Drop shipping is when you have an e-commerce site and sell products without an actual stock.  All you do is forward your orders to a drop shipper who ensures that the products are delivered to the customer.

This arrangement is beneficial on several levels.  The main one being that you do not have to maintain any stock levels.  This frees you from the headache of having a warehouse, buying inventory, hiring staff, or worrying about the shipping and routing of work.

All of the things in the last paragraph will raise your cost tremendously and then you have to worry about stock not moving.  It is also a great benefit that you do not have to do the shipping.  Some drop shippers will even put your logo on their boxes.

This makes the customer think that you actually shipped the product.  Hopefully, you have a reliable drop shipper and they will get product to your customers on time so that your reputation is enhanced.

Some drop shippers will give you credit.  This helps to improve your cash flow to cover immediate expenses.  An efficient drop shipper will send you regular updates on inventory levels so that you are up to date.

If you have common software then you will get immediate notice when their stock levels are updated so the you are always up to date.

Your drop shipper should be able to offer you specials on bulk products.  You can then pass that price on to your customers.

Not only will this increase sales, but you will get a reputation that you offer bargain prices.  Your drop shipper will be able to accept returns and offer some kind of guarantee on those products.

This eliminates you having the headache of returns and broken products.  It also raises your reputation as being an honest e-commerce business owner.

The biggest drawback to drop shipping is the lower profit margins, but this is justified by the small amount of investment of time and and money that you have in your business.  This makes it even more important to be involved with  a reputable drop shipper.  His actions reflect your reputation and profit level.

Drop shipping businesses need to be precise with their research and know their market to stay on top of profit levels.  Good luck!