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.

Source: Wikipedia