Dropshipping: what it is, how it works, advantages, disadvantages and examples

Dropshipping is a business model based on retail sales directly over the Internet, without keeping those products in stock. To do this, the retailer reaches agreements with online platforms, manufacturers, and/or wholesalers, who ultimately ship the order to the final customer.

In other words, in dropshipping, you sell a wholesaler’s products from your website in exchange for a percentage of sales, with the wholesaler itself being in charge of keeping the stock, preparing the order, and delivering it to your customers (for the final customer, this process is seamless).

It is a business model that allows you to create an online store without investing in any type of stock and requires very little investment.

How does Dropshipping work?

In case you didn’t know, dropshipping is a variant of ecommerce in which your store doesn’t keep the products it sells in stock, but rather you buy the goods from a third party and they are then shipped directly to the customer.

Thanks to this, it is not necessary to invest too much money to start venturing into this type of sales.

Of course, you won’t become a millionaire overnight, but if you’re patient and persistent and do enough research, you can build an extra source of income to cover your everyday expenses.

Facts and statistics about Dropshipping

These ecommerce figures help you understand the market a dropshipping store is aimed at:

• 29.4 million people shopped online in Spain in 2024, 83.3% of internet users (ONTSI, 2025 edition).
• Average spending was €3,762 per person a year, 13.8% more than in 2023 (ONTSI).
• Mobile phones are the device most used for shopping, by 83.6% of shoppers (ONTSI).
• Clothing is the most purchased item, bought by 76% of shoppers (ONTSI).
• Social media is now a sales channel for 18.2% of shoppers, compared with 8.9% the previous year (ONTSI).
• 70.22% of carts are abandoned before payment (Baymard Institute, average of 50 studies).

Advantages of dropshipping

Compared to creating a conventional online store, where we would have to keep stock and handle logistics, the advantages found by stores doing dropshipping are very diverse; among these advantages are:

• They require little initial investment. In a way, it’s the cheapest way to create an online store to sell physical products. There is no need to stock products, have premises for them, or take on their distribution.
• Logistics disappears. One of the things that can cause you the most trouble when running an online store goes away: you don’t have to manage the distribution logistics of the items you sell.
• Easily scalable. As an online store, you can add as many products as you want and manage your site’s information however you like.
• Low fixed costs. Normally, only one person is responsible for managing a dropshipping store, which means you don’t need a warehouse (there is no stock of goods) or staff to manage it.

Disadvantages of dropshipping

As you might expect, dropshipping comes with a number of disadvantages that anyone thinking about setting up a dropshipping store should know about:

• High competition. Just like you, there will be many other stores that also do dropshipping and sell exactly the same products. So you’ll have to compete with all of them and make your SEO the best to bring traffic to your store (which is not easy to achieve).
• Be careful with your supplier. When the wholesaler provides you with the online store (sales platform), you won’t be able to edit the product pages, which means saying goodbye to SEO. If that happens, working on your SEO ranking will be very, very complicated.
• Very small sales margin. Profits come from small sales commissions, so you have to sell a great deal to earn a meaningful income.
• You don’t control the quality of the products or their shipping. It’s your store, so if the quality of the products isn’t what was expected or their delivery is delayed, you are the one held responsible in the customer’s eyes.
• Stock problems. When you are the one in charge of storing the items, you can get to know the products and their stock directly. Since this is delegated to another company, they don’t always provide you with up-to-date inventory, and this can cause problems with delivery times.

Buying and selling with Dropshipping

Dropshipping isn’t just about striking a deal with a third party for transactions and switching on the cash register without doing anything.

Although it is a very valid option to diversify the product catalog in an ecommerce site or a specialized blog on a specific topic, it has its pros and cons that are important to clarify. The main difficulty of the model lies in choosing the right market to focus on (it’s best to research it thoroughly first) in order to reach those sales goals.

Additionally, depending on the area you choose, it will also be more difficult to find the right supplier since, in many cases, differentiation leads to a shortage in the number of product suppliers.

Analyze and understand the market well

Therefore, it is a key aspect in a Dropshipping sales initiative.

Keep in mind that on the Internet, there are many options to make money, but there is also fierce competition among sellers from all over the world.

Furthermore, in Dropshipping, profit margins are quite tight, and the ideal is to select a profitable niche with high demand and low competition. Use parameters related to profitability, saturation, web traffic, and search trends.

In this first phase of market analysis and product sales, it would be good to take a look at your competition and see how they work, how they have structured their online store, what types of products they offer, which supplier they operate with, and what their sales margins are like.

Once this field work and preliminary analysis are done, the search and selection phase among different dropshippers to market your products begins.

We’ve already mentioned the precautions to take at this step, but the point is to negotiate favorable agreements with the highest margins and find a serious, reliable supplier that helps build loyalty in your customer relationships.

In addition to numbers and dates, carefully define the delivery structure and protocols that each supplier uses. It is advisable to have more than one so that products reach the final consumer as soon as possible.

