abstract:Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer. As in retail businesses, the majority of retailers make their profit on the difference between the wholesale and retail price but some retailers earn an agreed percentage of the sales in commission, paid by the wholesaler to the retailer.
Some companies, including Circuit City, have moved to a "drop shipping" arrangement, where wholesalers deliver goods right to the consumer without the retailer actually taking possession of them.
Best Buy, whose Q3 results were, well, pretty bad with a 20% drop in profits, is offering free shipping this weekend along with all the other online retailers trolling for last minute shoppers. (Those same Q3 figures, by the way, showed that its online channel delivered a 20% increase in revenues compared to the same period a year earlier).