Introduction

The question “when was dropshipping invented” is both a historical query and a business planning prompt for anyone starting an online store. The phrase appears early because understanding the origins helps you adapt proven patterns and avoid outdated pitfalls when you set up supplier relationships, pricing, and logistics.

Dropshipping did not appear overnight; its roots trace to 19th century mail-order catalogs, matured through mid-20th century wholesale practices, and became a mainstream e-commerce tactic with the internet and marketplaces in the 1990s and 2000s. This article covers the origins and evolution of dropshipping, the modern model, concrete supplier sourcing strategies, pricing examples, tool recommendations with current pricing where available, common mistakes and how to avoid them, and a launch checklist you can act on this week. If you plan to start a dropshipping business, this guide provides historical context plus practical, actionable steps that let you build a reliable operation rather than chase fads.

What is dropshipping and why it matters

Dropshipping is a retail fulfillment method where a seller lists products for sale without holding inventory; when a customer places an order the seller forwards the order to a supplier, who ships the product directly to the customer. The seller handles product selection, marketing, storefront, and customer service, while the supplier handles inventory and shipping.

Why it matters for entrepreneurs:

Low upfront capital: You do not buy inventory in bulk. Example: instead of investing $5,000 to buy 500 units at $10 each, you can test a product by listing it and paying the supplier only after you get a sale.
Fast product testing: Launch a product page, run ads, and measure conversion within days. Example: a paid Facebook ad spend of $200 can validate a product before placing any inventory orders.
Flexible catalog: Add and remove SKUs quickly. Example: switch from phone accessories to home goods within a week using suppliers on platforms like Spocket or DSers.

When to choose dropshipping:

You want to validate product-market fit before committing capital.
You want a low-overhead side business with minimal warehousing.
You need to offer a broad catalog without logistics complexity.

When not to choose dropshipping:

You require full control over branding or unboxing experiences.
Your product margins must be high and predictable; dropshipping margins after fees and returns can be thin.
You sell heavy or regulated items where supplier mistakes create legal or high-cost issues.

Metrics and numbers to monitor:

Gross margin = (Sale price - COGS) / Sale price. Aim for 30-50% gross margin before ad spend.
Average order value (AOV). Raising AOV with bundles or upsells improves ROI on ads.
Cost per acquisition (CPA). If ads cost $20 and gross margin per sale is $25, you may be profitable only at scale or with repeat customers.

Example math: sell a widget at $40, supplier price $15, shipping $4, platform fees 3% plus payment processing 2.9% + $0.30. Gross profit ≈ $40 - $15 - $4 - ($1.20 + $0.30) = $19.50. After ad spend of $12 per sale you net $7.50.

That math guides whether to double down on advertising or reprice.

when was dropshipping invented

Answering “when was dropshipping invented” requires separating the idea from the modern label. The practice of selling without holding inventory has roots in 19th century mail-order and early wholesale practices, but the widespread, internet-enabled dropshipping model emerged in stages.

Key milestones:

Late 1800s: Mail-order retail pioneers like Montgomery Ward (founded 1872) and Sears (catalogs from 1893) sold and fulfilled goods through third parties and manufacturers. These businesses often forwarded orders and relied on suppliers for inventory, a proto-dropshipping approach.
Mid 1900s: Wholesalers developed “drop shipping” as a trade term. Manufacturers and wholesalers accepted orders from retailers and shipped directly to the retailers’ customers. This evolved in industries like furniture and appliances.
1990s: The internet and marketplaces changed distribution. eBay launched in 1995 and Amazon opened third-party selling programs in 2000, enabling small sellers to list items without stocking everything.
Early 2000s: Alibaba (founded 1999) and later AliExpress (launched 2010) connected Western sellers with low-cost manufacturers in Asia, making low-minimum, single-unit shipments feasible and affordable.
2006 onward: Shopify (launched 2006) and other easy storefront platforms cut technical barriers, letting non-technical entrepreneurs launch stores. Apps and integrations for automated order forwarding and product importation followed.
2015-2020: Dropshipping-specific services and apps (for example DSers replacing Oberlo after Oberlo shut down in 2022, Spocket, Modalyst) simplified supplier discovery, inventory sync, and order automation, accelerating mainstream adoption.

