What is Dropshipping?

With the development of the internet, shopping behavior has moved online, just like many of our habits and daily tasks. With the accelerating effect of the pandemic, people have started to meet many of their needs, from food to clothing, from electronics to home decoration products, from virtual stores in the massive ecosystem we call e-commerce.

This rapid development of e-commerce has led to the emergence of new sales models and ways of doing business that benefit sellers while making lives easier in line with consumers' expectations. One of the increasingly popular business models offered by rapidly developing and growing e-commerce is the inventory-free e-commerce model, also known as dropshipping.

In this comprehensive guide, we will share information on what inventory-free e-commerce is, how it is done, its pros and cons, and how to carry out inventory-free e-commerce on marketplaces like Amazon and Etsy, as well as on Shopify and WooCommerce-based e-commerce websites.

What is Inventory-Free E-Commerce?

Inventory-free e-commerce, which has become popular among many online sellers, means, as the name suggests, selling without keeping stock. In the dropshipping model, which is an alternative way to sell products on the internet, sellers offer the products of their contracted suppliers for sale on their own e-commerce sites or online marketplaces. As soon as an order is placed for the listed products, the packaging and shipping process is handled by the supplier, not the seller, who delivers the product to the end customer.

The inventory-free e-commerce model, where the seller serves merely as a bridge between the supplier and the end customer, is highly advantageous for many small businesses, those who do not have a physical business, and those who sell from home. As it does not require keeping any stock, it also spares the seller from international shipping and logistics processes.

Inventory-free e-commerce actually began to make a name for itself and became widespread among many businesses with the popularity of China-based e-commerce platform AliExpress among buyers. None of the sellers on AliExpress manufacture the products themselves, nor do they keep track of inventory. On AliExpress, sellers make agreements with suppliers from China or the Far East, and only the products they mediate for sale are delivered by the suppliers to the end customers.

The inventory-free e-commerce model, which gained significant momentum thanks to sellers on AliExpress, has also paved the way for many international marketplaces to offer this service to their own sellers. Amazon, Etsy, Shopify, and WooCommerce are among the marketplaces and e-commerce infrastructures that offer the option of inventory-free e-commerce selling to online stores selling through them.

How to Do Inventory-Free E-Commerce?

We mentioned that in inventory-free e-commerce, the site selling the product does not have to be the one manufacturing or holding the stock. If you want to sell new products that you think will appeal to your target audience through inventory-free e-commerce, without renting any warehouse or having to buy products in bulk, the steps you need to follow are simple. We can list them as follows:

• To start inventory-free e-commerce, your first step should be to agree with a reliable supplier. Find suppliers who keep the products you want to sell in their warehouses and are experienced in inventory-free e-commerce, and make an agreement with the one you find suitable.

• After choosing the supplier, you can start listing the products you have decided to offer for sale on your marketplace or your own e-commerce site.

• Next, you need to send the payment for the products you will sell to the supplier. You can display the sales price on the site by adding your profit margin per product on top of the price you agreed with the supplier.

• After this stage, every product sold through your site or marketplace will leave the supplier's warehouse and be delivered directly to the customer.

What Are the Pros and Cons of Inventory-Free E-Commerce?

As in any sales model, there are both positive and negative aspects to implementing the inventory-free e-commerce model. Let's look at all of them, starting with the positive sides.

Pros of Inventory-Free E-Commerce

• Since you do not need to have any warehouse in inventory-free e-commerce, you do not pay warehouse rent and are also exempt from employee expenses.

• Since processes like packaging and shipping your products and their costs are the supplier's responsibility, you can focus more on the sales and marketing processes.

• Since you do not buy products in bulk, this model offers you flexibility in removing products that are not selling well from your portfolio and adding new products.

• You can sell a wide range of products by working with multiple suppliers.

• Since starting inventory-free e-commerce has no other expenses besides setting up an e-commerce infrastructure, it does not require having high capital.

Cons of Inventory-Free E-Commerce

• Not having control over the packaging and shipping of products can lead to some issues. Since you are outside the process, there are risks such as sloppy packaging, late design, or damaged product delivery.

• Since you are outside the supply chain, a product that is no longer in stock may still be listed on your page.

• Since different suppliers can work with different sellers like you, the same products can be offered for sale on different pages.

