Dropshipping is one of those business terms used loosely, especially for new players in the ecommerce space. One may easily think that dropshipping is ecommerce, and vice versa.

But that’s far from the truth because these two business models are different in a lot of ways, and fully understanding each will help you figure out what’s more aligned with your business goals. If you haven’t decided yet which model to go with, this article will help you.

Also read: Best Business Ideas You Can Start with PH100K Capital

Dropshipping vs ecommerce 

Ecommerce is basically buying and selling stuff online. It can involve anything from physical products like clothes and furniture to digital downloads like games and music.

It’s like starting your own business from scratch and taking responsibility for all decision-making including what product to sell, where to sell them and the  logistics. You’ll set up websites or online stores in popular marketplaces like Lazada or TiTok Shop. 

Dropshipping is much simpler. You partner with dropshipping suppliers who already have the goods you want to sell. All you need to do is set up a website or online storefront where you can publish product listings and accept orders. 

Once orders are received, you can forward them to the supplier and they will facilitate the fulfillment and shipment of the orders to customers. 

Dropshipping is a retail method where you sell products online without keeping any inventory. You act as the middleman, earning the difference between the wholesale price you pay the supplier and the retail price you charge the customer.

Key differences

Their key differences are emphasized through these aspects:

Inventory management

In dropshipping, you just need to focus on tapping new markets and closing orders. Your dropshipping supplier will take care of inventory management and fulfillment. 

In ecommerce, you source your own products and set up an inventory management system for proper control and tracking.

Order fulfillment

The dropshipping supplier handles the fulfillment without requiring anything from you. However with ecommerce, you need to partner with a third-party logistics company to facilitate the deliveries. 

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Level of commitment and control

Ecommerce requires 100% from you in terms of all decision-making and building profitability. You need to oversee sourcing and procurement, marketing and sales, fulfillment, and after-sales. Full commitment is a crucial key for success.

With dropshipping, you can just focus on marketing and sales and after sales. Everything else is done for you by the dropshipping supplier. Good for those only doing side hustles or want flexibility.

Profit margin

Since dropshipping suppliers already have set prices for you, there may not be much room for you to increase your margins. You’re stuck with the cost they charge and the percentage you get from every product sold. 

While on ecommerce, since you source your products — there’s always the option to customize and negotiate the cost. You can play around your pricing as well.

Similarities

Meanwhile, these two business models are similar on two important aspects:

Marketing and sales

Since the internet is already a saturated space for businesses, focusing on marketing to drive awareness and traffic to your online store is important. Set up a budget for ads or collaborate with influencers to have a strong online presence and get noticed by your target audience.

Customer service

Both dropshipping and ecommerce are customer-centric. When they order something from you, they expect good product quality and fast delivery. Whatever friction they encounter in the process would definitely be a problem for you (not your suppliers). Customers also expect a response when they have questions or issues about your product.

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Pros & cons of dropshipping vs ecommerce

Now that we understand what makes dropshipping and ecommerce different, you can now start to work on determining which business model suits you best. 

And if you still haven’t come into a decision, we got you this quick list of pros and cons for both of them. 

Factors to consider when choosing between dropshipping vs ecommerce

• Budget. Ecommerce requires more of your time and resources, this might not be best for entrepreneurs with limited budgets to start with. If this is not ideal yet, dropshipping might be perfect for you. You just need to look for a dropshipping supplier and you’re good to go.
• Products. Products offered by dropshipping suppliers are usually generic and also offered to other dropshippers. So if you’re looking at building your own brand, dropshipping might not be best for you. Ecommerce opens opportunities for you to build your own brand and offer unique and better quality products.
• Lifestyle. Ecommerce is basically starting a business from the ground up. This is perfect for those who have the time and business knowledge to leverage on. But if you’re looking for something with less commitment and ideal as a side-hustle, dropshipping is the choice.

Dropshipping vs ecommerce: Which is better?

Deciding between dropshipping and ecommerce depends on your priorities. Dropshipping offers a low-cost entry point with no inventory management, ideal for starting an online store quickly. However, it comes with lower profit margins and less control over product quality and shipping. 

Traditional ecommerce requires more upfront investment but allows for higher profits, branding opportunities, and control over the customer experience. Consider your budget, risk tolerance, and desired level of involvement to choose the best fit for you.

If you choose the ecommerce course, then it’s best to partner with a 3PL provider who will handle the complex logistics for you and help you expand easily as your business grows.

Optimize your ecommerce from the start with Ninja Fulfillment. Connect with our logistics experts today!