Interpretation: If you ask “when was dropshipping invented” in the narrow sense of retailers selling without owning inventory, you can trace it to the mail-order and wholesale practices of the late 1800s and mid 1900s. If you mean the modern, internet-first dropshipping model used by solo entrepreneurs and small teams, that model coalesced between the late 1990s and mid 2010s as marketplaces, global suppliers, and storefront platforms matured.

Timeline summary (quick reference)

1872: Montgomery Ward mail-order begins.
1893: Sears catalog expands remote retail.
1950s-1990s: Trade wholesalers practice dropshipping in B2B channels.
1995: eBay founded.
1999: Alibaba founded.
2000: Amazon Marketplace launch.
2006: Shopify launches.
2010: AliExpress opens for global buyers.
2015-2020: Dropshipping apps and integrations popularize low-cost, automated setups.

This timeline shows evolution rather than a single invention moment. That matters because your supplier sourcing and business setup should reflect the current ecosystem: digital suppliers, shipping expectations, payment and tax compliance, and automation tools.

How dropshipping works today: setup and supplier sourcing

Setting up a modern dropshipping business is a chain of discrete, repeatable steps. Each step has supplier and platform decisions that affect margins, speed, and risk.

Core setup steps:

Choose a platform: Shopify, WooCommerce (WordPress plugin), BigCommerce, or marketplaces like eBay, Amazon Seller Central.
Find suppliers: Use marketplaces (AliExpress, Alibaba), dropshipping apps (DSers, Spocket, Modalyst), or specialty suppliers (CJ Dropshipping, Printful for print on demand).
Import products: Use CSVs or apps to import product data including SKUs (stock keeping units), descriptions, images, and variants.
Price and list: Set retail prices with margins covering cost of goods sold (COGS), shipping, platform fees, and ad spend.
Automate fulfillment: Configure order forwarding to suppliers, or use integrations that send orders automatically when payment is received.
Optimize conversion: Product page copy, images, reviews, and shipping policy clarity.
Customer service and returns: Define refund and return workflows with suppliers; obtain tracking numbers for transparency.

Supplier sourcing practical tactics:

Start with vetted apps: Spocket focuses on suppliers in the US/EU for faster shipping; expect higher COGS but better delivery times. Modalyst offers branded suppliers and curated lists.
Use DSers for AliExpress automation: DSers integrates with Shopify and handles bulk order forwarding to AliExpress suppliers with different shipping methods and ePacket where available.
Try CJ Dropshipping for product sourcing plus warehousing: CJ offers China warehouses and some fulfillment in US/EU for faster delivery.
Check supplier metrics: sample order lead time, average processing time, returns policy, minimum order quantity, and packaging options.
Place sample orders: Always buy samples (expect $10-$30/sample plus shipping) to inspect quality, packaging, and delivery times before listing products at scale.

Example sourcing scenario:

Niche: phone camera lens kits.
Supplier: AliExpress seller with 98% positive rating and 1,000+ orders.
Product landing cost: $8.50 per kit, shipping ePacket $3.50, total $12.00.
Retail price: $34.99. Gross margin before ads ≈ (34.99 - 12.00)/34.99 ≈ 65%.
After ad spend $15 per sale and fees, net margin ≈ $4. Use bundling or higher AOV to improve profitability.

Shipping and delivery expectations:

If suppliers ship from China without local warehouses, average delivery to US customers is 12-25 days unless using ePacket or expedited shipping.
Use local suppliers or US/EU warehouses for delivery times under 7 days; factor higher COGS into pricing.

