business that has to deal with a frustrated customer.<\/p>\n\n\n\n

Suppliers will also be in control of quality and product availability \u2013 there’s no way you’ll be able to inspect products before shipping.<\/p>\n\n\n\n

Low margins<\/h3>\n\n\n\n

One significant disadvantage of dropshipping is that you won’t get the same discounts getting products from a dropshipping supplier that you’d get if you bought the products in bulk from a wholesaler.<\/p>\n\n\n\n

Because you’ll be paying more money for dropshipping products, your margins will be lower. And that means you may have to increase your prices to see a decent profit.<\/p>\n\n\n\n

Competition<\/h3>\n\n\n\n

Be aware that because the barrier to entry is low, you may face a lot of competition.<\/p>\n\n\n\n

Nothing is stopping any retailer from offering the same products you offer at similar prices. Your products might not be unique, so you may well have to provide a great customer experience through your e-commerce website and digital marketing experience (but you should do this anyway, no matter what type of e-commerce business you run).<\/p>\n\n\n\n

How to find and secure an excellent dropshipping supplier<\/h2>\n\n\n\n

One of your most important decisions is choosing your product and dropshipping supplier.<\/p>\n\n\n\n

If you don’t have a product or supplier, do your research and see whether there’s a product available that people might want to buy, and determine if there’s a supplier who would allow you to purchase from them cheaply.<\/p>\n\n\n\n

Instead of paying big money for focus groups, British entrepreneur Suhail Nurmohamed advises you to use your friends to test potential new items<\/a>.<\/p>\n\n\n\n

He says: “I would conduct my mini market research. So my cousins and friends. And once you ask them, ‘Bro, would you wear this?’<\/p>\n\n\n\n

“If they’d laugh, I would say, ‘Okay, cool. Not that one.’ And if they would like it, I would be like, ‘Yeah, yeah. All right. Cool.’<\/p>\n\n\n\n

“So it’s knowing what people would wear, what people would like.”<\/p>\n\n\n\n

You may already have the product in mind, which means it’s a matter of finding a dropshipping supplier that makes the product you want to sell and delivers it to the customer who has made the order with you.<\/p>\n\n\n\n

The traditional supply chain consists of:<\/p>\n\n\n\n