Create the online store

In WordPress, WooCommerce, or PrestaShop, for example. If you want to try something simpler, there are providers that allow you to set up a website online on their platform with monthly fees and quite acceptable visibility.

From there, all you need to do is import the product catalog you want to sell and start selling. Remember to optimize your product descriptions and categories so they rank at the top of organic search results.

Once all the agreements are in place, the sales process is as follows: the customer orders a product, the supplier supplies and ships the goods within the agreed time, and the retailer handles payment and after-sales service, including any issues.

In this commercial cycle, take into account all aspects related to the consumer experience and apply aspects that facilitate good service, repeat purchases, and loyalty.

When the machinery is running smoothly, you can make decisions regarding introducing new collections or creating new business lines.

With the data in hand, it is important to assess strategic aspects derived from online advertising, with paid campaigns, using social media, email marketing campaigns with discounts and promotions, or resorting to digital marketing.

The good thing about the internet is that you can carry out small, short-term actions aimed at specific audiences.

9 tips to increase your dropshipping sales

Increasing sales in Dropshipping has never been an easy task, but there are several tools and best practices that can help you in this effort.

That’s why we’ve put together 9 tips to increase your dropshipping sales. Use the ones you consider necessary and start seeing changes in your earnings.

Design an attractive store

Even though the investment in the dropshipping model is very low, you need an online store that grabs attention.

As in any type of business, potential customers buy with their eyes.

For this reason, you need an online store on Shopify that is attractive and intuitive for making purchases. While you can do Dropshipping on other platforms, Shopify helps you do it in a simple way.

In addition, the look of Shopify stores makes people want to learn more about the products you offer and conveys trust.

Of course, you must accompany them with clear copy and precise information about every detail regarding them. And since these types of online stores have a responsive design, anyone will be able to view a clean site regardless of whether they are connecting via a tablet, smartphone, or desktop computer.

Use a simple checkout

By using a customizable checkout, you’ll be able to simplify the buying process and much more.

The fewer steps in the payment process, the fewer customers you’ll lose along the way. Show shipping costs from the start and let people buy without creating an account. According to the Baymard Institute, these are two of the most common reasons for abandoning a cart.

Use SEO strategies

Since the Internet is filled with millions of websites all over the world, standing out from the competition can become a headache.

That’s why getting good Google rankings is key to winning new customers and to letting those who know you easily find your products or services.

It is proven that users rarely go to the second page of Google.

Because of this, good organic rankings are essential to increase your dropshipping sales.

Undoubtedly, keywords are necessary to ensure that the products you offer reach the right consumers.

Find a specialization

In dropshipping, every online store needs to specialize in a niche.

In other words, focus on a particular product.

Although many believe that focusing on something specific limits sales, with Dropshipping, the opposite happens.

Why? Because communication becomes more effective and lets you stand out from your competitors.

Don’t worry, when starting out in the Dropshipping business, you may not know which sector you will specialize in.

But once you’ve explored the terrain well, it’s up to you to identify your customers’ needs and focus on meeting them.

Where would you buy if you were looking for a gaming mouse to get lost in your favorite games? Any tech store or one that specializes in gaming gear?

You will probably choose the second option.

Offer quality service

Treating customers excellently will always be key to earning a good reputation among consumers.

And in the Dropshipping business, it is all due to the Internet and the ease of sharing opinions on any topic.

Don’t mind losing a bit of money if you run into problems with a shipment or with suppliers, as long as your customer is happy.

This way, it will make them trust you, increasing the chances that in the future they will recommend your online store to their circle of friends.

An easy way to look after your customers is email marketing for ecommerce: a welcome email, a shipping notification or an offer for people who have already bought from you.

Set the right prices

You can’t do dropshipping with a profit margin so small that it barely leaves you any cash to work with. It’s recommended that you aim for profit margins of 60 or 70% so you can make the most of this type of sales model.

Don’t get into a price war

By entering a price war, customers might stay with you for the sole reason that you sell cheaper. However, this strategy has a limit, which is that you cannot lower the price to the point of affecting your profit margin.

If you want to avoid this happening, then provide added value that goes beyond the price.

We are talking about the service, customer support, or the information you provide, for example. The ideal is to aim for people to be happy with your brand and not just with the products you sell.

Analyze each of your products

Just because dropshipping allows you to work without upfront stock doesn’t mean you can add any product you want to your store.

Obviously, this is possible, but it could harm you much more than you imagine.

On the other hand, by adding poor-quality products or products with negative reviews, you could end up with dissatisfied customers and unnecessary product returns.

In addition to returns incurring costs, they create a negative image of your brand. So avoid them as much as possible!

Carefully analyze the suppliers you work with

Keep in mind that not all suppliers offer the same options and pricing conditions.

That’s why it’s essential to get to know your dropshipper well.

There will be some that have good prices and others not so much; there will also be those that impose a set of conditions and others that do not. Take your time to discover who your perfect supplier could be, and you’re set.

As you’ve probably seen, it’s well worth analyzing your supplier, the way they work and their conditions.

