[lozenge]

Revealed preferences- Amazon is a very successful online shopping site.

Amazon isn't drop shipping. Drop shipping is when the goods are sent straight from the manufacturer to the consumer. Most orders on Amazon are using Amazon Prime/fulfilled by Amazon meaning the goods (whether third party owned or Amazon owned) were stored in Amazon's warehouse before they were shipped to the costumer. Prime 2 day/1 day delivery would be impossible if the goods were dropshipped from Asia.

[tomnipotent]

> Drop shipping is when the goods are sent straight from the manufacturer to the consumer

It just means another party besides the seller is fulfilling the order, such as any product on Amazon shipped by the marketplace seller.

[AussieWog93]

Ecommerce guy here!

Dropshipping, specifically, means that the seller doesn't actually own any of the items they sell, and instead forwards any orders they receive to another business. This is of course very low-risk, as the seller doesn't tie up any of their own capital in a potentially bad product.

Amazon's service, FBA, is an example of something similar called "third party fulfillment". In this arrangement, the seller physically owns the stock they sell, but contract out Amazon to store and ship it. The seller must put the money upfront to buy the products, and if it turns out to be a flop they eat a big loss.

[tomnipotent]

Amazon doesn't only offer FBA. Many sellers fulfill from their own facilities. The only difference from traditional drop shipping is that the customer is aware of the shipper, but Amazon still owns the transaction, customer, and all communications.

[AussieWog93]

Ahh, gotcha.