Drop Shipping companies are basically wholesalers that also drop ship their merchandise. They receive individual orders and payments from retailers and then send the product to the customer.

Not only do people with online retailing websites profit from the conveniences of using a drop shipping company, but so do people selling products on online auctions like eBay. As long as the products they list on eBay sell for more than the wholesale cost of the product, plus shipping expenses, the person will profit from auctioning merchandise. Successful eBay sellers or Power Sellers have created large streams of income by auctioning drop shipped products online.

The benefits of using a drop shipping company can be massive. Depending on the number of products needed to function properly as a business, it could cost tens of thousands of dollars just to purchase your stock.

After purchasing your initial stock, you would then have to rent a space to store the merchandise. Then you would have to deal with postage and packaging which can be a very time consuming job after you start getting a decent amount of orders each day.

But if you create a relationship with a drop shipping company, they already have the wholesale products and the resources available to deliver them to customers.

The drop shipping company benefits by selling more products and the online retailer benefits by saving on the costs of purchasing and storing stock. So both parties profit from drop shipping.

It has also been called "Blind Shipping" as it can be merchandise shipped to the customer without a return address. The wholesaler may also have his company information included though. Good drop shipping companies also deal with returns, which makes things easier for the customer and the retailer.

Drop Shipment or Drop Shipping can be a very rewarding and profitable business to be in for both the drop shipper and the retailer, but like any profitable business there is a lot of hard work involved. Don't be conned into accepting offers that seem too good to be true as there are a number of unscrupulous people out there looking to take advantage of those that are new to the industry.