If you are reading this article, you want to know the striking difference between the two big shots. We will dive straight into it and provide you with the real convincing difference that exists between e-commerce and dropshipping.
This article would try to define both terms from the perspective of an industry player and not just some random dictionary or internet definition of terms.
We know so well that readers smell mediocrity and uncertainties from a distance and so we will showcase our wealth of experience in both areas and possibly help you figure out which of the business models you should consider adopting.
Before we talk differences, it is reasonable to look at what e-commerce and dropshipping really mean while taking a sneak preview into their Pros and Cons in a bid to help you choose which would suit your personality or business needs.
What Is E-Commerce?
Remember buying and selling?
Remember how hard it was before now to go to the mall for groceries or supply if we had kids crying or other pressing needs at home?
Well, e-commerce bridged the gap for us! Shopping couldn’t be any better than it is now.
Ecommerce simply means buying and selling of goods and services over the internet. There is no other worthy explanation to it.Noble Cyril
It comprises “shopping” for whatever we need online and completing the transaction by paying and receiving the same products or services over the internet.
The customer browses over a catalog of products in a seller’s website, selects items as per their requirements, supplies a delivery address, and either pay over the internet or on delivery. The cycle completes when the customer receives and pays for the products or services requested.
This can be basically classified into four categories: Business to Business, Business to Customers, Customer to Business, and Customer to Customer.
As is their names, goods and services exchange hands between one entity and another.
Pros of E-Commerce.
- With e-commerce, your location does not matter. You can have your order delivered to you irrespective of the geographical location between the buyer and the seller.
- The customer needs not to stress in any way. All the customer needs is to browse a catalog, pick a product, and order for it. The rest is handled by the seller.
- Since it is done over the internet, you can shop for whatever you want at any time of the day. It also allows you the liberty to choose who to buy from right there at your comfort.
Cons of E-Commerce.
- The security of customer information is a concern. When buying, you are required to give a few of your details like name, address, and possibly phone number(s). this puts the customer somehow at risk which is why every online purchaser is advised to buy from a trusted vendor and also pay due diligence to look out for themselves online.
- The cost of setting up an e-commerce company is considerably high. If you want to be a player in this industry, you would need to consider the cost of setting up a secured website, inventory systems, and logistics systems; these come at a cost.
- The problems of delayed delivery of customer orders, wrong delivery or delivery of damaged goods among other eventualities. The customer, however, has the right to return goods purchased provided they meet certain terms and conditions.
What Is Dropshipping?
Dropshipping is a business that functions with a model like that of e-commerce. It is a business that involves receiving orders and delivering them without keeping those goods in stock.
This means that drop-shippers promote goods that are not “theirs” and when the orders come in, they, in turn, re-route those orders to the suppliers or sellers who deliver the goods to the buyers.
Dropshippers stand like a middle man between buyers and sellers.
Since they serve as an interface between the buyer and seller, they help the seller sell more with ittle or no extra effort.
Their reputation, however, is in the hands of suppliers because they lose it when the supplier supplies a bad product or even delivers the wrong products.
The drop-shipper never handles stock inventory!
Pros of Dropshipping
- You do not need any huge investment to kick off a dropshipping business. All you need is a network of manufacturers or sellers and a database or collection of ready buyers
- Dropshipping can be run from any geographical location. You can run a dropshipping business out of Nebraska and make deliveries in Denver or Utah!
- Their reputation lies in the hands of the manufacturers and suppliers. When a bad product is supplied, they bear the blame. Whatever goes wrong, the drop-shippers would be the first point of call since the buyer knows only the drop-shippers.
Similarities between E-Commerce and Dropshipping
- Both businesses can be managed online
- In both business models, the customer only places an order and expects delivery, that is all. No extra stress!
The Big Difference Between E-Commerce and Dropshipping
Now, having taken a holistic look at both business models, let us look at the big difference between both so that we can help you make a choice.
A drop-shipper focusses on marketing a specific good or brand at a time while e-commerce sells a lot of products and brands at a time- like a market place
The initial investment into starting e-commerce is considerably high while that of dropshipping is low. The basic things a dropshipper needs as regards investment are a laptop and an internet connection.
The profit margin for ecommerce is considerably higher than that of dropshipping. Since they sell a pool of products, a cumulative profit margin definitely beats that of dropshipping.
An e-commerce company has greater control over their order fulfillment process than their dropshipping counterpart since the drop-shipper is not in charge of delivery logistics. You should also consider your packaging as it is a way to push your business brand across border. Branding plays a huge part in the e-commerce business.
These and so much more are the differences between both business models. From the above listed, it has become clear that if you do not have so much money to invest and if you are not well experienced in stock management, dropshipping would work well for you but you should figure out a way to cut through the pitfalls.
If you have some good initial investment for take-off and can handle selling a wide variety of products among other logistics concerns, e-commerce is the “go” for you.
If you decide to follow the dropshipping path, you should be careful enough to know how to choose a perfect dropshipping niche so that you can sell more and maximize profit.
You know another difference, right? You should share it in the comment section.