What Is Drop Shipping (and What Does It Mean for You)?

More retailers are using this fulfillment method, but it has drawbacks for customers.
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When you shop at your favorite online stores, you're probably not thinking about where your items are coming from. However, due to the recent coronavirus outbreak, some retailers are having to change their shipping methods, which means your order might be fulfilled through drop shipping.

When businesses utilize drop shipping, they also give up control of some customers' orders. And that can lead to problems. So what does drop shipping mean, exactly, and how can it affect you?

What Is Drop Shipping?

Drop shipping is a fulfillment method that allows retailers to offer more products on their websites without needing to store the physical items in a warehouse. Items shipped via drop shipping come straight from the supplier in many cases, rather than the retailer itself.

Drop Shipping Means More Inventory (With a Catch)

Several retailers have begun to utilize drop shipping, especially over the last few years. This method lets the suppliers keep the inventory; normally, they'd ship the products to the retailer to be sold. When a customer orders something, it ships directly from the supplier instead.

A big problem with drop shipping is that products can end up being more expensive.

This arrangement could increase retailers' efficiency, but also bring extra costs to customers in the form of pricier products. For instance, a clothing store can offer something like a sweater in more colors, but doing so means they pay more for the products overall, due to more complicated logistics. That cost may then get passed on to the customer. More choices are great, but shoppers can end up paying more just for access to that bigger selection.

Customer Service Can Be a Headache

While a retailer might have excellent customer service, that doesn't mean the supplier does. In order to utilize drop shipping, sellers have to rely on suppliers to handle areas like inventory management and shipping. Sold items go straight from the supplier to the customer, but the shipping and tracking info tends to come from the retailer.

SEE ALSO: Yikes! What to Do When Your Amazon Package Is Not Delivered

Of course, when something goes wrong, customers are more likely to contact the retailer first, as the sale was completed through them. This can result in trust issues for retailers. After all, allowing a third party to control shipping and inventory management means sellers have less — or even zero — control and visibility over the progress of an order. It's easy to see how a setup like this could mean that any problems with your order would take longer to resolve.

Readers, do you think it's worth having more choices at your favorite online stores, even if it means less-reliable shipping and higher costs? Let us know in the comments below!


Senior Staff Writer

Julie joined DealNews in 2015. Her work has been featured on MSN, Business Insider, Lifehacker, The Motley Fool, GoBankingRates, and Moneyish. In her spare time, she enjoys baking sweets, reading thrillers, and listening to an ever-growing list of podcasts.
DealNews may be compensated by companies mentioned in this article. Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
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2 comments
Squirrel
To clarify...not so much the item itself, but the overall price including shipping, is what I am referring to.
Squirrel
Having been an online seller that utilized drop shipping, I for one, have not found drop shipping to be more expensive than retailer shipping. Of course, anything is possible, but as a whole, it is a safe bet that the item will cost more if the manufacturer ships to a retailer and then a retailer ships to you.