Drop shipping is a technique used by supply chains, manufacturers and wholesalers. To drop ship products is to ship them directly to the consumer. Customers will order products directly from a retailer, in which the retailer contacts the manufacturer or wholesaler to ship the product directly to the customer. The retailer does not need to have the product in stock to drop ship, and instead requests that the product be shipped from the manufacturer or wholesaler to their customers. Retailers who drop ship would then receive a commission.
Ecommerce businesses use drop shipping to send products to their customer directly from the supplier, without the need to have the products in stock. It is typical for ecommerce stores to drop ship items, instead of having a large inventory. This is more cost-effective for eCommerce because a website only needs to list their manufacturers products to then drop ship to customers.« Back to Glossary Index