"Dropshipping or Ecommerce, what's the difference? Which one should I start?"
If you’ve been looking to break into the online business world, chances are you’ve probably considered a few dozen online business models, and at some point found yourself asking this question. Ecommerce has exploded since 2020, no doubt about it. Whether it’s dropshipping or ecom, everyone’s taking advantage of this trend and setting up multiple 6-figure businesses as we speak.
So what’s the deal? What sets these two apart? And how do some other online business models stand up against these two?
All that and much more, that’s what we’re going to discuss today in this article! In this guide, we’ll compare dropshipping vs ecommerce to help you find out what suits your needs and ideals best.
Basic Difference: By-Definition
By the Oxford definition, Ecommerce or electronic commerce is the “use of the Internet to buy, sell and trade goods and services”. These goods and services can be physical, or virtual. Another simpler definition defines E Commerce as any “commercial transactions conducted electronically on the internet”.
By this definition, if a business can (and is) conducting transactions electronically, it’s considered Ecom. Simple as that! Even if they offer cash on delivery, or in-person transactions. As long as the option to pay online exists, then by definition it’s considered Ecommerce.
Now the term “Ecommerce” is very broad and can contain dozens of different online business models, which are mostly either B2B (Business To Business) or B2C (Business To Consumer).
Some other models exist like C2C, C2B, B2A and C2A, but those models are less popular and less often found than the two big ones.
Now that’s Ecommerce — a broad term for the online marketplace where different kinds of buying, selling and trading are taking place. E Commerce is an entire online business Ecosystem with lots of different independent systems within it.
One of which is, you guessed it — dropshipping.
Dropshipping is a type of Ecommerce business model;
Just like Print on Demand, FBA, affiliate marketing, online teaching, apps, SaaS, marketing agencies, and a whole bunch of others.
By definition, Dropshipping is a form of retail business wherein the seller accepts customer orders without keeping stock on hand.
They “Drop” the shipping 😀
Okay, lame joke…
The infographic below portrays the entire workflow of the dropshipping business model:
You can find out in-depth details about what dropshipping is, how it works and how you can set up your very first Shopify store within minutes right here. And if you’re confused about what products to dropship this holiday season, we’ve got you covered there too!
Now imagine 10 people standing underneath an umbrella. That umbrella is called “Ecommerce” and the 10 people that it’s sheltering thanks to its existence, are the various different business models — all connected one way or another to some form of electronic “E” commerce platform, and hence the wider ecosystem.
NOTE: Keep in mind we’ve only discussed the by-definition difference so far. In 2022, Ecommerce and Dropshipping have more clearer and explicitly understood differences that we’ll discuss below. So much so In fact, that Ecommerce has become it’s own unique type of business model under the wider “Ecommerce” umbrella (Kind of like Singapore, Singapore… where the country and capital city are both named the same).
Some Popular Ecom Platforms:
Different types of Ecom businesses have different dedicated platforms. For example, shopify is the best for particularly physical product-based businesses (including Ecommerce dropshipping), while Printful and Printify are popular names in the POD industry. Playstore and Appstore are two major players in the apps niche, while Thinkific, Udemy, Skillshare and Coursera are ruling the online “knowledge” industry.
Every model has its dedicated platform you can start selling through. Now let’s have a look at the PRACTICAL view regarding Ecommerce with the second difference — Order fulfillment.
How Does Ecommerce Work?
How does the E-commerce ecosystem work? Any transaction conducted electronically to buy/sell/trade goods.
How does the ecommerce business-model store work? Let’s have a look. Here’s the basic workflow from purchase to delivery:
- Customer visits the online store and chooses a product.
- Your Customer buys the product by paying online.
- The product is picked up from your warehouse.
- The order is packed and labeled with the customer’s shipping address.
- A shipping company delivers this product to your customer.
The last three steps constitute the order fulfillment process, which in the ecommerce model, are all handled by you — unlike in dropshipping, where you don’t have to hold inventory or pack and ship the products yourself.
