Dropshipping: Selling Without Inventory

Strategies for Coping with Confinement

By: Gabriel E. Levy B.


Although for some it is more difficult than for others, the current confinement that Latin America is experiencing has become a symbol of lack, whether emotional, economic, social, cultural, affective or of entertainment, altering in a very short time the world as we knew it.

We are starting to publish a series of articles called: “Strategies for Coping with Confinement”, which, based on the use of ICTs, will provide practical solutions to help facilitate daily life in times of quarantine.

Is dropshipping a way to increase income without leaving home?

Dropshipping refers to a type of retail sale where the retailer does not own the products, nor does it keep the goods in its inventory, but plays only a commission agent or intermediary role, taking and passing the order to the supplier of the product, who in turn is responsible for sending the goods directly to the final customer [1].

There are multiple modalities of dropshipping [2], which we summarize below:

The first modality is the one directly promoted by companies specialized in this type of service and that motivates people to serve as intermediaries, becoming a kind of commission agent as it happens in the catalog marketing or the real estate market.

Some of the most recognized companies under this modality are Oberlo, Shopify, Mabisy and BigBuy:

“We are a wholesaler that supplies the online channel and we sell to e-commerce clients, marketplaces, social networks and all kinds of rewards programs” Salvador Esteve, BigBuy’s CEO [3]

The second type of dropshipping refers to people who identify certain innovative products on platforms such as Amazon, eBay, Alibaba, among many others, and locally publish these innovative products on regional platforms such as OXL or Mercado Libre. They use the same descriptions translated into Spanish and even the same photos of the original supplier, so that when a customer buys the product locally, they in turn order it on the international site, generally sending it to the address requested by the regional customer, or in some cases to their own address, and then repackaging it and resending it with their brand.

A specialized article in the Spanish magazine Retina El País extensively analyzes dropshipping, in particular the third modality that we talked about previously, in reference to a success story:

“He acquired a license to acquire Scarecrow-related products in China to sell them through his digital store, which simply serves as a meeting point with customers.”

If a dozen specific goods are ordered from him, he processes them in the Asian continent and sends them directly to the buyers from there. He receives nothing, does not store and does not generate stock”.  Article from the Spanish magazine Retina del País [4]

A fourth modality is a hybrid among the previous ones and consists of promoting in social media such as Facebook, Instagram, YouTube or Tik Tok, products offered either through Oberlo, Shopify, Mabisy and BigBuy catalogs or products located in virtual stores such as Amazon, eBay, Alibaba, mentioning the benefits of the product in an influence scheme, and then offering them to followers in these media, who make the order and payment, and then receive it by mail using any of the above-mentioned schemes.

An Excellent Alternative for Telecommunications Companies

For the Telecommunications sector, especially in the case of small and medium enterprises, dropshipping becomes a great opportunity for the monetization of new services without requiring large investments, since both ISPs and cable companies can offer their customers various types of technological devices, such as gadgets, home automation devices, IP cameras, internet equipment and a host of devices, which do not require large investments or inventories, allow them to offer their customers these products, bill them with the service and finance them if the financial muscle is available.

Not Everything is Positive:

Although in general terms the model offers great advantages and many people have turned dropshipping into a form of income or even, in many cases, into the main economic source. There are some associated risks, perhaps the main one being the non-satisfaction of the local customer with the product, which using the return tools of platforms such as Mercado Libre cause the defective or non-defective product to end up in the hands of the intermediary, who in many cases is unable to make the return to the original supplier, losing the money or generating stock of merchandise while managing to sell it to a new customer.

Another associated risk derives from the lack of ethics of Chinese companies, which, in the specific case of the third modality, use the local distributor temporarily, while at the same time they collect information from the final customers, and then contact them directly with better prices by taking the intermediary out of the way.

But while the risks exist, they are no greater than those of other forms of trade.

In conclusion, dropshipping is a marketing model that allows intermediation in the sale of products without requiring large capital or warehouse stock, is an efficient scheme that allows a constant cash flow and extra income, something that is undoubtedly a great opportunity in times of crisis and in the case of telecommunications operators may provide an alternative source of income, which produces cash flow without investment capital.

[1] Book: The Ultimate Guide to Dropshipping

[2] Specialized article: Dropshipping in e-commerce

[3] Specialized article by Revista Retina El País from Spain

[4] Specialized article by Revista Retina El País from Spain

Disclaimer: The published articles correspond to contextual reviews or analyses on digital transformation in the information society, duly supported by reliable and verified academic and/or journalistic sources.  The publications are NOT opinion articles and therefore the information they contain does not necessarily represent Andinalink’s position, nor that of their authors or the entities with which they are formally linked, regarding the topics, persons, entities or organizations mentioned in the text.