• Since sales are made through suppliers, you must act according to the suppliers regarding pricing. For this reason, you may not make very high profits per product sold.

Advice for Those Doing Inventory-Free E-Commerce

Since many processes in the inventory-free e-commerce model occur independently of the seller, there are some points to consider before and during sales with this e-commerce model. We have compiled the details you need to know below:

Partner with the right supplier.

For success in inventory-free e-commerce, above all, you need to choose your business partner correctly. Shake hands with a supplier who manufactures the product you want to sell, has a strong technical infrastructure, and is knowledgeable about the requirements of inventory-free e-commerce.

Pay attention to choosing the right products.

Before starting to sell with inventory-free e-commerce, it will be beneficial for you to do a research on the products you will choose and sell the products that are in highest demand in e-commerce.

Build your site with a reliable e-commerce infrastructure.

When building your e-commerce site where you will display your products, work with an e-commerce infrastructure that has XML integration. XML connections allow you to automatically import the products you select from the supplier's website into your own e-commerce site. Additionally, thanks to this integration, product stocks are also automatically updated on your site.

Do not start dropshipping without establishing a company.

As it is not legal to sell with inventory-free e-commerce without establishing a company, make sure to set up your business beforehand. If your annual profit expectation is below 150,000-200,000 TL, you need to establish a sole proprietorship, and if it is above, you need to establish a limited liability or joint-stock company that is subject to corporate tax.

For detailed information about establishing a company, you can check our relevant content.

Give importance to your marketing and promotional activities.

Since products highly demanded by users in e-commerce will naturally be on sale in different marketplaces and e-commerce sites, it is important to do activities that will differentiate your own products. In this regard, make sure your store has a design that is impressive enough to attract customers, yet simple enough for them to easily find what they are looking for.

Determine your return process.

Since product shipping will occur independently of you, you may encounter unwanted return situations. Create a detailed return policy and place it on your site in order to manage returns well and keep them to a minimum if possible. Avoid leaving any loose ends in return management by also reaching an agreement with your supplier on how return processes will work.

Get support regarding your legal responsibilities in sales abroad.

You may run into legal responsibilities such as income tax or customs in the countries where you sell. Be sure to seek support from a financial advisor or tax expert for information and regulations on these matters.

Consider building your own supply network with fulfillment support.

After starting dropshipping, once your orders increase after a certain period of time, agreeing with warehouses abroad and delivering your products to your customers by releasing them from those locations will set you apart from your competitors and make your trade more seamless. To expand your target market and sales, you can start fulfillment and international warehousing services with ParkPalet, which has more than 250 warehouses worldwide.

Research shipping delivery times and be transparent with your customers.

Especially sales made abroad normally take longer to deliver. Research how long it takes to deliver to different countries and be clear with your customers regarding delivery times. This way, you can gain loyal customers and positively affect your sales.

Also, you can speak with your supplier to request diligence regarding shipping processes, or you can use Navlungo's digital infrastructure to get offers from different international shipping companies and provide information for the supplier to proceed with the most suitable one. You can inspect the Navlungo panel via the link.

Inventory-Free E-Commerce Suppliers

With the normalization of the inventory-free e-commerce model, many supplier companies serving as B2B have emerged to supply products to businesses selling online. Depending on the product type you want to offer for sale, you can cooperate with both local and foreign inventory-free e-commerce suppliers. The important thing here is to choose the company that provides the most suitable product supply for the product category you want to focus on.

Foreign Inventory-Free E-Commerce Suppliers

The fact that e-commerce has become quite common today resulted in the same products being offered for sale in dozens of e-commerce stores. In order to break away from this competition among stores and positively affect your sales, it may make sense to offer your audience products that are not commonly encountered. In this regard, you can gain an advantage in the market by sourcing your products from foreign inventory-free e-commerce suppliers.

On the other hand, you must plan shipping deliveries for products sourced from foreign suppliers carefully. Delivering products ordered from both the domestic and foreign markets to their addresses in optimum times contributes to acquiring loyal customers and keeping your store rating high by receiving positive reviews. At this point, it is crucial that you work with a reliable and fast supplier, and that the supplier you work with uses a smart quote panel like Navlungo, carrying out the shipping operations by selecting from multiple quote alternatives.

