What exactly is dropshipping and how does it actually work?

Dropshipping is a retail model where you sell products you don't physically hold in stock. When a customer orders from your store, you purchase the product from a supplier (typically in China) who ships it directly to your customer. You never touch the product.

The simple flow: Customer sees your ad → visits your Shopify store → buys the product at retail price → you purchase the product at wholesale price from your supplier → supplier ships to customer → you keep the margin.

• What you own: The customer relationship, the store, the brand, the ads, and the marketing. You are the business owner — the supplier is just your fulfillment partner.
• What you don't own: Inventory, warehouse space, or manufacturing. This is the model's main advantage — you can test products with no upfront inventory risk.
• The margin: You buy at $8–$20, sell at $30–$80+. Your profit is the difference minus advertising costs. Target a minimum 65% gross margin before ad spend — thinner margins leave no room for ad costs, refunds, and fees.

The hard part isn't the model — it's finding a product that people will buy, making ads that convert cold traffic, and iterating fast enough to find winners before you run out of budget. That's what this entire course covers.

More on Dropshipping Fundamentals

• I have $500 to start. Should I run paid ads or do organic first?
• What's the difference between dropshipping and building a brand?