Dropshipping is a retail fulfillment method where an online store doesn't keep the products it sells in stock. Instead, when a store sells a product using the dropshipping model, it purchases the item from a third party, usually a wholesaler or manufacturer, who then ships it directly to the customer. This means the retailer never physically handles the product.

Here's a step-by-step breakdown of how dropshipping works:

1. Setting up an online store: The first step is to create an online store using an ecommerce platform like Shopify, WooCommerce, or Magento. This store will serve as a platform to showcase and sell products.

2. Sourcing products: After setting up the store, the next step is to find products to sell. Retailers can search for suppliers, wholesalers, or manufacturers who offer dropshipping services. There are several online platforms like AliExpress, Oberlo, Doba, and SaleHoo that connect retailers with suppliers.

3. Importing products: Once a retailer has found a supplier or manufacturer, they can import the products they want to sell to their online store. Many dropshipping platforms provide tools to easily import products and their details, including images, descriptions, and prices.

4. Setting prices: Retailers need to set their own prices for the products they sell. It's important to consider factors like the cost of the product, shipping fees, marketing expenses, and desired profit margins. Price competitiveness is crucial to attract customers.

5. Marketing and selling: With the products imported and prices set, retailers can start marketing and selling their products. They can use various marketing strategies like social media advertising, search engine optimization, influencer collaborations, or email marketing to drive traffic to their online store.

6. Receiving orders: When a customer places an order on the retailer's website, the retailer receives the payment and order details. It's important to ensure the customer's shipping address is accurate.

7. Notifying the supplier: Once the retailer receives an order, they forward the order details to the supplier or manufacturer who will fulfill the order. This includes providing the shipping address and any specific instructions.

8. Supplier fulfills the order: The supplier or manufacturer then ships the product directly to the customer using the retailer's branding, if agreed upon. The retailer is charged the wholesale price of the product and the shipping fees by the supplier.

9. Tracking and customer support: Retailers should provide tracking information to the customer so they can monitor the progress of their order. Additionally, retailers are responsible for handling any customer inquiries, returns, or refunds.

Dropshipping offers several advantages, including low startup costs, as retailers don't need to invest in inventory upfront, and the ability to offer a wide range of products without the need for warehousing. However, it also has some challenges, such as lower profit margins due to wholesale prices and potential issues with product quality or shipping delays.

Examples of successful dropshipping stores include:

1. Gymshark: A popular fitness apparel brand that started as a dropshipping store before expanding into manufacturing its own products.

2. Oberlo Success Stories: Oberlo, a dropshipping app, features several success stories on their website, highlighting entrepreneurs who built profitable businesses using the dropshipping model.

References:
- Shopify: How Does Dropshipping Work? (https://www.shopify.com/guides/dropshipping)
- Oberlo: What is Dropshipping? (https://www.oberlo.com/blog/what-is-dropshipping)
- SaleHoo: What is Dropshipping? (https://www.salehoo.com/education/what-is-dropshipping)