What Is Dropshipping? The Ultimate Guide to Selling Without Inventory in 2025

Dropshipping has become huge in the ecommerce world, and it’s easy to see why. It’s a hands-off business model where you don’t have to source, produce, or fulfill products yourself. Instead, a third-party supplier takes care of storage, packing, and shipping products directly to your customers.

The global dropshipping market was valued at $351B in 2024 and is expected to hit $435B in 2025. But where there’s money, there’s also competition. So you might be wondering—is it the right fit for you?

We’re here to help you decide. In this article, you’ll discover:

• How dropshipping works

• Key pros and cons

• Profitability and legal questions

• Tips for dropshipping with Printful

Read on to explore dropshipping from all angles.

What is dropshipping?

Dropshipping is a business model in which a third-party supplier manufactures, packs, and ships orders for businesses.

The dropshipping business model allows you to offer a wide range of products without the overhead costs associated with traditional retail, such as warehousing and large inventory investments. 

Most dropshipping suppliers offer on-demand order fulfillment, meaning that you only pay for products that are ordered. This business model is popular in ecommerce for its low entry barriers and flexibility in product offerings.

What is a dropshipper?

A dropshipper is an individual that sells dropshipping products without holding inventory. 

Dropshippers focus on marketing and customer service, while their dropshipping suppliers manage the logistics of order fulfillment. As a dropshipping business owner, you can run a successful online store without worrying about:

• Inventory management

• Product manufacturing

• Finding and keeping up a storage space

• Production equipment

• Shipping

Instead, you can focus on planning your product catalog, running marketing campaigns, and growing a customer base. 

Learn More: How to Start a Dropshipping Business

How does dropshipping work

If the dropshipping business model intrigues you, here are the steps you need to take to get started.

1. Find a dropshipping niche

To start a successful dropshipping business, do market research to identify a profitable niche with strong customer interest. Then, choose products that fit this niche—items your audience will genuinely want and be excited to buy.

2. Name and register your business

Once you’ve identified your niche, it’s time to name your dropshipping business. Choose a memorable name that resonates with your business idea.

Depending on your location, the typical dropshipping business structures include sole proprietorship, partnership, and limited liability company (LLC). Find out what they are and their pros and cons in our dropshipping business guide.

3. Find a supplier

Your dropshipping supplier can make or break your business. They’ll handle fulfillment and delivery, which will impact your reputation. 

Choose reliable suppliers with fast fulfillment and opt for those with fulfillment centers worldwide for quicker delivery. Check reviews for reliability and make sure you can order samples to assess quality before committing.

Valuable read: 10 Best Ecommerce Platforms for Dropshipping Business

Printful’s fulfillment centers

4. Set up shop

To sell your dropshipping goods, you need an online store. The choices are:

Ecommerce marketplace

• Pros: Large audience, low listing fees (usually under $1)

• Cons: High competition

Standalone website

• Pros: Full customization

• Cons: Higher monthly costs, must build your own audience

Before deciding, check if your dropshipping supplier supports your chosen platform. 

5. Connect your store to the dropshipping supplier

If your store integrates with your dropshipping supplier, fulfillment can be automated—orders will go directly to the supplier, who will handle packing and shipping orders to your customers. Without this integration, you’ll need to manually forward each order, which can quickly become time-consuming as your sales increase.

Source: Unsplash

6. Add products to your store and choose a pricing strategy

Select products from your supplier’s catalog and add them to your store. Here’s the easiest way to price your products:

product costs + desired profit margin = your retail price

Consider additional costs like ecommerce platform fees or outsourcing expenses like design or accounting services. Include a margin for potential future discounts in your pricing and sales strategy.

Source: Printful

Valuable read: How to Find Dropshipping Products That Boost Sales

7. Prepare product photos and descriptions

Your product descriptions and visuals should reflect your brand’s personality. Use high-quality images, showing close-ups for details and real-life settings. It’s a good idea to include people in photos to help customers visualize using the products. If real shoots aren’t possible, mockups or stock templates are good alternatives.

Create compelling product descriptions using niche-specific language that resonates with your audience. Be clear about features, sizing, and quality in your product listings. Include SEO keywords—common search terms customers use—to improve discoverability.

Read more: What Is SEO and How It Works

8. Market your business

Marketing is key to attracting customers and driving sales. Build a strong brand presence online through social media, SEO, email marketing, and paid ads, tailoring marketing strategies to your audience and product strengths. Engaging content and promotions improve visibility and customer loyalty, helping your brand stand out.

Is dropshipping right for your business?

Wondering if dropshipping is the right business model for you? Here are a few key considerations to help you decide.

