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How to start a dropshipping business with Magento

What is dropshipping?

Dropshipping occurs when a retailer does not keep an inventory of their products but instead works with a wholesaler who fulfills orders and ships directly to the customers.

Pros of Dropshipping

The dropshipping model appeals to many e-merchants in particular because it offers several advantages:

  • no stock management: no inventory, no worry
  • no large amount of capital needed: you purchase what you sell and you don't even need a physical location to work if you're alone
  • a greater range of products: suppliers often propose a wide range of products
  • no packaging and shipping: you don't have to worry about the packaging or the shipping since the suppliers take care of it

Cons of Dropshipping

Dropshipping also shows disadvantages:

  • lower margin: since you are buying one product at a time rather than placing a bulk order, the prices charged by wholesalers are not always favorable and you won't get special prices.
  • competition: a lot of online stores are already riding the dropshipping trend, so it can be difficult to stand out from stores that are already on the market
  • no quality control: you don't see the products you're selling (unless you order some items) so it can be difficult to check the quality of the goods
  • customer complaints: since you don't handle the packaging and shipping, you cannot control anything. So in the case where a customer is not happy, you'll be the one who receives complaints

Whatever you are a small or big business, you could easily enter the dropshipping game using a Magento solution.

Example

Below is a simple example of using the dropshipping model with Magento 2.

If you are on Magento < 2.3, you should use the Advanced Inventory extension.

Online sales & dropshipping with Magento > v2.3

"We have a store on Magento 2.4. We are selling products from a supplier.
Customers can buy our products from our website directly.
When a customer shops through our websites, we want stocks to be decreased in real-time to keep our inventory up to date."

If you're using the MSI module from Magento <= v2.3, you could use our MSI Suite to complete and enhance the default workflow: 

  1. Save time managing your inventory: handle the stocks for your supplier from the stocks grid and get a clear view of your products' availability in the tree view. You can even use the Mass Stock Update extension to easily and rapidly update all your inventory.
  2. Make it clear for your customers: display a stock grid on your front-end product pages as well as specific stock status messages in different places: product page, cart, checkout, and order confirmation email.
  3. Automate the order management: keep your stocks completely sync and automatically pre-allocate the orders after they are placed according to the algorithm you have selected.
  4. Assign specific permissions to admin users: for example, don't let the wrong person see and handle stocks, orders, and products from your supplier. 
See more about the MSI Suite.

Step 1 - Add your sources in your Magento back-office

The first step is to add your sources to your Magento back office.

You can do that manually or use the CSV import if you have loads of stores to add. 

Create your stocks and link each one with the appropriate websites and sources.

Step 3 - Schedule the update of each stock

Use the Mass Stock Update extension to keep all your stocks up to date.

Manually or automatically update all Magento stock attributes in one go through any CSV or XML files available from the Magento file system or any remote server through HTTP or FTP.

Tips: Ask your supplier for an updated URL to easily import or update the stocks of the products from a CSV file.

Step 4 - Send the orders to your supplier

When a customer makes a purchase on your website, you must place a duplicate order with your supplier. 

Tips: In the case where you have loads of orders, you could use our Mass Order Export extension to automatically send the orders to your supplier.

Step 5 - Send the shipping information to your customers

Once the supplier has packed and shipped the products to your customer, you should update the status of the order and add the shipping information. 

Tips: Integrate the updated order status file to your Magento store using Mass Order Update.

See also

How to start with Google Shopping Ads

How to open a new sale channel with Google Shopping Actions

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