Dropshipping is a business model that allows retailers to act as a middleman while selling a product. Instead of actually handling the inventory that is sold, the retailer instead passes orders onto a dropshipping company for them to complete the task of picking, packing and fulfilling the order.

Essentially, this business tactic creates a relationship between a business and the manufacturer or distributor of a product. Retailers get to manage the website of their business, while another company handles the product development and order fulfillment.

“A distributor is simply a company that maintains a large inventory of another company’s products and distributes those products to smaller companies.” Entreperuner reported.