Retailers & Wholesalers
Retailers that drop ship merchandise from wholesalers can take measures to hide this fact or keep the wholesale source from becoming widely known. This can be achieved by “blind shipping” (shipping merchandise without a return address), or “private label shipping” (having merchandise shipped from the wholesaler with a return address customized to the retailer). The wholesaler might include a customized packing slip, including details such as the retailer’s company name, logo, and contact information.
Dropshipping can occur when a small retailer (that typically sells in small quantities to the general public) receives a single large order for a product. The retailer may arrange for the goods to be shipped directly to the customer from the manufacturer or distributor. Drop shipping is common with expensive products.
Sellers on online auction sites also use drop shipping as a way of distributing products without handling the stocking and shipping of the inventory. A seller will list an item as new and have sold items shipped directly from the wholesaler to the customer. The seller’s profit is the difference between the selling and the wholesale prices, minus any selling, merchant, or shipping fees.
When a product is sold out by the wholesaler, it may be back-ordered. Back orders may be accompanied by a long wait for a shipment while the wholesaler waits for new products, which may reflect badly on the retailer.
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