The shipping of a product directly from the manufacturer to the customer without requiring inventory carrying by the retailer. It also refers to a form of sales where the retailer does not keep goods in stock, but instead passes the customer's order and shipment details to the wholesaler, who then dispatches the goods to the customer directly. The retailer makes their profit on the difference between the wholesale and retail price.

Drop shipment or (drop shipping) is a type of retailing where the retailer does not keep goods in stock, but instead passes the customer's order and shipment details to the wholesaler, who then dispatches the goods to the customer directly. The retailer makes their profit on the difference between the wholesale and retail price.

Some retailers may still keep "show" items on display in stores, so that customers can inspect an item similar to those that they can purchase. Other retailers may only provide a catalogue or Internet presence.

Drop shipping can occur when a retailer (who typically sells in small quantities to the general public) receives a single large order for a product. Rather than route the shipment through the retail store, the retailer will arrange for the goods to be shipped directly to the purchaser.

The book selling industry provides an example. Book retailers typically sell single copies of books to the general public. But a store may receive an order for, say, 50 copies of a book from a company that wishes to buy the books for their employees, clients, or stockholders. The book retailer will arrange for the wholesaler to deliver the books directly to the company.

Many sellers on eBay also drop ship. Typically a seller will list an item as new and ship the item directly from the wholesaler to the highest bidder. The seller profits from the difference between the winning bid and the wholesale price, minus any selling fees from Ebay.

Yet another version of drop shipping is the practice of using private freight carriers to transport large volume items direct from the manufacturer to a postal facility close to the location of the end recipients (as opposed to dropping the items at a postal facility close to the manufacturer). This practice is employed for purposes of postal and time savings. An example is a magazine publisher trucking all magazines addressed to subscribers in Miami directly to the post office in Miami.

NOTE: Dropshipping companies do not always offer wholesale prices. In order to determine whether a dropshipper is a legitimate wholesale supplier, pay close attention to the following:

1. Is a Tax Identification number required within the Dealer application? -- The vast majority of established wholesale dropshippers require either an EIN (Federal Tax ID) or Social Security Number.
2. Are prices already displayed to the public? -- Genuine wholesale prices are never shown to the public.
3. Is a membership fee required? -- Most authentic wholesale dropshippers will never require membership fees; those that do offer a full refund after a certain number of inventory purchases are made.