Apart from its general features such as catalog management, product listing, updating/editing images, recently viewed/compared products, customer groups, persistent shopping cart, free shipping options, multi-tier pricing for quantity discounts, and, etc., Magento offers 'Drop shipping method' to sell more products. Obviously, either a new seller or a consistent one in the field wish to sell more products and ship them for the respective customers.
The workflow involved in drop shipping method is as follows. The business man sells an item through his Magento storefront, then e-mails the order and shipping information to the supplier. The supplier may be a wholesaler or a manufacturer (with whom he has established a business relationship) having inventory on-hand. Further, the vendor picks the specified item, packs and ships to the customer. But the customer receives the item as if it got shipped through the merchant. The vendor here works on the back stage for the company and remains unknown for the customer.
Moving further, the advantages of adopting 'Drop shipping method' during Magento e-commerce website development are as follows.
Inventory: There is no need to keep inventory stocked. The merchant can use the vendor's inventory and purchase only when there arises the necessity of sale.
Decreased overhead costs: As there is no chance for storing inventory, one need not rent/lease and maintain the warehouses. In case of physical stores, when the business expands, the merchant has to expand his warehouse, that demands additional investment for space and labor. These investment amount get waived off for the merchants.
Original Resource: http://www.sooperarticles.com/internet-articles/web-development-articles/launch-your-online-business-right-away-magento-drop-shipping-method-1427499.html