We often hear about dropshipping in recent years as an easy-to-start business idea. However, have you ever heard about the term “ghost commerce”?
They both allow entrepreneurs to sell products online without the hassle of physical inventory management. However, are they exactly the same? If not, when it comes to ghost commerce vs dropshipping, which one aligns best with your expectations?
If you are struggling to clarify the differences and similarities between those trending models, do not miss out on this article. Scroll down and let us guide you in deciding the most beneficial choice for your situation.
Contents
1. Ghost commerce vs dropshipping: a comparative overview
| Ghost Commerce | Dropshipping | |
| Definition | Promote and sell products from other brands. | – Sell products from other suppliers. – Work with third parties to ship them directly to the customer. |
| Suitable for | For whom has the strength for branding. | – For those who can handle product selection and high competition. – Particularly fitting for those with the skills to manage an eCommerce store. |
| Product type | Both physical and intangible products. | Only sell physical products. |
| Inventory | Not require | Not require |
| Fulfillment | Not require | Not require |
| Profit margins | Earn money from your creativity. | Make money from the difference between the product’s base price and the selling price. |
| Branding & identity | Selling other products from different brands under the entrepreneur’s brand name. | The entrepreneur acts as an intermediary. |
| Startup cost | It’s lower than traditional eCommerce. | It’s lower than the ghost commerce. |
| Scalability | – Has scalability potential. – Building brand loyalty might take time. Yet, this investment will make the journey worthwhile. | Easier to scale up your business since it has a low upfront investment. |
| Technical skills/requirements | – Need more technical skills and requirements than dropshipping. – Predicting and keeping up with social trends can help you succeed. – Require proficiency in writing and video storytelling. | – You should have the qualification in eCommerce platform management. – Need to build strong relationships with suppliers. |
| Branding & marketing strategies | – Create valuable and engaging content to attract shoppers. – Create your community to reach loyal customers. – Prioritize building trust and authentication around your knowledge, skills, and personality. | – Skills in search engine optimization and pay-per-click advertising are needed. – Upload high-quality product images with detailed descriptions. |
2. What’s the difference between ghost commerce and dropshipping?
As you may gain a comprehensive perspective on ghost commerce and dropshipping, it’s time to go deeper into each aspect. Digging into the idea of their definition, how they work, and some key characteristics may help you clarify them.
2.1. Understand ghost commerce
Before coming into “What’s ghost eCommerce?” it’s better to have an idea of affiliate marketing. Affiliate marketing is a form of eCommerce where you sell products for other brands as an influencer or a reliable middleman. For example, if you have significant followers on Instagram and introduce your favorite products to them, it is called affiliate marketing.
When talking about ghost commerce vs affiliate marketing, ghost commerce takes affiliate marketing to the next level. With this business model, you will still be a middleman but keep people from knowing. Instead, you will sell those products under your brand name.
Imagine you have a well-known TikTok account. You are using this platform to inspire people using eBooks. And when having an order from the consumer, you act like an actual seller but have less control over the products and policies.
2.2. Understand dropshipping
Dropshipping allows retailers to sell goods without inventory. To do that, entrepreneurs will work with third parties to store and ship items to the customers’ front door.
You should set up an online store and partner with reliable suppliers to enter this market. Platforms like Shopify or Wix provide a no-code, user-friendly choice for newcomers to ease the task. Then, retailers should compete on price and quality to attract and retain customers.
The key to success lies in your marketing strategies, good customer service, and keeping up with hot-trend products. Below is an example of how these factors can help your shop rank at the top of the market.
2.3. Is Ghost eCommerce the same as dropshipping?
There is a similar factor between ghost commerce and dropshipping that may lead to confusion. However, they are not the same.
As you may want to have a deeper understanding of ghost commerce vs dropshipping, you may be curious about which aspect sets them apart. Read the following to uncover both the similarities and differences that define these eCommerce business models.
3. Ghost commerce vs dropshipping: A deep dive into every aspect
3.1. Product type
The fundamental matter when recognizing whether it is dropshipping or ghost commerce is their kind of product.
- Ghost eCommerce:
You may sell anything in ghost commerce, including physical and intangible products. For example, you may market items such as a limited-edition line of t-shirts, branded water bottles, custom meal planner notebooks, etc. On top of that, selling intangible products and services such as online courses, coaching programs, downloadable content, subscriptions, etc., can elevate the eCommerce game.
- Dropshipping:
In contrast, this model zeroes in on physical products. For example, you will sell clothes, wall art, workout equipment, blankets, etc., to your consumers in dropshipping.
