Ghost Commerce vs Dropshipping: What are the Key Differences?

Starting an ecommerce business can be daunting. But what if there was a way you could start an online store with low risk, minimal hassle, and hardly any investment?

Ghost commerce is a strategy that thrives on minimal physical presence and maximum digital impact. Unlike conventional online stores, ghost commerce businesses often operate behind the scenes, leveraging partnerships, affiliate marketing, and social media platforms to sell products without the need for warehouses, physical inventory, or even a dedicated storefront.

In this blog, we’ll dive into the fundamentals of ghost commerce and dropshipping, compare their strengths and limitations, and help you determine which path aligns with your business goals.

What is Ghost Commerce?

Definition and key features

Ghost commerce is an ecommerce business model where businesses sell goods and services online with minimal physical presence. These businesses source and sell products from third-party suppliers who handle the entire supply chain, from manufacturing to shipping logistics. While many ghost commerce businesses operate branded online stores, some bypass traditional storefronts by using affiliate marketing, social media, or influencer-driven strategies to direct customers to third-party websites, earning commissions or sales revenue.

The key characteristics that make ghost commerce successful are:

Anonymity

Ghost commerce stores run with very little direct human interaction, whether you’re dealing with customers or suppliers. For business owners who value their privacy or don’t want to be the face of a brand, this is an excellent feature. 

Low start-up costs

Ghost commerce businesses don’t need to allocate funds for warehousing, inventory, office space, or other costs typically associated with traditional retail. They can be established with relatively little startup capital and have significantly lower maintenance costs. 

Automation and AI

Much of ghost commerce is possible due to AI and automation technology advances. With the right automation tools, you can streamline most daily processes, from order processing to customer service. Automations can be used to trigger specific workflows, such as automatically sending tracking information to customers after purchase or starting an email marketing campaign at just the right point in the customer journey. AI can be used to provide personalised recommendations at scale, dynamically respond to customer queries, and inspire marketing content. These tools enable ghost commerce businesses to operate with minimal human involvement while maintaining high efficiency and delivering a seamless customer journey.

How ghost commerce works

Ghost commerce focuses on leveraging third-party resources, digital tools, and innovative marketing strategies to manage operations and drive sales without traditional ecommerce elements like inventory or a physical storefront. Some businesses will sell physical products, while others drive sales through alternative channels like affiliate marketing, social media, or influencer collaborations. Other ghost commerce users facilitate B2B2C transactions, for example connecting product or service suppliers to influencers or retailers.

Uber is a prime example of ghost commerce. The company connects hundreds of drivers and riders every day, even expanding into the food delivery space. It’s one of the biggest transportation companies in the world - and yet, Uber doesn’t own any cars. Uber works with drivers, car companies and other suppliers to build their fleet of vehicles, but they don’t hold any stock of their own. Airbnb works with a similar model - the company itself doesn’t own any rental properties, but they connect travellers and property owners.

Ghost kitchens are another popular example of this model in action. Ghost kitchens are essentially restaurants that operate without a dining space or storefront. Instead, they rent kitchen space to prepare and deliver food directly to customers through third-party apps, such as UberEats. This has been a popular business model with celebrities and influencers such as Mr. Beast (MrBeast Burger), Mariah Carey (Mariah’s Cookies) and Tyga (Tyga Bites). It’s estimated that ghost kitchens will reach a market value of $1 trillion USD and hold a 50 per cent share of the drive-thru and takeaway food market in 2030.

What do these businesses have in common? They have a loyal customer base, viral marketing campaigns, and less overhead costs than their traditional retail counterparts, helping them pocket more profits. 

What is dropshipping?

Definition and key features

Dropshipping is an ecommerce fulfilment method that allows ecommerce store owners to sell products online without having to buy or manage inventory. Instead, they order their products directly from a dropshipping supplier, who then ships the product directly to the end consumer. 

Dropshipping has become a popular business model due to its low overhead costs, ease of operation, and incredible product variety. Almost any product can be dropshipped, from clothing to high-end electronics and appliances. The dropshipping market value is expected to reach $372.47 billion USD in 2025 and $476.1 billion in 2026, marking over 350 per cent growth since 2020. With more platforms offering dropshipping integrations and solutions, dropshipping is more accessible than ever before, and it will only continue to grow.

