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How Drop-Shipping Works for Retailers and Manufacturers

Retailers are interested in carrying our manufacturing firm's new products, which help infants and toddlers to stand and walk. However, many are asking for drop-shipping, which we worry will increase our costs and sales logistics. Should we require retailers to purchase product at full price and then provide a credit to compensate them and cover their profit after the sale has been finalized and the period for returns has expired? —M.M., Phoenix

Drop-shipping is the delivery system used by most online retailers and other companies that do not have the physical storage facilities to purchase and hold inventory, as traditional brick-and-mortar stores do.