3.2. Inventory & Fulfillment
- Ghost commerce: The retailer works with reliable suppliers who can quickly and efficiently fulfill orders. Otherwise, they will seek providers delivering white-label or private-label products and services.
- Dropshipping: The retailer collaborates with third parties that store and ship orders directly to the customer.
Thus, entrepreneurs in these two realms do not need to store inventory since they all resell products from other suppliers. This point allows the retailer to focus on deals without worrying about inventory management or shipping logistics.
3.3. Profit margins
This factor is another game-changer that distinguishes these two business models. In common, ghost commerce has the upper hand when talking about potential.
- Ghost commerce:
The product is sold under your unique brand identity in ghost commerce. As a result, you can earn a higher profit margin by making it the one and only in the market. For example, you can make a Zara bag stand out with personalized touches like names, special dates, or distinctive patterns.
- Dropshipping:
Your earnings come from the difference between the base product cost and the price you resell. The tricky part is the product remains the same across various sellers. That may lead to higher competition and a lower profit when compared to ghost commerce.
3.4. Branding & marketing strategies
This is an aspect for those wondering “How to make money with ghost commerce.” In fact, the real magic that can make any business idea highly profitable lies in marketing strategy.
- Ghost commerce:
For those who can differentiate themselves from other retailers, start ghost commerce. Customizing items, packages, and labels to match your personality gives you more control over your brand’s identity. To share your brand story, take advantage of content marketing, social media, influencer, or email marketing strategies.
- Dropshipping:
On the other hand, dropshipping may be your path if you are good at search engine optimization (SEO) or pay-per-click advertising (PPC). Since you are not selling your own products, you have less control over your brand. With the right strategies, you may direct shoppers to your online store and buy products.
3.5. Technical skills/requirements
Once you start an online business idea, a question often comes to mind: “Do I need some technical skills?”
Since requirements for each model vary, they both demand knowledge about eCommerce, such as setting up online stores, product research, supply chain, etc. Yet, with the support from platforms like Shopify, Wix, Squarespace, etc., those eCommerce tasks are automatic and much more accessible.
Besides, in ghost commerce, you may need more advanced tools to customize domain names, logos, and packaging.
3.6. Scalability
For entrepreneurs who care about long-term goals for the business, this is the key factor in choosing ghost commerce vs dropshipping.
- Ghost commerce:
It is scalable. However, you have less potential to expand your business rapidly than the dropshipping model.
Building brand loyalty requires time and effort. To reach more customers, pay attention to details and creativity. That way, you may also have more opportunities when scaling your business, such as higher profit margins, lower competition, higher control, and higher brand value.
- Dropshipping:
This business model excels in increasing orders by partnering with established suppliers. To achieve this, your main tasks are finding new high-quality products and selling them through various marketplaces. Yet, it may have more challenges than ghost commerce, including lower profit margins, higher competition, lower control, and lower brand value.
3.7. Startup cost
Startup cost may be the most curious aspect when learning about the topic of eCommerce trends. With this comprehensive knowledge, you can come to a decision between dropshipping and ghost eCommerce.
- Ghost commerce:
You need a higher startup cost than dropshipping. You need more resources to build customer trust and loyalty and stand out in the market. Besides, in case you are not good at designing and marketing, you need to hire someone to create and maintain your brand identity.
- Dropshipping:
Since there are platforms that can support entrepreneurs in this business model, you can start it with no or low fees. As mentioned, you just need to pay for the base products from suppliers.
4. Our verdict: Which option is most suitable for you?
After going through almost all aspects that set those two models apart, we have some final key points for your decision. Remember that both have the potential for success. Understanding their pros and cons and aligning them with your vision is crucial to choosing the most suitable one.
Dropshipping is a good option if you want a low-risk, low-cost, and easy way to sell online without worrying about inventory or fulfillment. It allows you to enter the market and validate your product ideas without investing much money upfront.
On the contrary, ghost commerce might be a better choice if you are looking for a more modern, rewarding, and lucrative online business model. It allows you to sell under your brand with higher prices and profit margins. However, you should have the willingness to invest more time and money at the beginning.
5. Conclusion
eComStart hopes this article can clarify the difference between ghost commerce and dropshipping. Choosing the most suitable business model depends on your preference and situation. Do not forget to analyze their pros and cons as well as your needs and goals before coming to any decision.
For more information about business models and entrepreneurs’ journeys, visit ecomstart.io and read our latest news.
6. FAQs