How dropshipping works

The dropshipping fulfilment model is simple:

1. A customer orders products from a retailer. 

2. The retailer passes the order to their dropshipping supplier. 

3. The supplier processes the order and ships it directly to the customer.

Dropshipping benefits retailers because they don’t have to hold or purchase inventory or manage logistics, meaning fewer overhead costs. Suppliers outsource their marketing efforts to multiple retailers, expanding their product reach without direct marketing and increasing their sales volume. Finally, consumers benefit from fewer stockouts and greater product availability, especially within niche markets. 

Key differences between ghost commerce vs dropshipping

Sometimes, “ghost commerce” and “dropshipping” are used interchangeably. Some experts consider dropshipping a subset of ghost commerce, while others consider them distinct business models. Ultimately, the ghost commerce business model covers a broad spectrum of ecommerce activities, while dropshipping refers to a specific type of fulfilment. While they have many similarities, here are the subtle differences between the two business models.

Business model differences

Brand identity

Both business models have a strong focus on building brand identity, but they go about it in different ways. Ghost commerce emphasises anonymity for the business owner but relies on a strong online presence and high customer satisfaction to build brand recognition and loyalty. This can include white labelling, print-on-demand, or other customisable items. Dropshippers typically sell generic or unbranded products, though they may develop a strong brand identity within their niche. As they are more public-facing, dropshippers also typically develop closer customer relationships.

Types of products

Dropshipping always involves physical products, while ghost commerce can be used to sell physical or digital products and services through various fulfilment methods. This includes products such as courses, downloadable content, subscription services, or other intangible products. 

Partnerships

Although both businesses may use influencer marketing, affiliate marketing or other partnerships, ghost commerce often relies more heavily on these collaborations to compensate for the lack of physical presence and lean operations. These partnerships not only keep costs low by outsourcing content marketing and general operations, but they can also increase a brand’s global reach by leveraging your partner’s own target audience and markets.

Level of involvement and control

In both models, businesses relinquish some control over their day-to-day operations. By outsourcing production, inventory management and logistics, these businesses rely on a third party supplier to ensure products are high-quality, consistent, and shipped on time. This detachment makes it difficult to troubleshoot issues along the supply chain, particularly if your suppliers are overseas. Using reliable suppliers and maintaining clear lines of communication are incredibly important to maintain the health of your business.

Scalability and profit margins

Ghost commerce businesses with a strong brand identity can earn higher profit margins by selling customisable, branded products. Although these features may cost more upfront, customers are often willing to pay more for their perceived value, meaning you can charge a premium. With dropshipping, products often remain the same across multiple suppliers, making it harder to charge a premium and compete in the market. However, dropshippers can often charge more for niche products, such as specialised equipment, or high ticket items such as appliances, luxury fashion or furniture. Both models are infinitely scalable, making them perfect for businesses of any size. However, ghost commerce operators can be more flexible across channels and suppliers, while dropshippers will be limited by the capacity of their product suppliers and platform restrictions.

Pros and cons of ghost commerce

Pros

Budget-friendly

Out of all possible online business models, ghost commerce is one of the most affordable. There are no fees for product manufacturing, warehousing or logistics. For stores that work with influencers or other partnerships, there are also fewer production costs. 

Flexible and scalable model

The ghost commerce model can easily be scaled up or down depending on your individual needs. It's compatible with many ecommerce platforms and marketing tools, making it easy to adjust your strategy as required. Once your business gets off the ground, you may even choose to transition to a more traditional, hands-on model. 

Requires minimal experience 

Because so much of the business is outsourced, you can enter ghost commerce with minimal ecommerce experience. It’s a great way for beginner entrepreneurs to enter the market without significant investment or high risk. 

Cons

Risk of fraud and reputation

Due to low start-up costs and lack of physical inventory or brand presence, the ghost commerce business is also an attractive option for fraudsters. As consumers are increasingly wary of ecommerce fraud, new ghost commerce adopters may have difficulties gaining their trust and loyalty. This can be mitigated by building fantastic customer experiences and offering outstanding customer service.

