Dropshipping has changed a lot over the years. This article goes back in time and documents the history of dropshipping.
Today, dropshipping is one of the most profitable eCommerce models in the world. But where did it all start?
Most do not realize how the dropshipping model came around. While the concept of it sounds enticing, this wasn’t always the case.
In this article, we are going to take you on a journey on the history of dropshipping. We will explain how the model was created, and how it grew to become one of the most highly profitable industries in today’s world.
The history of dropshipping teaches us a lot and it gives us some very important lessons that are still relevant today.
The 60s & 70s: Dropshipping Before the Internet
Did you know that dropshipping actually began before the internet?
It first kick started in the 60s and 70s, where mail order companies were taking advantage of mail order catalogues.
Mail order catalogues were small booklets received them in the mail that advertised a range of items. You could order items directly from your catalogue via phone, and have the company deliver it to your door.
During this time, mail order companies like JCPenney & Sears used this method on a large scale. It turned out to be very profitable for them. But as they grew bigger, a problem inside of their business started to arise.
With the business rapidly growing, JCPenney & Sears’ were struggling to keep up with the level of customer demand. And knew they needed to find a more fast and efficient way to ship out customer orders.
As a solution, JCPenney & Sears developed fulfilment warehouses that were specially designed to speed up this process. These were similar to what Amazon now calls FBA (Fulfilment By Amazon) warehouses.
Their main purpose was to store massive inventory in bulk. And the big advantage was that you could easily locate and ship out individual items customers ordered.
At the time, other exclusive mail order companies like CompuCard, realized a massive opportunity in using these warehouses.
They thought it would be smart to list the items (in the warehouse) for sale in their own mail order catalogue for a mark-up price.
Then, when a customer ordered an item, CompuCard would purchase the item from the fulfilment centre, then have the warehouse deliver the item to the customers address. This was how the ‘dropshipping’ model came about. And it was genius!
This model was now crowned the first form of ‘major-scale’ dropshipping. Fast forward twenty years, and things started to evolve…
The 90s: Dropshipping & the Dot Com Bubble
Here was when the internet was born. Mail order companies graduated from mail order catalogues to ‘ecommerce’ stores. And online shopping was being slowly introduced to the public.
It took a while for consumers to warm up to online shopping. Back then, it was considered ‘shady’ to give your credit card details online.
People feared their details would get stolen, and thought it was stupid to give away important details over the phone. Even if it was for a well-known store.
But over time, as attitudes changed towards the internet, more people started to accept this new ‘virtual’ method to buying items.
With more people entering the online shopping world, the dropshipping ‘dot com’ bubble started to explode, and the bubble began to grow.
The ‘dot com’ bubble was a period where online stores with fancy names popped out of nowhere and made HUGE promises to investors.
These online stores convinced investors that they would make huge returns off this new ‘thing’ called eCommerce. Investors were sold by the idea, and dropped millions of dollars on this promising investment.
One of these online stores, Pets.com, was able to raise millions of dollars from these investors.
But at the end of the dot com era, they never ended up profitable. And none of the investors made a good return on their investment.
Things started taking a toll when dropshipping from USA dropshippers that had become a lot more expensive over time due to increased shipping demands. And so by 2001, a lot of these stores went bankrupt as they were unsustainable. And the ‘dot com’ bubble burst.
The 2000s: The Rise of Amazon.com & eBay.com
Amazon and eBay revolutionized how individuals could sell online. No longer did you need to go through the technical, expensive process of creating an online store and advertising it. Now, you could list your items on their site and let them drive the traffic for you!
For dropshipping, this was a huge boom, as previously it was very expensive to use dropshippers.
Not only did USA dropshippers charge a lot for their items, but they had to spend an enormous amount of money during the store development and advertising phases. With no Facebook ads until 2007, the only real option to advertise was Google Ads, which was (and still is) very expensive.
But now, Amazon and eBay advertised their website on behalf of individual sellers, which meant that dropshipping was now viable for anyone. Not just large corporations.
2010-2018: The Chinese Revolution with Aliexpress, Shopify & Oberlo
2010 was when dropshipping was changed forever.
Previously, working with Chinese dropshippers was complicated, which was why most individual dropshippers chose to work with USA dropshippers.
But in 2010, Alibaba released Aliexpress. On this website, individuals could purchase items from Chinese manufacturers and dropshippers. And it was as simple as purchasing an item from an online store via a checkout.
It removed the language & cultural barriers, and made the whole process even easier than working with USA suppliers – while being MUCH cheaper!
And then in 2015, Oberlo came out: a Shopify app that turns Shopify stores into semi-automated Aliexpress dropshipping stores. This was so successful, that in 2017 Shopify actually purchased Oberlo, and integrated the app even further.
That is why today, we can now dropship in our own stores and control our own destiny, because…
- We have access to cheap dropshippers and items with Aliexpress.
- It’s simple, easy and affordable to create professional semi-automated dropshipping stores with Shopify & Oberlo.
- Driving traffic cheap and simple (thanks to Facebook ads)
The Bottom Line
As you can see, dropshipping has been through quite a journey, and one that we should greatly appreciate.
The dropshipping model dramatically lowers the barrier for entry, making it easy for anybody to start, grow and build their own profitable dropshipping store.
If it’s always been your goal to have financial freedom, then dropshipping is one of the fastest, simplest and easiest vehicles to help you reach this.
There is no question that now is the best time to start a dropshipping store. And at Wholesale Ted, we are dedicated to helping you achieving this goal.