How does dropshipping work?
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Say I set up a shop of the brick and mortar type, and I sell online for local delivery or curbside.
But then someone on the other side of the country finds my shop’s website and places an order. I don’t maintain an inventory to both ship AND do local sales, and the distributor has a fairly large minimum order which means I can’t just order one item (I have to order a whole pallet). Instead, I push the order through as drop-ship, which means the distributor ships directly to you from their much larger inventory rather than me having to deal with the goofiness of trying to play games with my inventory.
The manufacturer or distributor benefits in that their business license rarely allows them to sell retail (wholesale and retail are separate business certifications in most of the US). A company CAN hold both, and some do, but most only do one or the other. So I make the sale and instead of sending you the item from my inventory and then trying to wrangle a single item from them between my normal orders, they just send the item directly from their warehouse once I’ve made the sale — the wholesaler wins, I win, and you win.
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