Legal and tax basics:

Register a business entity appropriate to your country.
Collect and remit sales tax or VAT based on local rules and marketplace thresholds.
Keep invoices and records from suppliers for COGS and returns.

Profitability, pricing and launch checklist

Pricing strategy determines whether you can scale. Dropshipping margins are often tighter than inventory-backed models, so plan carefully and use a repeatable pricing formula.

Pricing formula example:

Retail price = target gross margin target = COGS + shipping + fixed fees + target gross profit.
Fixed fees to include: payment processing (typically 2.9% + $0.30 per transaction in the US), platform fees (Shopify Basic $39/mo or marketplace seller fees), and average refund/returns cost.
Advertising ROI: determine break-even ad cost (BEAC) = retail price - COGS - shipping - fees. If BEAC = $12 and your expected cost per acquisition (CPA) is $15 on Facebook, you lose $3 per sale.

Sample product pricing:

Product A: COGS $12, shipping $4, platform fee 3% ($0.60 on $20 sale), payment processing $0.90 (2.9% + $0.30). If you set retail price $29.99, gross margin before ads ≈ $29.99 - 12 - 4 - 0.60 - 0.90 = $12.49. If CPA is $8, net profit ≈ $4.49.

Launch checklist (operational):

Legal and payments
Register business and open bank account.
Set up Stripe and PayPal, verify identity documents.
Store setup
Choose platform: Shopify Basic ($39/mo), WooCommerce (free plugin plus hosting $5-30/mo), BigCommerce (starting $39/mo).
Install theme and mobile-optimize product pages.
Supplier and product
Select 3-5 validated suppliers for backup.
Order and inspect at least 2-3 samples per product.
Pricing and margins
Calculate BEAC for each SKU and set a target CPA.
Implement minimum advertised price (MAP) policies if working with brand-focused suppliers.
Marketing
Set up Facebook Pixel and Google Analytics / Google Tag Manager.
Launch a small test campaign with $100-$300 budget to collect initial data.
Fulfillment and customer service
Map order flow and automated notifications.
Draft a clear shipping and returns policy showing expected delivery windows.

Scaling considerations:

Improve AOV with upsells, bundles, or subscription offers. Example: add a $9 accessory that increases AOV by 20% and converts at 10%, improving ROAS.
Consider partial inventory: keep top sellers in a small local fulfillment center to reduce shipping cost and time if margins justify it.
Monitor chargebacks and maintain high-quality customer support to reduce disputes.

Tools and resources

Use a mix of storefront platforms, supplier apps, and fulfillment services. Listed pricing is indicative as of mid-2024; verify current plans before committing.

Storefront platforms:

Shopify: beginner-friendly; Basic Shopify around $39/month. Themes and apps add costs.
WooCommerce (WordPress): plugin free; hosting $5-$30/month depending on traffic; greater flexibility but requires technical setup.
BigCommerce: similar to Shopify; plans start about $39/month.

Supplier discovery and automation:

DSers: Free plan plus paid tiers; automates AliExpress order placement; recommended after Oberlo shutdown.
Spocket: Free plan with paid plans starting around $24/month; focuses on US/EU suppliers for faster shipping.
Modalyst: Free starter plan; paid plans start around $35/month; curated brands and faster shipping options.
CJ Dropshipping: Free to use; charges per order fulfillment; offers warehousing in several countries.
AliDropship plugin: One-time fee about $89; integrates AliExpress with WooCommerce for automation.

Print on demand (POD) options:

Printful: No monthly fee; product + shipping cost per order. Good for custom apparel and accessories with branding options.
Printify: Free plan plus premium $29/month for discounts on product base prices.

Marketplaces:

Amazon Seller Central: Individual or Professional plans; Professional subscription around $39.99/month in the US plus referral fees per sale.
eBay: Listing fees and final value fees; use managed payments.

