When discussing any business model, it’s important to drill down on the mechanics of each deal and understand how it differs compared to similar businesses and methods of selling.
So what is drop shipping?
Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock but instead transfers customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.
To understand drop shipping, we have to understand how the products we are selling are being sold and what form of protections are built into the sale for the consumer. When we sell an item we can either sell a fungible, unspecified item or a specified, unique item. Details below. Continue reading