(pronounced DRAHP-ship)

In its most basic explanation, drop shipping is instructing a vendor to send purchased product directly to a third party – like a customer or client – instead of delivering to the wholesaler for inspection, inventory, and stocking. If the seller of the product isn’t the manufacturer, then it allows the seller not to have to carry an inventory, which can be more cost-effective for that retailer. The main problem with drop shipping is the infamous Back Order of Death. If the manufacturer doesn’t communicate well with both the customer and the retailer when product is on back order – i.e., not available for shipping – then it can reflect badly on the seller.