You’re skilled at marketing

In dropshipping, strong marketing is crucial. Since you’re competing with thousands of dropshippers online, your ability to use social media, SEO, and paid ads to draw attention will make your products stand out in a crowded marketplace and drive sales. If marketing is one of your strengths, you’re well-positioned to make the most of dropshipping.

You’re ready to compete in a crowded market

Dropshipping is highly accessible, so competition can be intense. To thrive, you’ll need to carve out a unique brand and offer something memorable, whether niche products, standout customer service, or a compelling brand story. Those who understand the importance of differentiation and can deliver it consistently are more likely to find success.

You’re comfortable with outsourcing

Since you’ll rely on a third-party supplier to produce, store, and ship your products, you’ll need to trust their reliability and quality standards. While you won’t be hands-on with inventory, maintaining a clear line of communication with your supplier helps ensure that everything runs smoothly. If you’re okay with leaving these elements in another company’s hands, outsourcing fulfillment can save you time and hassle.

You can handle customer support

Your customers won’t know that someone else is handling fulfillment—they’ll consider you responsible for product quality and delivery. You’ll need to be ready to answer questions, resolve issues, and manage returns, as any praise or complaints will come directly to you. If you’re committed to providing excellent customer support, you can build a strong reputation that sets your store apart.

You don’t need complete control over the customer experience

In dropshipping, your supplier controls factors like packaging, shipping times, and product quality. If you’re flexible and able to manage customer expectations around these factors, dropshipping’s low-maintenance approach could be a good fit.

Pros and cons of dropshipping

Let’s look at the positives and negatives of dropshipping to determine if this business model suits you.

Dropshipping pros

Easy setup process

One of the most alluring factors for new business owners is that dropshipping doesn’t require an ecommerce experience. 

You only need to create an online store and choose which products to sell. After connecting your supplier to your store, the rest of the operations are taken care of.

Low financial risk

Starting a business is scary since you must usually go all in. Traditionally, the most significant commitments include:

• Investing money in equipment (without a guarantee of earning back)

• Hiring staff

• Buying and storing inventory

Dropshipping businesses are often successful, but if yours isn’t, you won’t be losing a crucial part of your investment like you would with a traditional business.

Flexibility

Dropshipping is quick to adapt if you decide to take your business in a completely new direction. With a few clicks and no extra financial investment, you can completely change your product catalog or entire business niche.

Fast speed to market

Since the order fulfillment is done on-demand, you don’t need to wait on large pre-orders. You can go from an idea to a market within the same day. And a fast speed to market increases your chances of turning a profit from emerging trends.

Valuable read: Weighing Dropshipping Pros and Cons: The Ultimate Breakdown

Dropshipping cons

Of course, such a lucrative business model comes at a cost. Let’s see what that is.

Low profit margins

While dropshipping can make you money, you’ll have to work at it to get there. 

Since it’s such a simple business model, many dropshipping businesses compete with you and sell similar products. You might have to lower your prices to win over the customer, which means less profit.

When you fulfill your orders on demand, you only pay for the products you sell. However, paying for each product individually creates higher product costs as you can’t get the usual wholesale price.

With comparatively higher base prices and competitors already trying to undersell you, there’s little room left for good profit margins. However, with careful marketing and strategy, you can still succeed in the dropshipping business.

Limited product choices

Dropshipping allows you to switch between different niches, products, and designs easily, but there’s a small catch: you’re dependent on your supplier’s product selection.

For instance, if you sell necklaces and bracelets but want to add earrings that your current supplier doesn’t offer, you face a dilemma. Your options are to skip selling earrings, wait for your supplier to stock them, or add another supplier who offers the desired earrings. 

While the third option meets customer demands, managing multiple suppliers can be challenging due to different shipping times, pricing, billing, and return policies. This complexity increases with each additional supplier, potentially leading to inventory issues and negative reviews.

Lack of control over production

Most people don’t like putting their business’ fate in others’ hands. But that’s exactly what you’ll have to do when running a store with dropshipping.

Your business depends heavily on your dropshipping supplier’s integrity and quality of work. If their shipping times get longer, their products become faulty, or their customer support starts slacking off, it’ll directly reflect on your business.

Plus, you can’t micromanage the supplier to ensure they get everything right. What you can do is perform thorough supplier research before starting a business to make sure you won’t have problems in the future. Once you start working with a supplier, check product quality by regularly ordering product samples and following your customers’ reviews.

A lot of responsibility

Even though you’re not in control of what goes on in the manufacturing process, your customers still hold you accountable if something goes wrong. In the end, it’s going to be your reputation that’ll take the hit and not the supplier’s.

Your customers put their trust in you, not your manufacturer. So when a dropshipping supplier sends your clients a damaged product or delays shipping, your customers will blame you. Take ownership of your products and reply to customer concerns and reviews. If the feedback gets too negative, consider switching to another supplier.