That’s it, that’s the major defining difference between these two models — Inventory, Capital and Order Fulfillment. Now let’s see how dropshipping works and how it differs from ecommerce fulfillment.
How Does Dropshipping Work?
As we’ve mentioned, dropshipping is not exactly an ecommerce alternative. It’s different and It’s just another Ecommerce business model.
Online stores that use dropshipping have no inventory of their own. Instead, they partner with an order fulfillment vendor, also known as a dropshipper.
Here are the basic steps that a dropshipping store runs on:
- Customer visits the online store and chooses a product.
- Your Customer buys the product by paying online.
- You forward the order details to your supplier (whether manually or through Zapier).
- Your supplier picks the product from their warehouse, packs and labels it up with the customer’s shipping address and details.
- Your supplier ships out the desired product directly to your customer from their warehouse inventory (by self or through a courier service they’ve partnered up with).
You own the store and list products, but you don’t own physical inventory.
Please note that dropshipping is different from 3rd party logistics. In 3PL, you own the inventory, but a third party does the warehousing. You only outsource the storage, packing, and shipping. But in dropshipping, the dropshipper owns NO inventory.
In a nutshell, you can start an online dropshipping store and start selling instantly, without even having a single product in your stock. You outsource the product from your supplier only when a customer places an order — saving you the loads of capital and stress required in keeping, managing and handling inventory.
The online business ecosystem offers several methods for order fulfillment as well. Ecommerce fulfillment and dropshipping are two major popular models in 2022.
Matter of fact, Statista reports that dropshipping had a $128.6 billion market value in the covid era of 2020, and It’s expected to grow a whopping 370% by 2026…
Now so far we’ve discussed 2 major basic differences: By-definition, and Practical Order Fulfillment in the ecom business model. The “Capital” difference is kind of understood when you understand the 2nd difference. But how do these contrasts stand up against each other? How do they affect a person’s lifestyle? Which one should you choose if you’re only starting out?
Let’s find out!
1. The Weight Of MASSIVE Capital
E Commerce is a business model that requires lots of planning, cash, time and assets to even think about starting, period. How else are you going to buy inventory? Store it in a decent warehouse close to town? Partner with a shipping company to deliver products to your customers’ doorstep safe, sound and on time?
How this, how that. It never ends.
When it comes to the eCommerce model, there are a hundred different things to keep in mind and tackle all at the same moment (not to mention you can’t do it all alone). When Jeff Bezos started Amazon in 1994, his parents invested in his company a total of $225,000 to start (adjusted for inflation in 2022, that makes roughly $452,447.37).
On the flip side, dropshipping is a relatively low-barrier business model that, while does require effort, isn’t too difficult or too risky to get started with. As a bonus, there aren’t many legal hurdles and obligations in your way either (more on that later on).
It’s already 50% easier when the supplier takes care of all the shipping and logistics for you, but now with Adserea it’s even MORE absurdly easier when the top winning products are already available at your fingertips — all with the ad videos, copies, content, data and spy tools you can leverage to give yourself a head-start over competition.
Thanks to Adserea, dropshipping is now at least 90% easier for you than it ever was before! While ecom requires half a million dollars to start, you can open up a dropshipping store and start selling as soon as today, in just under a thousand bucks!
2. The Stress Of HUGE Workload
Massive costs aside, It’s not easy to run an Ecommerce business. You certainly can’t do it alone, and if you try to… You’ll end up sacrificing your health for wealth (please do not do that…)
What’s the point of wealth if you become too unhealthy to even enjoy it? No one wants to be rich in a graveyard.
