Drop Ship From a Third Party

Drop shipments are used by companies that do not stock inventory of the products they sell. Such companies send product orders directly to manufacturers or distributors that, in turn, ship the merchandise directly to the customers. Companies willing to offer drop-shipping services can gain additional sales volume and shift advertising costs to middlemen - assuming these companies are able to handle the logistical demands associated with shipping a large number of small quantity orders to individual customers.

Companies that initiate drop-ship orders are trying to create a competitive advantage by shifting the risks and the costs of stocking inventory to their suppliers including storage, insurance, overhead, and changes in the market value of inventory.  Within the framework of a company with global operations, drop shipments can become quite complex. Multi-national companies look for the most cost-effective ways manufacture merchandise, store, and move merchandise to where it is needed at the lowest cost and with the least risk of loss or damage or delays while in transit.

Edited by Michael Dennis, author of "Credit and Collection Handbook." Mr. Dennis is an author, lecturer and consultant.  He can be reached by email at mcdennis@yahoo.com