Dropshipping has become one of the most popular e-commerce business models globally. Entrepreneurs are flocking to the sector because of its flexibility and exponential growth.
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So why is it so popular? When did it all start? Many people working in the dropshipping industry don't even know its history and how the modern dropshipping model came to be.
Today, we'll take a look into dropshipping history and how long it's been around. We want to give you this information to help you understand how this modern business developed and became such a great option for online business.
So let's take a look into dropshipping history!
Dropshipping Explained: Dropshipping Through The Decades
Dropshipping has been around for some time now. It's not a new invention, but because of the widespread use of the internet, it has become one of the most popular career options for entrepreneurs. So let's take a look at dropshipping history through the decades.
Dropshipping In The 60s-70s
Dropshipping started way before the internet was popular. It was first started by mail companies who took advantage of mail-order catalogs in the 60s and 70s.
Mail-order catalogs were small booklets you would receive back in the day in your mailbox. These booklets would have a wide range of product advertisements that you could buy simply by placing the order by calling the catalogs' number.
Companies like JCPenney & Sears were the first ones to do dropshipping on a large scale. When scaling up, these businesses faced a problem; they couldn't keep up with customer demands. That's when they created specialized warehouses to house the products on offer.
These warehouses were similar to those that Amazon has now, which we know as fulfillment by Amazon or FBA. The purpose of these warehouses was to store products in bulk, making it easier to locate and ship out individual items according to orders.
At that point, companies like CompuCard realized that they could list the items in their own mail-order catalogs and have the products ship to customers from the warehouses.
That was the first 'major-scale' drop shipping operation globally. It took another 20 years for the business to evolve.
The 90s Dot Com Bubble Dropshipping Explained
With the dot com bubble in the 90s, the dropshipping model began to evolve. More and more dropshipping companies started becoming e-commerce stores.
Now, it took customers sometime before they warmed up to the concept of trusting the internet, but when they did, the entire sector exploded.
During the bubble, plenty of companies started raising capital because they were able to sell investors on the e-commerce model.
In 2001, dropshipping businesses suffered a significant setback when shipping prices within the US soared due to an increase in demand, and that's when the "dot com" bubble burst.
Dropshipping Of The 2000s Explained
Most e-commerce stores suffered, and many shut down when the bubble burst. However, two survivors would redefine e-commerce forever and leave a mark on the world, unlike anything before on the internet.
Those two companies were Amazon and eBay. These companies created what is called a digital marketplace. These companies meant that sellers wouldn't need to go through the painstakingly complex process of building websites.
You could list your product in the marketplace and have these sites drive traffic to your website. That breathed new life into the dropshipping business because with this model, they were able to cute out major expenses like store development and advertising phases. Google Ads was the only online ads option and it was expensive. But, companies like Amazon and eBay helped advertise products you listed on their website.
2010s Dropshipping Explained: The Chinese Revolution
The last decade is when dropshipping became the behemoth it is today. Prior to this, working with Chinese suppliers had been expensive and time-consuming.
However, in 2010 Alibaba entered the fray with AliExpress that broke the cultural and language barrier. It made buying from Chinese manufacturers and dropshippers easy.
It made buying from Chinese manufacturers more accessible to people in the States and, in most cases, it was cheaper than US alternatives.
During this time, Shopify rose to prominence. Shopify made e-commerce sites affordable and easy to create and maintain. In 2015 Oberlo came out.
Oberlo is an app that turns Shopify stores into semi-automated AliExpress dropshipping stores, making things much easier for dropshippers. Shopify bought Oberlo in 2017, and that made creating and integrating drop shipping stores much easier.
Ever since then, growth has been exponential. Driving traffic nowadays to your dropshipping site has become more accessible as well. With the advent of social media and Facebook Ads service, you can set up high-value campaigns that drive customers to your site.
Nowadays, creating a successful dropshipping site is easy, with Chinese suppliers working in tandem with US ones, helping you deliver products worldwide.
Dropshipping Through The Decades
Now that you know the history, you have a better understanding of the market and its trends.
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