Dropshipping
Dropshipping is a fulfilment model where the seller holds no stock — orders are shipped directly to the end buyer by the supplier, factory, or warehouse on demand.
Dropshipping is a zero-inventory fulfilment model: the seller takes orders and payment at the front end but holds no stock — when a buyer orders, an upstream supplier, factory, or third-party warehouse ships directly to the end buyer (one piece per order). The seller earns the margin between the retail price and the supply price, avoiding inventory capital and self-run warehousing.
Practical notes for Chinese sellers: two common forms exist — (1) a domestic supplier dropships cross-border directly (ships from China to the overseas buyer, with longer transit), and (2) goods are pre-stocked in an overseas warehouse that then dropships locally (faster, closer to platform delivery standards). Pros: low startup capital, flexible SKU testing, no slow-moving inventory risk — good for validating products and getting started. Cons/risks: thin margins, heavy dependence on the supplier's dispatch speed and quality control, stock-out risk, complex returns, and — for cross-border direct sends — destination clearance, taxes (e.g., VAT), duty compliance, and delivery times that affect store ratings. Note that cross-border dropshipping does not exempt you from the import country's tax and clearance obligations; under-declaration is increasingly scrutinized, so keep duties and documents compliant for the long run.
FAQ
- Does dropshipping mean I don't have to worry about clearance and taxes?
- No. Regardless of who ships, goods entering the destination country must still be cleared lawfully and bear the applicable duties, VAT, and other obligations, and liability can ultimately fall on the seller or importer. Low-value cross-border parcels were once loosely cleared, but countries are tightening cross-border e-commerce taxation and declaration rules. The proper approach is to confirm the destination's tax identity (e.g., VAT/EORI) and declaration method to avoid back-taxes, fines, or seized goods.
- For dropshipping, ship from China directly or stock in an overseas warehouse first?
- It depends on sales volume and delivery expectations. At the startup/validation stage, dropshipping directly from China minimizes capital but has long transit and weaker ratings. Once a SKU sells steadily with high repeat purchase, switch to pre-stocking in an overseas warehouse and dropshipping locally — faster, cheaper last-mile, and a better buyer experience. A common path is to validate with China-direct first, then move proven SKUs to an overseas warehouse.
Related terms
Sources: https://www.cifnews.com/help/gymte · http://www.woshipm.com/pd/4530875.html