You’ll find certain Ecommerce entrepreneurs stressed heavily. Managing operations, giving out orders, delegating tasks, trying to be present in several places at the same time, acquiring deals, handling legalities, partnerships, accounting, marketing strategies, reports, tax, product quality, customer satisfaction and on and on…
Like I said, it’s not something you can do alone or even with 10 grand in your pocket. This much amount of work takes a serious toll on you long term and it’s not for everyone. It’s not a piece of cake to build an Amazon (especially considering they ran on a loss for many consecutive years before even becoming profitable).
According to NY Times, Twitter CEO and meme lord Elon Musk is reported to have worked over 120 hours a week time and time again. Just watch some of his interviews, see how tired he looks. That’s a glimpse at the type of pressure you have to deal with running a company.
Of course, to combat this you can always start a local, smalltime Ecommerce business in your own town. But that will still require good capital and result in very slow, limited sales for a while until you can afford to expand.
3. Legalities…
Let’s say you somehow manage to get half a million in order to start your very first ecommerce business. Let’s also assume you can handle most of the pressure that comes with running one too. But what about the legalities?
If you’ve raised revenue via the public or investors for the company, then you especially need to make things transparent with everyone to avoid trouble, and put it in a 100x the effort; the pressure on your head will be tremendous.
Forming a proper, registered and trademarked business entity (like an LLC) is just a start. You’ll need a business bank account, tax registrations, licenses, patents, comply with hundreds of laws, rules, regulations, committees, constitutions, compliance and acts, age restrictions, insurance, get a thousand signatures and on and on — all to start your very first e-commerce business…
But don’t get demotivated. No one’s saying you can’t or shouldn’t start an ecom business; we’re just saying it’s best to start out with dropshipping and then level it up to a point where you have the experience and capital needed to afford and manage the hurdles of full-scale ecom.
In fact, some dropshippers have done just that! They started with dropshipping (which doesn’t require all the legal strain apart from a few basic prerequisites) and then slowly leveled up enough to own inventory and ship out products on their own, or through a partner. You need a thorough understanding and experience of supply chain and management for this.
Once you’re making a decent revenue and profit, then it may be a good idea to register your business as a separate entity, buy inventory and start shipping out yourself in order to scale up.
PRO TIP: Dropship first, ecom only after you’ve gained enough experience and capital.
4. Peanuts or Profits? Maybe both
It takes at least 4-5 years for an average startup to start becoming noticeably profitable. That’s why more than 99% of businesses shut down in their first year or two, because you always get peanuts before you start reaping profits.
Take this example of Tesla we found. Tesla was born in June 2003 and a year later, Elon Musk became chairman. In 2009, Tesla received a “$465 million USD loan from the United States Department of Energy” and went public the following year.
But it wasn’t until 2013 (a decade after its launch) that Tesla experienced their first consistently profitable quarter. Wired reported that “Tesla recorded sales of $562 million, a gain of over 80% from the last quarter, with 4,900 Model S sedans delivered.” Though some of that revenue was from cutting production costs, Tesla also made money by selling development services for Mercedes-Benz and Toyota.
The game of companies and corporations is a long-term play. If you’re only trying to make a full time salary with part time work, it’s probably not the brightest idea for you (at least not at this stage). Ecommerce can take up to a decade to give you a buck, while dropshipping can give you the same in less than a year (of course in the long run though, e-commerce can have a much higher turnaround in multi millions rather than just one or two).
But it all comes down to what you want and how fast you want it. Nevertheless, dropshipping gives you the essential experience and knowledge that will help you forwards in any different types of Ecommerce you wish to Start in the future.
5. Freedom, Growth & Sustainability
Be honest to yourself, what are you working for? I know it’s not just money — but freedom as well. The thing is it has to be both in life, time and money. But today’s modern society has forced us to work 9 hours a day, 5 hours a week and save up to “enjoy” our lives at 70 years old when we can’t even walk straight.
When it comes to Ecommerce, you’ll be working long hours just as if you were a job worker… or a whole lot more in fact. Since everything is under your control and you’re the boss, you have endless responsibilities and tasks to make your startup successful. Some entrepreneurs work 40 hours or more every week (14-18 hours a day) to find success. They sincerely believe that in the beginning, you have to make lots of sacrifices and deliver 10x the effort than an average wage-worker. After all, the most difficult time of raising a baby (startup) is its initial 5-7 years.
