Dropshipping or "Stockless Retailing"

(From the tutorial, A Frank Comparison of Money-Making Options)

Description: Dropshipping allows you to sell tangible goods without holding inventory. You sell directly to your customers and collect payment… then send the orders to your distributor, who packages and ships the product directly to your customer with your company name on it. Your distributor then charges you the wholesale price for the product. The difference between the retail and wholesale price is your profit.

Advantages:

The product or service is already created for you. Your customers select items from the dropshipper's catalog.
No upfront fees for stock products. That is, you set the price, take orders and send them to your distributor. Your distributor sends the products directly to your customers. You don't have to buy anything upfront - after you've made the sale, you then pay your distributor the wholesale price of the product.
No inventory or shipping worries. See above.

Disadvantages:

You have less control over product delivery. You rely on another company to reliably and promptly send orders to your customers.
You're responsible for customer service - even though you have no control over product delivery. If your customer is unhappy with the product or has problems or questions, you provide the service.

Where to Find DropShip Sources: The Drop Ship Source Directory is a good place to get more information on dropshipping.

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