What is the difference between Dropship and Marketplace?

From Pipes...

The traditional pipeline business model is one in which the flow of value is linear from a producer to a consumer, and that’s the model that we’ve seen in the industrial era where manufacturing, media, services, everything has followed a pipeline business model.

to Platforms!

The Platform Business Model creates value by facilitating exchanges between two or more interdependent groups, usually consumers and producers. Like Facebook, Uber, or Alibaba, these businesses don’t directly create and control inventory via a supply chain the way linear businesses do.

s and differences
between the Dropship model and
the Marketplace model
Similarities and differences
between the Dropship model andSSimi
Similarities and differences
between the Dropship model and
the Marketplace model
between the Dropship Model and the Marketplace Model


At first sight, the Dropship model and the Marketplace model have a lot of similarities.

Both models operate over a Marketplace platform meaning there are three main parties involved:

  • The marketplace platform operator who is responsible for driving traffic to the site and owns the relationship towards the end-customer

  • The supplier who is selling products or providing services towards end customers over the platform

  • The end customer who purchases products, or consumes services

None of the models require the marketplace operator to handle any physical products. Even though the marketplace operator owns the platform, they never handle any physical goods.
This means that the operator neither needs a warehouse for storing products or a carrier to fulfil the customer order.


Merchant of record
  • In a dropship model, the marketplace operator is the merchant of record towards the end customer. This means that the marketplace operator will handle the transfer of money and issues the receipt towards the end customer. The supplier will then invoice the marketplace operator for the goods sold. Financially speaking, this is just like a classic wholesale model.

  • In a marketplace model, the supplier is the merchant of record towards the end customer.
    This means that the supplier will issue the receipt towards the customer and legally, the transaction of goods and money is between the supplier and the customer.

PARAGAIA have a number of experienced technical experts when it comes to solutions for Marketplaces, Dropship models and business ecosystems.

Whether you are looking for solutions for B2B, B2C or Services, we most likely will be able to provide the solution that fit your needs. We work closely with the most reputable vendors in the industry and are happy to share our experiences with you!

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