{"id":84361,"date":"2024-10-21T08:21:55","date_gmt":"2024-10-21T08:21:55","guid":{"rendered":"https:\/\/www.sellerlogic.com\/blog\/what-is-dropshipping-and-how-does-it-work-the-complete-guide-2025\/"},"modified":"2025-08-29T14:51:46","modified_gmt":"2025-08-29T14:51:46","slug":"what-is-dropshipping-and-how-does-it-work-the-complete-guide-2025","status":"publish","type":"post","link":"https:\/\/www.sellerlogic.com\/en\/blog\/what-is-dropshipping-and-how-does-it-work-the-complete-guide-2025\/","title":{"rendered":"What is dropshipping and how does it work? The complete guide 2025"},"content":{"rendered":"

In e-commerce, there are many different business models. Some swear by arbitrage<\/a>, others run their own shop with independent logistics, and yet others rely on Amazon FBA. Less common and sometimes viewed with suspicion is the dropshipping method. Perhaps it is because classic dropshippers do not hold their own inventory. Or the popularity among self-proclaimed YouTube gurus has harmed its image too much. In any case, dropshipping is better than its reputation, especially for beginners in the e-commerce business who want to learn and first gain valuable experience.<\/p>

In this guide, we want to answer all important questions: What dropshipping means exactly, how it works, what advantages and disadvantages exist, how beginners can find suitable providers, and whether there are good alternatives.<\/p>

What is dropshipping? Definition explained simply<\/h2>

In contrast to the classic online retailer, who purchases goods, stores them, and ships them to the customer after an order is received, dropshipping does not involve holding any inventory. Instead, the wholesaler or manufacturer supplies the customer directly. The actual provider of the products acts merely as an intermediary. They offer the products, take care of advertising and online presence, but do not have any items in stock.<\/p>

For the customer, this has no further relevance. For them, the impression is created that all services are provided from a single source, as the actual sender of the goods does not appear directly and the products are either not branded at all or are appropriately customized. This model has several advantages for both the online retailer and the manufacturer, as each saves a significant part of the delivery and distribution chain.<\/p>

By the way: Dropshipping concepts are not a new invention, but have long been known under the term “stretch business.” Under the English buzzword, they have particularly arrived in the bubble surrounding passive income.<\/p>

How does dropshipping work?<\/h3>
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Online retailers and wholesalers or manufacturers share the work. The products are offered online \u2013 for example, in their own shop, on Amazon, eBay, or Etsy. The online retailer is responsible for the product presentation and advertising. When a customer places an order, it is received in the retailer’s systems and is \u2013 usually automatically \u2013 forwarded to the manufacturer. The manufacturer then takes care of ensuring that the product is produced if necessary and\/or shipped from their warehouse. The customer still receives all information (order and shipping confirmation, tracking, invoice, etc.) from the online retailer and not from the dropshipping partner.<\/p>

In the event of a return or if the customer contacts customer service, this is usually handled by the online retailer. However, there are also models where the manufacturer or wholesaler takes care of these areas. For the customer, these processes are usually invisible, as the sender address, the logos used, etc. are typically provided by the online retailer.<\/p>

Wholesale warehouse vs. consignment warehouse<\/h4>

Basically, there are two different types of dropshipping. Either the fulfillment is done through a wholesale warehouse or through a consignment warehouse.<\/p>