Drop Shipping Definition
Drop Shipping is a retail fulfillment model in which a seller takes customer orders but does not hold the products in stock. Instead, the order is forwarded to a supplier or manufacturer who ships directly to the end customer. The seller never physically handles the product.
How does it work?
The flow typically runs as follows: a customer places an order with the retailer; the retailer passes the order details to the supplier; the supplier picks, packs, and ships the item directly to the customer, usually with the retailer's branding on the packaging. Payment settlement between retailer and supplier happens separately, typically at agreed wholesale terms.
What are the product data implications?
Drop shipping creates a specific product data challenge: the seller is responsible for the accuracy of the product page and customer-facing content, but the product knowledge sits with the supplier. If the supplier's data is incomplete, inconsistent, or formatted differently, the seller must clean and enrich it before publishing.
This is a common reason retailers and marketplaces use a PIM system, to normalize supplier-provided data into a consistent format before it reaches any sales channel, and to track data completeness across a catalog that may span hundreds of suppliers.
How is it different from a standard wholesale model?
In a standard wholesale or sell-in model, the retailer buys stock upfront and holds inventory. In drop shipping, the retailer carries no inventory risk, but also has less control over fulfillment speed, packaging quality, and stock availability. The tradeoff is lower overhead against lower operational control.