If you do it right and follow people who’ve already done it, it most certainly pays off. But those sleepless nights still take a toll on you!
The ecommerce model, while slow and rigorous, can offer hundred times the returns in a decade or less if you’re patient and skilled enough to see it through. Not to mention, once you establish a brand name, you can sustain your business for many more multiple decades and even generations to come.
Contrastingly, dropshipping offers relatively quicker success and growth, but overall shorter lifespan and less sustainability in general. Of course, it comes down to how an individual steers their business. While some dropshipping stores close down after an initial big million hit or two, others continue and expand with more products, a variety of niches and even a brand name that can catch on. Inspire Uplift is a great example of such a dropshipping store. They have been in business for a long time and still get tons of traffic each month.
Who knows, maybe your Shopify dropshipping could make it up there too? Find out how!
Here’s a quick comparison of what we’ve just discussed:
Ecommerce
— Less freedom of leisure
— More freedom of managing operations
— Slow growth
— More sustainability (long-term)
Dropshipping
— More freedom of leisure
— Less freedom of managing operations
— Faster growth
— Less sustainability (long-term)
CONCLUSION:
And there you have it! Now you know how Ecommerce stands up against dropshipping, the differences, comparisons, how to start and everything in between. We’ve shared our thoughts and analysis to help you get on the right track and move towards higher success, profitability and scalability like never before.
Whatever your preferred business model, here’s one big takeaway to always remember: The more you give, the more you get. If you make things about the customers, the customers will make it about you in return. Keep in mind that creativity and flexibility are something you’ll need to exercise yourself in any business. Those are soft skills that you develop only by doing, so don’t stress out if a thing or two doesn’t go as well as planned.
And now that you know how for a fact that dropshipping is the way to go in Q4 2022 if you’re only starting out, here’s a little surprise to start, scale and automate your store as much as possible — giving you all the time in the world to enjoy the upcoming season with friends, family and everything you love to do.
This is the quickest and easiest way to find top winning products and import them to your dropshipping store, all in the click of a button, thanks to Adserea!
Adserea is the one-stop solution for all your dropshipping needs. Designed to save time, effort and money, our handy software has made it VERY easy for the average joe to start, scale and maintain a fruitful dropshipping store from absolutely anywhere in the world.
How so? Well, we offer over 1000+ winning products in dozens of niches that you can add to your store with the click of a button. But not only that, you also enjoy ad content (engaging video ads, ad copies, descriptions) and targeting suggestions for every single product and loads of authentic data to analyze and witness the potential for your own eyes.
We also add 2 FRESH brand new winning products daily in various niches!
Adserea even offers you some amazing Spy tools and A.I Analyzers that you can use to copy or take inspiration from the best, most popular stores across the web. This gives you a proper roadmap to follow in order to scale and sustain your business by simply mimicking what works. In a nutshell, you won’t have to beat around the bush and waste time figuring things out all by yourself.
This is the secret platform that the top dropshippers in the world don’t want you to know about, but we’re spilling all their secrets for you to start benefiting today. So what do you say? 90% of the work is ALREADY done for you!
No risk, no sweat.
You can try Adserea now for FREE by clicking right here, and start selling the best, most sought-after products this upcoming holiday season as soon as today — at just the click of a button!
Summary: Dropshipping and E-commerce: 7 Key Differences You Should Know
#1: Global Ecommerce ecosystem vs Dropshipping (by-definition)
#2: Order Fulfillment, Shipping and Inventory
#3: The Weight Of MASSIVE Capital
#4: The Stress Of HUGE Workload
#5: Legalities…
#6: Peanuts or Profits? Maybe both
#7: Freedom, Growth & Sustainability
