Drop Shipping
A fulfillment method where the distributor passes customer orders directly to the manufacturer or supplier, who then ships the product directly to the customer.
Implications
A retail fulfillment method where a store doesn't keep the products it sells in stock. Instead, it purchases the item from a third party and has it shipped directly to the customer, allowing the retailer to avoid inventory costs.
Example
Example: An online clothing retailer uses drop shipping by listing products from various suppliers on its website, only purchasing and shipping the items once a customer places an order, reducing overhead and inventory risks.
Related Terms
Different from traditional retail models, where the store holds inventory and fulfills orders, drop shipping relies on suppliers to handle storage and shipping, often leading to lower upfront costs but potentially lower margins.
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