How does it work?

Drop shipping is a method of fulfilling customer orders without actually having the product on hand. The product is advertised by the seller – often online via their own website or through a site like eBay – then once the product is bought the seller arranges the shipping via a wholesaler or manufacturer directly to the buyer.

Apart from the advantage of the seller not having to physically house or handle the products, it is beneficial from an environmental point of view as instead of goods having to be shipped from A to B then on to C (the customer), they are shipped straight from A to C. This can benefit the customer too as the seller’s costs are reduced and in a competitive market prices are lower. However, the seller needs to closely monitor the drop shipper’s stock levels, as if he takes payments from customers for products that are actually out of stock he faces the problem of resolving the matter with his or her unhappy customers.