Okay, drop-shipping in a nutshell:
A vendor wants to sell things online, but doesn't want to sink money into inventory and a warehouse. Instead, he finds a reliable source of a product for a reliable price, and lists that product on other sites for a bit more despite not actually owning it yet. You, the eager customer, stumble across his listing. There are several reasons you may choose it even though there is at least one cheaper source out there: you didn't do your research, you don't want to give your credit card number to a website you've never heard of, you want to be able to rely on the customer service and return policies of sites like eBay or Amazon, etc. So you order from what you assume to be a trusted site. The drop-shipper then immedialtely turns around and places an identical order with their source and pockets the difference. If all goes well, you get what you wanted and the vendor makes a bit of money for his effort.
If all doesn't go well, though, you can have issues:
- sometimes those shady sites do have inferior items, so you have to throw yourself on the mercy of whatever larger site you used. Sometimes they can force the drop-shipper to fix the problem, but sometimes it ends up being more hassle than it's worth.
- sometimes the drop-shipper goes to order from their supplier, only to find that the item is no longer available (or not available at a lower price than you're paying.) Usually this results in you getting a refund, but you've wasted a few days and have to start your search for your whatsit again. When drop-shippers get enough complaints about this kind of behavior, sites like Amazon shut them down. Unfortunately, since there's almost no overhead cost involved, they usually just pop back up under a different name.
-occasionally drop-shippers end up using the same source, making it look like there are 20 copies of that super-rare DVD in mint condition for sale all at once. If you tried to order it, though, you'd find that 19 of those listings were drop-shippers intending to order it from the 20th person. This can make searches take a lot longer to wade through.