What defines Drop Shipping in a supply chain context?

Drop shipping is defined by the process where products are shipped directly from the supplier to the end consumer, bypassing the retailer's physical location. In this model, the retailer does not hold inventory themselves; instead, when a customer makes a purchase, the retailer places an order with the supplier, who then handles the fulfillment and shipping directly to the customer. This approach allows retailers to offer a wider range of products without the risk and overhead associated with managing inventory.

The advantages of drop shipping include reduced operating costs and the ability to quickly scale a business, as the retailer does not need to invest in warehouse space or stock products. This method also provides flexibility in product offerings, allowing businesses to react quickly to market trends without the commitments tied to inventory management.