What Is The Difference Between eCommerce And Dropshipping?

The internet has made starting a business easier than ever. You only need an idea, a supplier, and a website to sell goods or services online with little effort. There are minimal startup expenses, but there are huge potential rewards, so much so that during the 2020 shutdown, many new online businesses were started in the US. A large number of those businesses are drop shippers. In this article, we will know what is the difference between eCommerce and dropshipping.

What is eCommerce?

eCommerce is the general term for the online sale of products or services. Mostly, it refers to online stores. When a business uses the traditional eCommerce method, it has a website listing its products. Customers select the items they want to buy. They put them in their shopping cart, proceed to the checkout, and pay using a debit or credit card. The order is received by the business, which processes it. They will have a warehouse where they can pick up the inventory, pack it, and then use a courier to deliver it to the customer. Larger businesses like Amazon might employ their delivery personnel.

Pros

• It allows you to create branded goods to display in your online store or make and sell your products.
• Since the products you sell cannot be bought or obtained from anywhere else, it is simpler to establish your brand.
• Over the entire process, you have more control. You don’t have to worry that your supplier won’t remember to complete customer orders.

Cons

• The initial expenditures can be quite costly.
• If your products aren’t being sold, you’ll need a dedicated storage place and the ability to keep them there.
• Order fulfillment, which includes packing and delivery, can take a long time.

What is Dropshipping?

Dropshipping is also a form of eCommerce which follows a completely different process. It is a business method that is currently growing. You need a supplier and a website, but you don’t need any physical store to store any inventory. In dropshipping, the company usually sells products that they don’t have physically. This dropshipping is common in most fashion brands where they have only websites. The customers select the products and buy them. However, the order passes to the supplier who makes the products and sends them to the customer. Here, the drop shipper acts as a mediator.

Pros

• Your early expenses are minimal because you don’t have to buy stock or materials.
• You don’t require a large warehouse or fulfillment facility to manage your orders.
• Due to the less time and financial investment needed, you may concentrate on growing your business using strategies like advertising.

Cons

• It can be hard to guarantee that the goods sent to customers are of the highest quality since you don’t store them yourself.
• Your brand’s reputation can be damaged if your supplier cannot meet customer demands on time.
• Building a recognizable brand is difficult because the products are likely to be sent in packaging that is either plain or bears the branding of your supplier.

Some Similarities Between eCommerce and Dropshipping

eCommerce and dropshipping have the same workflow until they reach the order fulfillment level:

• The online store creates the website
• The product catalog is uploaded
• They market and advertise what they sell
• They create the checkout process

Choosing the Best Method, eCommerce or Dropshipping

eCommerce and dropshipping use different business methods. They both have different impacts on the performance of your eCommerce site. You have to compare the impact of these models on the following aspects.

Initial Investment

eCommerce: Setting up a warehouse and purchasing merchandise are both necessary. It needs money up in advance.
Dropshipping: You can get started with no initial investment required because you don’t need inventory or a warehouse.

Profitability

eCommerce: If you buy things at wholesale prices, your profit margins will be huge. The price of shipping and packaging can be reduced as well.
Dropshipping: As you buy products from a dropshipping supplier, your profits will be low. You can face additional costs in your supply chain due to the possibility of paying for fulfillment services.

Branding

eCommerce: you have total control over the goods you sell. You are allowed to brand and sell your products. It helps the development of a strong brand.
Dropshipping: you need more control over the quality of the products the dropshipper sells for you. You won’t be allowed to use unique branding or sell customized goods.

Ease of Business

eCommerce: This method is complicated because you must buy, store, and package your goods. You might require an experienced staff.
Dropshipping: For new companies, dropshipping makes doing business easy. You can save money on initial product expenses, packing, and storage.

Risk

eCommerce: If products don’t sell, the loss will be more. However, since you are in complete control of the sales process, you won’t have to worry about solving issues with a third
Dropshipping: If you don’t have any inventory, you are at no risk if sales are low. But you can be at legal risk if the drop shipper doesn’t follow the rules.

Conclusion

eCommerce and dropshipping are two useful and popular fulfillment methods with pros and cons. Carefully consider the impact of these models. You must create a vast customer base no matter which eCommerce shipping strategy you choose. If you are looking to start a business and build an online store, we can help. At Ayatas Technologies, we have over 15 years of experience providing eCommerce solutions to different businesses. For more details, contact us at (916)836-8099 or Request a FREE Consultation below.