In today’s business world, online companies are growing more and more. Technology and business intelligence have brought multiple opportunities for vendors that intend to take advantage of innovative ideas and new business models instead of starting a traditional brick-to-mortar company. Thus, eCommerce and dropshipping businesses are in today’s pick!
Let’s move forward into explaining more about dropshipping vs ecommerce companies as well as expanding on their similarities and differences.
What’s An Ecommerce Company?
Ecommerce is the type of business in which the day-to-day processes include selling and buying products or services through the Internet. The order procedures take place online but the delivery of the order can be managed in different ways depending on the needs and preferences of the customer.
How Do Ecommerce Businesses Operate?
The e-commerce order fulfillment process can be separated into three key parts:
- Receiving The Order: In this initial step, the customer places his order and the company receives the order request through its ecommerce platform.
- Processing Order Details: The company receives the order details and processes the order.
- Shipping Procedure: In the last step, the order is sent out and the company informs the customer about the tracking details of the order.
Ecommerce Business Models
There are several types of eCommerce business models. Specifically:
- Business to Consumer (B2C)
- Business to Business (B2B)
- Consumer to Consumer (C2C)
- Consumer to Business (C2B)
Advantages of Ecommerce Companies
As mentioned earlier, ecommerce companies thrive in today’s world! However, in order to succeed you need to invest in multiple resources such as an inventory management software, a website, warehouses for saving stock, marketing campaigns and so much more. After investing in the necessary tools, the business will take advantage of the following benefits:
1. Automation of Standard Operating Procedures:
When running an e-commerce company with the business tools needed, you will notice the automation of the standard operating procedure. In other words, processes such as inventory taking, performing tracking tasks, or writing down inventory data will be automated.
1. Business Autonomy
By running an ecommerce type of business you have the autonomy to produce and sell your own product. Furthermore, you’re involved in all the business processes from manufacturing the product to the order fulfillment so you have the ability to control the business development.
2. Enlarge Sales:
Since an ecommerce business is running through a website, it means that potential clients from all around the world have access to your store. In other words, the customer base and the target group of the business are widened.
3. Increased Customer Satisfaction:
Combining an ecommece platform with CRM tools will lead the business to increase the satisfaction of its customers. Note that an inventory management solution will play a crucial role in that. That’s because by working with such a tool you will manage the company’s inventory so as to avoid out-of-stock situations as well as overstocking ones. Additionally, by choosing an inventory management software that integrates with a shipping solution you will have the opportunity to manage the order delivery as well as the respective tracking information while also informing the customers accordingly.
What’s A Dropshipping Business?
In this business model, the company doesn’t keep its selling products in stock nor stocks its own inventory. Instead, the company or seller orders the products from a supplier after receiving the customer’s order.
How Do Dropshipping Businesses Operate?
Dropshipping businesses’ operations include multiple activities. First of all, the drop shipper receives the order from the customer. Then, the drop shipper sends the order’s details to the supplier, and the supplier ships the order to the customers. After that, the seller pays the drop shipper and the customer receives the order.
Advantages of Dropshipping Companies
Dropshipping business is the ideal model to start with. Why so?
- Low Expenses: In a dropshipping business, the seller doesn’t need to hold the stock in a warehouse. That happens because the stock is handled by the supplier of the drop shipper. Usually, the supplier stocks the product inventory thus the drop shipper has zero warehouse costs.
- Less Manpower Costs: In this type of company, the staff is not needed since there’s no physical store.
- Global Reach: By partnering with suppliers based on different continents and countries you will have the ability to avoid the payment of customs while the price of the products will not increase.
Similarities of Dropshipping and Ecommerce Companies
To start with, both dropshipping and ecommerce fulfillment can be profitable for businesses. These types of businesses have many similarities:
- Both of them operate through the internet.
- They need a website and an ecommerce platform to run properly.
- Ecommerce and Dropshipping companies have virtual ecommerce stores.
- They have a considerable customer base due to the fact that they operate through the internet.
- They use social media platforms and other tools to market their products.
Dropshipping VS Ecommerce
Let’s analyze the differences between dropshipping vs ecommerce:
1. Amount of Investment
A dropshipping business’ initial investment is low because there is no need for the business owner to purchase materials or products to sell and stock them in a warehouse or store.
An ecommerce company development requires a considerable initial investment. That’s because there’s the need of developing or buying a product as well as the need of building an online store.
Since a dropshipping business involves communication between the dropshipper the supplier and the client, it makes the chances of scaling up the business more complexed.
In the industry of ecommerce, it is easier to scale the growth of your business depending on the number of assets you’re able to invest.
3. Cost of Maintenance
In a dropshipping business the expected costs of maintenance are relatively high. That’s because of the ongoing costs that the dropshipper will have due to the constant orders he will need to make from a supplier each time he will receive a customer’s order.
On the other hand, an ecommerce company doesn’t have high costs of maintenance. Actually, the ongoing costs are stable except for cases in which the business owner decides to invest in extra tools.
4. Product Quality
In a dropshipping business, there is no product quality control required. The product can be sent out without taking part in that process.
On the other hand, in an ecommerce business, the products that are ready to be sent out have been in product quality control multiple times during the manufacturing process.
5. Customer Satisfaction
Product delivery has an important role in customer satisfaction. As a dropshipper, you won’t have an involvement in the shipping processes thus you won’t be able to control the delivery’s time precision.
In ecommerce businesses, order fulfillment and delivery time is involved in the purchasing process thus the business owner has access and the ability to control it.
In A Nutshell
Dropshipping and ecommerce businesses have a lot of advantages and similarities. Both of these business models can be profitable as online businesses but they operate in a different way. In order to choose the ideal one to start with, you have to evaluate your business goals, its long-term needs, and your financial capabilities.
Stamatia Manolara is a Digital Marketer and Content Creator for Megaventory. Her passion is staying up to date with the latest digital marketing technologies as well as upgrading her skills and developing new ones.