Types of dropshipping

Simply put, dropshipping refers to any business that fulfills orders by purchasing products from another person or business and has them ship the products to the customer. Because this definition is so broad, it allows for many different types of dropshipping.

Review the different types of dropshipping below to learn what they are and what people and businesses they work best for.

Product reselling

What it is

The most common type of dropshipping is where a company finds products from a variety of sources and makes them available for online purchase all in one place.

These businesses make it easier for the general public to find and purchase these products. Also, these businesses usually provide extra value through in-depth reviews of the products, unique content about the products, or a curated library of resources for the products.

Who it's good for

Straight product reselling is great for someone who has a good amount of knowledge of an industry or particular demographic. For example, someone who knows about child development could create a dropshipping business around the different toys that are best suited for children of different ages.

Another example could be someone who knows a lot about people who work from home. They could create a store full of unique and practical office supplies for a home office.

This type of dropshipping is also good for people who excel at marketing. Because product reselling is a common type of dropshipping, finding a way to attract customers can be difficult. If you can come up with unique ideas to market your business, then you're more likely be to successful with this type of dropshipping.

Business extensions

What it is

Many retail stores don't have an online presence. Although they might want one, many don't have the time, funds, or knowledge to put their business online. Some dropshipping companies choose to work with these businesses and become their online presence. Each time the dropshipping business gets a sale, they ask the retail store to ship the item to the customer.

Who it's good for

Dropshippers who choose to be the extension of a business tend to have an established relationship with the retail store. You need to gain access to inventory levels and product details, as well as take good-quality photos of the products. This works well in smaller cities where businesses might be more willing to look into expanding their market, and can be harder to do in rural areas.

This type of dropshipping takes more effort because you need to establish a relationship with the retail store. Getting the appropriate inventory levels, writing the product details, and taking product photos can take a lot of time. However, the benefit is that you have less competition through exclusive access to the retail store's products and can partner with them on branding and marketing.

For example, a dropshipping business in Smiths Falls, Canada could partner with their local boutique stores and create a curated online presence for them. The retail stores could add the website to their business cards and include it in their own marketing as well.

Another example is a dropshipping business in Amsterdam could partner with emerging artists in their city to help them sell their artwork worldwide. This allows the artists to focus on creating their products and the dropshipping business to help increase sales.

Product creation

What it is

Some dropshipping businesses choose to bundle or group products together and have them available for purchase as one product. For example, a dropshipping business could find a supplier with a large product line of craft supplies and build their own crafts using those supplies. By creating new craft ideas, the dropshipping company can bundle the craft supplies together and sell a "Make your own craft" kit. They can then dropship the supplies and email the customer instructions, or make the instructions available for download on the website after purchase.

Who it's good for

Making new products by combining existing ones can be difficult and requires a certain level of creativity. However, another common product you can create is simply a bundle of products that are useful to be bought together. For example, a child going back to school might need all new school supples and you could create bundles of school supplies for each grade or year of school.

Keep in mind that if you create a product that contains dropshipped products from different suppliers, then the different products reach the customer at different times. It's best to create new products out of products that come from a single supplier who packages all products in an order together in one package.

What it is

Print on demand is a type of dropshipping where a company wants to sell products that have either text or an image printed onto them. Most printing services offer a wide selection of products to print on, such as shower curtains, mugs, pet food bowls, and T-shirts.

For example, a music band might want to increase their awareness by selling products with pictures of the band or just the band name printed on them. By working with a print on demand service, they can upload their images and each time they make a sale, the service prints the product and ships it to the customer on behalf of the band.

Who it's good for

Print-on-demand selling requires you to have an idea for what you want to print on products. After you have your idea, you need to put it in a format that the printing service can accept, typically through an image upload with specific size requirements.

Similar to product reselling, it helps if you know how to market the product that you create. Print on demand is another common form of dropshipping and many businesses print on common items such as mugs and T-shirts. If you have access to a specific group of people who have a common interest, then print-on-demand dropshipping might be a good fit.

For a checklist on how to create a print-on-demand store, see Setting up a print on demand store in Shopify.

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