This way, you will work only with the best of the best, reaching an acceptable sales level without having to deal with returns or unsatisfied customers.

Examples of Dropshipping businesses

Fashion, beauty accessories, fashion accessories, watches, technology, home goods, decor, pets, hobbies and sports are some of the sectors most widely exploited by the dropshipping universe.

Below we detail some examples of online distributors worldwide, and also in Spain.

AliExpress is a clear example of dropshipping.

The Asian giant markets practically all types of wholesale products for online stores spread across all five continents.

Sales giants from the United States such as Amazon, Sears, eBay or Zappos do it too.

Jack Ma, founder of Alibaba, and Jeff Bezos, founder of Amazon, top the billionaire rankings with the profits they’ve made from ecommerce.

Besides AliExpress, China has platforms such as Chinavision, Dealextreme and MiniInTheBox.

The latter, available in 24 different languages, sells products such as watches, jewelry, phones, automotive and smartphone accessories.

Also related items such as men’s fashion, gadgets, home, kitchen, pets, and lighting. They work directly with the manufacturer and guarantee fast deliveries (with warehouses in Europe and the United States) and secure transactions.

A European-level dropshipping wholesaler is Big Buy, a B2B online store available in 24 languages with a multichannel integration platform that supports different marketplaces (PrestaShop, eBay or Amazon).

It has online and offline channels and offers two pricing rates: for wholesalers and 360.

Its corporate blog includes ecommerce sales tips, corporate information and sales tools for campaigns such as Valentine’s Day or Black Friday, for example.

Other similar dropshipping suppliers where you can find all kinds of products are RedPointshop and Plasticosur.

The latter is based in Seville and offers a wide range of products for leisure, toys, in addition to ticket management and purchase.

Fashion and footwear are represented on platforms like Grupocoas, Mabisy, Lenceriasecret, ModaCreativa, Chollomoda, Secret, Brandsdistribution, or Garatti, the latter specialized in manufacturing Spanish footwear and distributing it in physical shoe stores.

Home and decoration products are found at AquimasBarato, Cristalymenajeonline, Mabisy, Nedis, and Red Point Source.

Cleaning, clothing care, breakfast, childcare, home, kitchenware, audio, telephony, and health and beauty are the categories of this last dropshipper, based in Madrid.

When it comes to gastronomy dropshippers, suppliers like Ecopasion, Delicatplural, Frappemania, Productosecologicos, Productosnavarioja stand out, as well as delicatessen suppliers like Proveedores.com specializing in catering.

For the sale of computers and accessories, consoles, and video games. In the computing space, suppliers such as Printful, Infortisa, Ociovisual and Megasur also stand out.

How Mailrelay helps you

We have mentioned that the main objective of developing a Dropshipping initiative is to obtain economic profitability, but you can also use this sales strategy to increase your website traffic or define a branding initiative with valuable information about the products you market in your store. Content marketing is the ideal alternative in this regard.

Monetizing a website or an e-commerce platform with a Dropshipping sales system is relatively simple and viable with a small budget and without extensive technological knowledge.

Having said that, despite its viability, it is important to develop a broader structure involving other web mediums such as a blog, emailing, and social media. The latter are very necessary if you want people to know your product, know about you, see what you do, and what solutions you offer so that, ultimately, they end up buying your products.

Oh! One last thing: don’t forget to read the fine print of the agreements you close with dropshippers to avoid unpleasant surprises with your customers and to maintain the quality standards your business needs to thrive.

In dropshipping you don’t control the product or the shipping, but you do control your relationship with your customers. With Mailrelay you can nurture it by email:

• Free plugin for WordPress and WooCommerce that syncs your customers, products and carts.
• Automatic abandoned cart email, which can also send an SMS. We explain it step by step in the WooCommerce abandoned cart guide.
• Automations for welcome messages, post-purchase follow-up or an offer to bring customers back to buy again.
• Segments to send each customer products similar to the ones they’ve already bought.
• A/B tests to find out which subject line or offer works best.

If your store is on Shopify, you can bring your customers into Mailrelay with Make or the API. The free account includes 80,000 emails a month and up to 20,000 contacts.

Frequently asked questions

What is dropshipping?

It’s an online sales model in which the store doesn’t hold any stock. When a customer buys, the order goes to the supplier, who ships it directly to the customer.

Is dropshipping legal in Spain?

Yes. But you’re the seller as far as the customer is concerned, so you’re responsible for the warranty, returns and delivery times, even if the supplier handles shipping. You also need to register as self-employed or as a company.

How much money do you need to start dropshipping?

Less than for a traditional store, because you don’t buy stock in advance. The main costs are the online store, the domain and advertising to attract visitors.

What’s the difference between dropshipping and a traditional online store?

In a traditional store, you buy the product, store it and ship it yourself. In dropshipping, the supplier takes care of stock and shipping, and you take care of selling and customer service.

How do I get customers to buy again?

With good service and email marketing: a welcome email, order notifications, abandoned cart reminders and offers based on what they’ve already bought.

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