Lack of control

Because so much of the business is outsourced, it can be hard to maintain control over product quality, shipping times and branding. You’ll need to thoroughly vet your suppliers before partnering and maintain clear communication with them. 

Need a strong marketing drive

Ghost commerce eliminates many of the hurdles involved with starting a business. However, business owners will still need to put in the work when it comes to marketing. Because ghost commerce is so hands-off, your marketing strategy needs to be incredibly effective to stand out from the competition. If your ghost ecommerce business can’t afford private labelling or other custom branding, you’ll need to rely on your unique brand experience, high-quality products and good customer service to stand out.

Pros and cons of dropshipping

Pros

Flexible and scalable

Dropshipping makes it easy for ecommerce businesses to expand their product catalogue with minimal risk. This means you can adapt to market trends and test new products in controlled environments before committing. You can scale your business up or down depending on your needs. 

Work from anywhere

You can operate a dropshipping online store from anywhere in the world - all you need is a device with an internet connection. You can run a dropshipping store on your smartphone or tablet, from home or abroad, 24/7.

Low barriers to entry 

Starting a dropshipping store is simple, no matter your level of experience, the size of your business, or your budget. You can start a dropshipping business from scratch, or use dropshipping to expand your offerings and increase your sales. Because you don’t have to buy inventory upfront, you don’t need to invest much to start dropshipping - in fact, you can start dropshipping with almost no money at all. 

Cons

Low profit margins

Dropshipping has lower profit margins than a traditional ecommerce business for many reasons. Although retailers buy products at wholesale prices, these prices may be inflated due to suppliers needing to cover shipping costs. Additionally, the heavy dependence on paid advertising to drive traffic to their stores increases customer acquisition costs, further reducing profitability. You can increase these profit margins by selling high ticket, niche, or luxury items, employing upselling or cross-selling techniques, or negotiating terms with your suppliers where possible.

Highly competitive

Because of its low barrier to entry, dropshipping has become a highly competitive industry. A lack of exclusivity means many other sellers offer the same items, often at competitive prices. Dropshippers may find it difficult to differentiate themselves or justify premium pricing, making it challenging to achieve substantial profits without significant sales volume. The easiest way to overcome this is to develop a strong brand identity and develop strong relationships with your suppliers.

Choosing between ghost commerce and dropshipping

Choosing between ghost commerce and dropshipping depends on your business goals, resources, and long-term vision. While dropshipping is simpler and faster to start, ghost commerce provides greater control and potential profitability over the long term, especially if you’re willing to invest in branding and customer loyalty.

Factors to consider

Goals

Consider whether you’re focused on short-term growth or building a lasting business when making your decision. If you’re looking for a quick, low-risk way to test the viability of an ecommerce business or new product lines, dropshipping is a straightforward choice. If you’re looking to build a strong brand with multiple income streams and potentially higher profit margins, ghost commerce offers more potential.

Budget 

Both models have low startup costs. However, ghost commerce may have higher initial costs if you decide to invest in premium services such as private labelling, paid ads or other services. These investments may lead to higher profit margins and allow you to grow sales faster, but they can be expensive and high-risk for beginner entrepreneurs. 

Resources

Dropshipping is less resource-intensive, with suppliers handling production and shipping, allowing you to focus on marketing and customer service. Although this stays true for ghost commerce, you may find yourself more involved in managing partnerships, sourcing new products or partnerships, and creating a unique brand identity. 

Summary

While ghost commerce and dropshipping share similarities as low-overhead ecommerce models, they differ significantly in their execution. Dropshipping is ideal for those looking for a straightforward, low-risk way to start selling online, focusing on quick scalability with minimal involvement in branding or product development. Ghost commerce emphasises flexibility and innovation, leveraging partnerships, automation, and diverse sales channels to build a sustainable and potentially higher-margin business. Choosing the right model depends on your goals, resources, and long-term vision, but both offer unique opportunities to thrive in ecommerce.