Fulfillment

Working Capital

The cash available to run day-to-day operations — ad spend, inventory, payroll. The binding constraint on how fast a dropshipping store can scale.

Working capital is the cash available to run day-to-day operations: ad spend, inventory purchases, software, salaries, agency fees. In dropshipping, it's almost always the binding constraint on scale.

Why: at a 25% contribution margin and 45-day cash-conversion cycle, every additional $1,000/day of ad spend requires about $45,000 of working capital to finance the lag between ad payment and customer payout. Operators who don't plan for this end up stuck at their current revenue level, unable to scale despite having winners, because the bank account can't pre-fund the next step up.

Financing options in 2026: Shopify Capital, Clearco, Wayflyer, Settle, and direct lines of credit from Mercury or Relay. All expensive (6-20% effective APR), but cheaper than the opportunity cost of not scaling.

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Related terms in Fulfillment
3PL
Third-Party Logistics — an external warehouse that stores, picks, packs, and ships your inventory for a per-unit fee. The step between dropshipping and running your own warehouse.
AliExpress
Alibaba's B2C marketplace of Chinese sellers — the default starting supplier for most new dropshippers. Low MOQs, low prices, long shipping times.
Chargeback
A payment reversal initiated by the customer via their bank. Each chargeback is a full refund plus a $15-$25 fee — and too many will get your payment processor shut down.
CJ Dropshipping
A dropshipping agent that sources, stocks, and ships products — typically from China with US or EU warehouse options. Faster and more branded than raw AliExpress.
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