Drop shipping is common among the Electronics retailing business. In Drop shipping the retailer does not keep goods in stock but instead transfers customer orders and shipment details to the manufacturer, another retailer, 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.
Two significant benefits of drop shipping are the elimination of upfront inventory and a positive cash-flow cycle. A positive cash flow cycle occurs because the seller is paid when the purchase is made. The seller usually pays the wholesaler using a credit card or credit terms. Therefore, there is a period of time in which the seller has the customer's money, but has not yet paid the wholesaler.
Drop shipment can also be an advantage in some transactions since it (can) obscure the actual shipper from the final receiver, thus preserving a middleman's role by preventing direct communication/awareness between the original seller and final buyer, without requiring a middleman to bear the costs/delay in physically taking in the goods, repackaging, relabeling, etc.
Drop shipping also eliminates some duplication of effort since only one warehouse will pick, pack, and ship the product. This approach can reduce total inventory management and shipping costs. These cost reductions can subsequently reduce the price to the consumer.
With the internet kicking off the world, drop-shipping does make sense after all. Most drop ship services only exist hand in hand with the internet so no one will know that you don’t keep an inventory on-hand. You won't be able to sell products with your conventional store front without products.