Direct shipping and drop shipping are two terms generally used interchangeably. They describe a process whereby three parties interact with the sales transaction (the buyer, the seller, and the supplier). The buyer initiates a purchase from the seller, who then arranges with the supplier to ship the product directly to the buyer. The seller does not carry inventory of the product and the supplier does not have any direct communication with the buyer. The buyer pays the seller and the seller pays the supplier. Though both terms (direct ship and drop ship) are generally used to describe the same process, I’ve always considered a small distinction between the two that relates to where you are in the supply chain. To the seller, direct shipping describes both the process and an inventory/sales strategy, however, the supplier will frequently just use the term “drop ship” to describe the process whereby he is shipping the product to an address other than that of his customer (the business that is paying him for the product). Sometimes the term drop ship also describes the process of shipping to any location that is different from the customer’s normal shipping location. This subtle distinction is sometimes evident in the terminology used in software documentation. Direct shipment, Drop shipment.