Apr 18 2011

What is drop shipping?

Category: Business & Economy


Drop ShippingDrop shipping is a technique whereby retailers sell products to the public using distribution channels that are setup by the wholesaler or manufacturer. It essentially eliminates much of the risk that a retailer is often susceptible to with a traditional supply chain. When a product is sold using a drop shipper, the retailer passes along the order to the wholesaler/manufacturer who will then package and ship the product directly to the customer (often without the customers knowledge aka blind shipping). This process eliminates the need for retailers to carry any inventory because products are stored by the drop shipping company until the retailer confirms a sale. The manufacturer or wholesaler will often take care of the storage, packaging, and shipping of products in exchange for a small fee (sometimes for free). This strategy is often seen as a convenient, less risky business model but, in many cases, will also accompany smaller profit margins for the retailer. Many online companies utilize this business model for the convenience. It also allows the retailer to focus on what it does best, marketing and sales.

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