Blog | 25/06/2020 | 2 minutes Read | By Michael L.
The idea existed in the 60’s with mail order catalogs, but the term started to gain popularity around 2010 with the release of AliExpress and Shopify.
Started in the 1960’s
So, how long has dropshipping been around? The idea has always been simple. A middle man sells to the customer, but the product is shipped directly from a warehouse, wholesaler or manufacturer to the customer. The middle man’s, or dropshipper’s, only job is to generate sales. Dropshipping cut costs from the fulfillment process, therefore the dropshipper can promote the products using the saved costs to a wider audience. In return, both parties earn more money, it is a win-win situation.
Around 1960’s, mail order companies mailed catalogs that advertised a range of items to every household in the country. Customers could order products directly from the catalog and pay for it via phone or mail. After some days, the company would deliver the items to their door. The orders would be typically outsourced to a warehouse, who would pack and ship the items. Sound familiar? Yes, the mail order companies used dropshipping.
The internet and online shopping
The next big development in dropshipping came when more people owned computers and were surfing the internet daily. Of course, in the early 2000’s many didn’t trust online shopping. They didn’t like the idea of giving out their credit card info to some random website. However, as time passes, more and more shopped online with the development of secure payment gateways, like Paypal.
The internet opened so many doors and many great things were born. Such as, Just-In-Time (JIT) production concept was developed by the Japanese when they realized that instant information transmission could reduce over- and underproduction. To put it simply, manufacturers would receive orders directly from retailers based on stocks that are running low. JIT improved the logistics of the manufacturers and retailers, and it also allowed the possibility of pre-orders.
One of the earliest companies that used dropshipping and JIT is Amazon. Yes, THE Amazon. Before it became the giant as we know today, Amazon used Seattle based book distributors who were willing to dropship. Amazon used dropshipping so successfully that it grew into the world’s largest retailer.
With the business rapidly growing, Amazon was struggling to keep up with the demand. They knew they needed to find a more fast and efficient way to ship out order items. As a result, Amazon built fulfilment centers that are designed to keep stock of certain items to speed up the shipping process.
AliExpress
Then around 2010, Alibaba released AliExpress and dropshipping was changed forever. China produces and exports a lot of goods at a low cost. Therefore, many wanted to source form China, however, previously finding and working with Chinese manufacturers was complicated. Mostly because there was a culture and language barrier. You would then need to find a middle man to introduce you to manufacturers.
Around 2010, Alibaba created AliExpress and on this website, anyone could purchase items from Chinese manufacturers and start their own dropshipping business. The process was as simple as buying something from Amazon. AliExpress removed the language and cultural barriers, and made dropshipping from China much easier and cheaper.
At the same time, Shopify also came around and made creating an ecommerce store much easier. Anyone could start an online store, and pass on the order to AliExpress and have the manufacturer directly ship to the customer.
Thanks to AliExpress and Shopify, the term dropshipping grew in popularity.
The Author
Michael L. / Contributor / Seoherald
Michael is an experienced freelancer offering SEO and WordPress services. Bringing in a new perspective about WordPress and SEO, he aims to write helpful content for those looking for an answer.