Drop shipping

Definition

Drop shipping is a retail fulfillment method in which a store does not keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. The store typically sets the price for the item and takes care of customer service and returns, while the supplier or manufacturer handles the shipping and handling of the product.

Significance

The significance of drop shipping is that it allows businesses to offer a wide variety of products without having to invest in inventory or warehouse space. This can be particularly useful for small or new businesses that may not have the resources to hold large amounts of inventory. It also allows businesses to test new products and adjust their product lines without incurring significant inventory costs.

Use Cases

A common use case for drop shipping is for online retailers. Online retailers can use drop shipping to offer a wide range of products without having to hold large amounts of inventory. This allows them to start and run their e-commerce store with minimal investment and without worrying about inventory management.