Payments and analytics:

Stripe: Typical fees 2.9% + $0.30 per successful card charge in US.
PayPal: Merchant fees similar to Stripe; varies by country.
Google Analytics 4: Free analytics; integrate with Google Ads for conversion tracking.

Shipping and returns:

ShipStation: Multi-carrier shipping management; plans start at $9/month plus per-order fees.
EasyPost: API for label generation and tracking.

Education and communities:

Shopify Help Center and Academy free courses.
YouTube channels with step-by-step tutorials (verify recency).
Reddit r/dropship and specialized Facebook groups for supplier recommendations.

Common mistakes and how to avoid them

Skipping sample orders

Problem: Listing products you have not physically inspected risks poor quality, misleading photos, and high returns.
How to avoid: Order samples from each supplier for $10-$30 each before listing. Track delivery times and packaging.

Ignoring shipping times and customer expectations

Problem: Long shipping times lead to chargebacks and negative reviews.
How to avoid: Clearly state shipping windows on product pages, use ePacket or local warehouses when possible, and offer expedited shipping options at higher cost.

Choosing suppliers based only on price

Problem: Lowest price often means lowest reliability or counterfeit risk.
How to avoid: Evaluate supplier rating, order volume, response time, return policy, and sample quality. Keep a backup supplier for each SKU.

Underpricing (or overpricing) without accounting for all fees

Problem: Many sellers forget platform fees, returns, and ad costs and find margins evaporate.
How to avoid: Use the pricing formula earlier in this article; calculate BEAC and test ad campaigns with small budgets before scaling.

Relying on a single traffic source

Problem: Overdependence on Facebook ads or a single SEO channel is risky if costs rise or policies change.
How to avoid: Diversify acquisition: organic SEO, content marketing, email marketing, Google Ads, influencer collaborations, and marketplace listings.

FAQ

When was Dropshipping Invented?

Dropshipping evolved over time. The basic practice goes back to late 19th century mail-order catalogs, but the modern internet-enabled dropshipping model crystallized between the late 1990s and mid-2010s as marketplaces, global suppliers, and storefront platforms matured.

Is Dropshipping Still Profitable in 2025?

Dropshipping can be profitable if you pick the right products, manage margins, and control customer acquisition costs. Profitability depends on product selection, supplier reliability, shipping times, and marketing efficiency; many sellers find success by focusing on niche products and higher AOV strategies.

How Long Does It Take to Launch a Dropshipping Store?

You can launch a basic store in 3-7 days with a single validated product and supplier. A more robust launch with multiple suppliers, sample orders, and marketing setup typically takes 2-4 weeks.

Do I Need to Register a Business Before Starting Dropshipping?

Regulatory requirements vary by country. Registering a legal entity and opening a separate bank account is recommended for tax, payment processor verification, and long-term scaling, though some sellers test under a sole proprietorship first.

How Do I Handle Returns and Refunds with Dropshipping Suppliers?

Set clear return policies with suppliers before listing products. Some suppliers accept returns, others do not. For returns, decide whether you will reimburse customers directly and handle return shipping or require returns sent back to the supplier; build those costs into pricing.

Which Niches Work Best for Dropshipping?

Niches with light-weight, non-regulated products and high perceived value tend to work well—examples include phone accessories, fitness gear, pet accessories, and niche hobby products. Avoid heavy, perishable, or regulated items until you have experience and tight supplier relationships.

Next steps

Validate one product this week

Pick a product idea, find 2 suppliers, order samples, and setup a one-page product test on Shopify or WooCommerce.

Run a small ad test

Allocate $100-$300 split across Facebook and Google Ads. Track cost per acquisition (CPA) and conversion rate to calculate early ROI.

Automate a supplier workflow

Install DSers or Spocket and connect your store. Configure automatic order forwarding and set up email templates for order confirmations and tracking.

Build operational guardrails

Document supplier contacts, return policies, fulfillment SLA (service level agreement), and standard customer service responses to reduce errors as you scale.

When was Dropshipping Invented History and Startup Guide