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What is Dropshipping?

Dropshipping is a business model in which e-commerce retailers do not keep goods in stock. Instead, when a customer places an order, the retailer orders the goods from a wholesaler and has them shipped directly to the customer. The retailer makes money by charging a higher price than what the wholesaler charges. Dropshipping is most often done with physical goods because the retailer doesn't want to carry any of the risks of keeping the goods in stock.