Drop shipping is when a merchant, usually an online merchant advertises an item they have for sale without really having that item in its possession. In addition, when a merchant uses a drop ship provider they often do not need to invest their cash in a big inventory that might not sell and can pay only for what they would like to be shipped instead of facing the probability of paying for goods up front that they might not probably be able to sell. For some companies this is a very cost effective means for them to contend with big marketers and present a big inventory just as a major vendor would.

But drop shipping can also have its problems. One problem that some merchants face is the span of time it takes to ship an item to their client. Since the merchant does not really have the goods the delivery time might be increased because after the consumer places an order with the merchant, the merchant then places the product ordered with the drop ship provider and that can add more than a few days or more to the consumer's shipping time. Some clients don't take kindly to wait for a long period of time to get their goods, so that is something to think when deciding to become a drop shipper.

There are just as many advantages as there are rewards to becoming a drop shipper. If a merchant does not want to go the course there is always the alternative of purchasing wholesale. When purchasing wholesale a merchant pays for the goods that they want to market upfront. It cost more cash upfront but since it is required to purchase in bulk the merchant gets a much lower rate per product overall and that increases a merchants income margin. Hence before when a merchant is purchasing one unit at a time they pay more and then they set a rate to sell their newly purchased item for.

When purchasing wholesale, the merchant is getting the product at a lower rate than purchasing it individually and when they sell the product they earn a bigger income since the product now has cost them less to obtain. Both purchasing wholesale and drop shipping are great ways to make money in business and some industry do one over the other and a few to both and they each have their own special set of bonuses.