While the cons of dropshipping might seem tough, they’re manageable, so I hope you’re still motivated to start your online store with dropshipping.

If you’re still up for it, let’s get to the rewarding part—making money.

Learn more: Weighing Dropshipping Pros and Cons: The Ultimate Breakdown

Is dropshipping profitable?

Yes, it is. But it’s not a get-money-quick scheme, so you’ll still need to do the work to succeed. Here’s what you can do to ensure your dropshipping business thrives.

Increase product value

How do you stand out from the competition and become customers’ first choice? Make a better offer. You can do so by:

• Offering free shipping or adding freebies to orders

• Including discount codes for future purchases

• Customizing products using services like Printful for unique offerings

The first two strategies may require increasing product prices but can set you apart from competitors. However, product customization with your designs will let you sell a more niche product at little to no extra cost. 

Still not sure if dropshipping is profitable? Here are top 10 dropshipping statistics you need to know to make up your mind.

Learn more:

• How Much Does It Cost to Start Dropshipping in 2024
• Dropshipping Products With a High Profit Margin

Pick a specific dropshipping niche

Avoid selling everything to everyone. Instead, identify a dropshipping niche that aligns with your interests and values, like custom pet accessories for dog owners or motivational home decor for remote workers. Focusing on a specific market can make your brand more distinctive and personally fulfilling.

Lay out a strong marketing plan

Success often hinges on a robust marketing strategy. Identify where your target audience spends time, such as Instagram or Pinterest, and establish your presence there. Understand their interests and pain points to tailor your brand’s tone and communication.

Learn More:

• How to Develop an Effective Marketing Strategy
• How Profitable Is Dropshipping?

Don’t skip SEO

Leverage SEO to increase visibility without the high cost of paid advertising. Optimizing your store for search engines can attract free traffic from potential customers.

Stay relevant

Regularly update your product offerings to align with current trends. Experiment with new product lines and limited-time offers to keep your brand dynamic and engaging, taking advantage of dropshipping’s flexibility.

Source: Printful

Is dropshipping legal?

When exploring various business strategies, a common question that arises is, “Is dropshipping legal?” Rest assured, the answer is a definitive yes. Dropshipping stands as a legitimate option, much like other business models. But as with any business, there are legal requirements you must comply with. You need to:

• Register your business

• Comply with your state’s laws on dropshipping tax

• Be honest and transparent about where your products come from

If a customer asks more about the origins of your products, don’t lie. Explain the product supply chain to them in a transparent manner.

As for tax and dropshipping business registration requirements, the rules are vastly different depending on your location. So, before setting everything up, get to know your country’s laws regarding dropshipping, taxes, and business management.

Dropshipping with Printful

Printful is a print-on-demand company that specializes in creating customized dropshipping products and fulfilling orders for brands across the world.

Customization can be a competitive advantage in dropshipping. Here’s how it works: when your customer orders from you, Printful picks the product blank and customizes it according to your desired fulfillment method and design. Then, Printful packs the order and hands it to a shipping courier who delivers the product directly to your customer.

Product customization process using Printful’s Design Maker.
Source: Printful

Printful’s most significant benefits include:

• Product customization

• High-quality product sourcing and fulfillment services

• A well-thought-out shipping process

• Free product design tools and graphics

• Life-like product mockups

Thanks to thorough logistics research and years of successful partnerships with its carriers, Printful offers the best rates among its competitors, which can significantly cut your shipping costs (and make more room for profit margins).

On top of adding custom product designs, you can also elevate your merch with unique branding: custom packaging, labels, pack-ins, packing slips, and a customized order tracking page. 

Is dropshipping worth a shot in 2025?

Many aspiring entrepreneurs wonder: is dropshipping worth it? And the answer is: yes, definitely! 

Dropshipping makes opening your own ecommerce store more effortless than ever. In just 24 hours, you could own a dropshipping side hustle. All you need is a business idea and an internet connection to start selling products. To start, check out our list of profitable dropshipping business ideas.

In fact, dropshipping’s not only alive and well, but it also proves to be more profitable than running your own inventory management.

Currently, businesses supported by dropshipping report earning over 50% more profit than those who keep their own inventory.

And with ecommerce revenue skyrocketing year after year, starting your business with a dropshipping supplier is more than worth the effort. But to ensure your success, remember to invest time into:

• Market research to find a profitable niche and product 

• Marketing your business and connecting with an audience

Learn more: 

• 15 Dropshipping Tips You Need to Check Before Starting Your Business
• Crafting Success with Your Complete Dropshipping Checklist
• How to Start Dropshipping with no Money in 6 Steps

To make sure your dropshipping journey is as smooth as possible, here’s a list of some of the top dropshipping FAQs. Check it out to find answers to your burning questions, or ask away in the comments section!