The foreign inventory-free e-commerce suppliers you can work with to bring products from abroad to buyers in Turkey or different countries are as follows:

• AliExpress

Ideally suited for importing products especially from the Chinese market, you can use AliExpress to make a difference in your market.

• NordStrom

A very popular clothing supplier in the US, you can source products from many categories such as cosmetics, shoes, and textiles on NordStrom.

• Spocket.co

It is a China-based inventory-free e-commerce supplier that hosts many dropshipping suppliers and where you can source original US and European products.

• DHgate

Although there is not as wide a product range as on AliExpress, you can source many different products such as jewelry, electronics, clothing, and automotive through this China-based DHgate inventory-free e-commerce supplier.

• BrandsGateaway

It is a US-based inventory-free e-commerce supplier where you can source products in clothing and accessory categories of hundreds of luxury brands.

• GdnAtlanta

If you want to sell jewelry and accessories for both special and daily use, you can choose GdnAtlanta, which offers many alternatives, as a supplier.

Local Inventory-Free E-Commerce Suppliers

With the rapid spread of the dropshipping model in Turkey as well, some local B2B supplier companies operating in this field have emerged. Especially pet shop, clothing, and shoe suppliers are frequently preferred by companies selling products in these categories. When using local inventory-free e-commerce suppliers, you need to be careful about shipping processes for your domestic and international sales and show sensitivity in ensuring that products reach your customers quickly.

We can list some dropshipping suppliers serving the domestic market as follows:

• YeniStoksuz

It is a supplier from which you can source products of many different categories.

• ToptancınBurada

It is an inventory-free e-commerce supplier where you can find various products in dozens of different categories such as accessories, furniture, sports, and toys.

• StokHanem

You can source these products through StokHanem, where you can find a wide variety of household goods, garden, kitchen, and bathroom products.

• E-Hediyeci

If you are selling in the gift category, you can source personalized design gift products and different gift alternatives on EvHediyeci.

• ModaCar

Through ModaCar, another inventory-free e-commerce supplier specializing in a specific vertical; you can offer products such as hardware, electrics, electronics, automobile, motorcycle, and bicycle accessories to your customers.

• Gumush

It is a site where you can source both jewelry products and household items made of silver.

What Are the Most Profitable Inventory-Free E-Commerce Products?

The dropshipping products most sold by users starting online sales with inventory-free e-commerce usually appear as casual sportswear, printed t-shirts, and hat varieties from the textile category; hygiene products, masks, yoga and sports accessories from the health & beauty category; home & garden decoration products, mother & baby products, gifts, and pet toys & accessories.

Products in the mentioned categories are frequently preferred categories especially since they are intensely demanded and are the best-selling products according to the season in the UK, the US, and Europe.

How to Drive Inventory-Free E-Commerce with Etsy?

Etsy differs from other global marketplaces by offering handmade and designed products for sale. In order to carry out dropshipping on Etsy, you can also offer handmade products for sale in the clothing, accessories, and jewelry categories.

Dropshipping through Etsy can be more challenging compared to other platforms. Because handmade products take longer to make and you may not be able to supply products to your audience quickly. In addition, while you can sell dropship products in almost any category on other platforms, your range in choosing products is narrower as Etsy is a marketplace unique only to products in certain verticals.
You can also check our relevant content for the Etsy 2023 Pricing Guide.

Let's Join Our Forces

Inventory-free e-commerce, one of the least risky methods of setting foot in e-commerce, does not require storing and warehousing products, but you may need support from 3rd party fulfillment companies after expanding your business.

When your orders do not exceed double digits, you can manage your business smoothly without needing to set up your own supply network. However, when your order quantity reaches triple or even quadruple digits, it means you have a fulfillment need. By purchasing products in bulk, you can send them to ParkPalet's warehouses abroad and hold stock in the US, and from there send orders one by one to Canada or to your customer located in any part of the world. In other words, setting up your own supply network, receiving warehousing and fulfillment services abroad, and managing your orders and international cargo operations more effectively after gaining expertise in e-commerce with dropshipping and bringing your sales to a certain level will make your business more advantageous. In this respect, you can inspect the website of your solution partner ParkPalet and always send your questions.