Drop shipping is a novel concept. It is a system where suppliers provide retailers warehousing and delivery services, which in most cases are free of charge. A drop shipper is first and foremost a supplier of products and goods. He could be a manufacturer, wholesaler or plain distributor. Because his valued and distinct services, i.e. warehousing and delivery, a drop shipper allows a retailer to open shop with less start-up capital. A retailer displays the products of the drop ship supplier without added cost. The more suppliers he works with, the more products he can display and sell to the online consumers and this, ultimately, translates to more profit.

This free delivery service will significantly reduces operating costs. Instead of the online seller doing the packaging, the drop ship supplier does it for him. This system works easily. When an online buyer makes his purchase and asks that a particular item be delivered to him at an agreed price, the online seller informs the drop shipper to deliver the purchased item directly to the buyer. This can easily be done considering that the item is still in the possession of the drop ship supplier. In other words, the work of the online retailer is reduced to maintaining a good and accessible website where he can display his wares; accepts orders and payments from the buyer and prompts the supplier to make deliveries. In this arrangement, the online retailer acts as the middle man between the buyer and the drop shipper and gets as his profit the difference between the amount paid by the buyer and the amount he paid to the supplier.


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