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Drop shipping is a form of retail business in which the seller accepts customer orders without keeping stock on hand. Instead, in a form of supply chain management, the seller transfers the orders and their shipment details either to the manufacturer, a wholesaler, another retailer, or a fulfillment house, which then ships the goods directly to the customer.
The seller is responsible for marketing and selling the product, but has limited control over product quality, storage, inventory management, or shipping.[1] By doing this, it eliminates the costs of maintaining warehouses – or even a storefront – purchasing and storing inventory, and employing necessary staff for such functions. As in any other form of retail, the seller makes profit on the difference between an item's wholesale and retail price, less any pertinent selling, merchant, or shipping fees accruing against them.[citation needed]
Dropshipping has become a popular business model as it requires minimal initial investment and overhead costs. A dropshipping operation can be managed from any location with an internet connection. However, dropshipping also has its drawbacks, including lower profit margins, less control over the quality of the products sold and an increased risk of shipping delays or supply chain issues.[2]
Amazon, the online shopping giant, found early success in a dropshipping business model where they could offer over a million different books to consumers while only keeping approximately 2000 in stock of the more popular titles. Publishers and wholesalers would receive forwarded orders from Amazon and would ship the products directly to the customer using packaging from Amazon.[3]
^Kale, Sirin (1 May 2020). "'It's bullshit': Inside the weird, get-rich-quick world of dropshipping". Wired.
^Khouja, Moutaz (2001). "The evaluation of drop shipping option for e-commerce retailers". Computers & Industrial Engineering. 41 (2). Computers & Industrial Enginnering: 109–126. doi:10.1016/S0360-8352(01)00046-8.
^Girotra, Karan; Netessine, Serguei (July 2014). "Four Paths to Business Model Innovation". Harvard Business Review.
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mail Commercial mail receiving agency Email forwarding Poste restante Dropshipping Package forwarding Beam, Christopher (5 January 2007). "How international...
buyer, the usual term used is click and collect. FOB (shipping) Incoterms (Ex works) Dropshipping General Delivery/poste restante New World Dictionary...
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management Direct marketing Database marketing Direct Marketing Association Dropshipping Jobber (merchandising) Fuel jobber Rack Jobber Jobbing house Logistics...
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