The world of business has changed in the past decade. Gone are the many bricks and mortar shops that used to open in malls and other locations, only to fail due to low sales figures and little traffic.

The internet is now the world’s shopping mall and from any location in any part of the world, customers can find a site on the web and buy merchandise from them.

This online shopping boom has led to another growth area in the area known as drop shipping. If you are asking yourself “what is drop shipping?”, the answer is that it is a low risk and very low cost way to begin a business selling products that can earn a profit by allowing the wholesaler to handle the shipping to the customer.

The answer to drop shipping lies in the fact that the seller of the goods or the retailer, never has to buy a stock or inventory of the items they are selling online. This leads to a low cost way of doing business because there is no risk to the retail seller of the goods. If a retail seller online wishes to sell blue widgets and after six months, they see there were only two orders for the blue widget, they are not stuck with a warehouse full of the item that nobody wants to buy.

The reason that many retail sellers like to use the drop ship method is that they do not need to have the storage space for an inventory of items on hand and they also do not have to have the packing and shipping materials that would be needed to send their items to the customers either. These retailers know what is drop shipping advantages and they earn more profit by not spending money to keep items or pack them to send.

The basic answer to what dropshipping in is that it is a way to begin a business on a website and not have to invest a large amount of money on items or packing materials. The supplier or wholesalers of the items being sold take care of the warehousing of the items and they will pack them and ship them directly to the buyers with nothing needed from the retailer.

The retailer, in turn, sets their retail price for the product and can set the margin of their profit knowing the cost per item for the drop shipping service from the wholesale supplier.

The next time you hear someone wondering what drop shipping is, you can let them know that it is a popular way to begin a business using only a web site and it is low risk as well as a small investment up front, since there is no inventory required for the retailer to keep on hand. Many of the online auction sites are handled in this way and the drop ship method makes sense for the high volume seller as well as the ones who sell only a few items.