Manufacturing, logistics and industries
drop shipment
In short and in plain language
In a drop shipment, the maker sends the goods straight to the end customer.
The goods do not go through the warehouse of the dealer.
The dealer still sends the invoice to its customer.
Definition
In a drop shipment, the manufacturer or wholesaler delivers goods directly to the customer of its buyer, without passing through the buyer’s warehouse. Order and invoice still run through the dealer. For VAT purposes, such a process often counts as a chain transaction.