Posted in Operations and Supply Chain Terms, Total Reads: 1251
Definition: Drop Ship
Drop Ship is the technique in which the retailer passes the customer orders to the wholesaler or manufacturer who completes the order directly. Thus the retailer does not have to stock the goods at his retail store. The retailer takes a percentage of the goods price as fee for this facility.
Generally, the retailer earns its profits from the difference between the manufacturer selling price and the customer-buying price. But this concept is not followed in drop shipping as the goods are not with the retailer but acts only as an ordering intermediary.