CLEP Marketing Practice Exam 2026 – All-in-One Guide to Achieve Top Scores!

Utilizing a drop-shipper can effectively reduce handling and storage costs for a business. In a traditional retail model, the business has to purchase inventory upfront and manage all aspects of storage and shipping. This includes renting warehouse space, employing staff for inventory management, and covering shipping expenses.

By using a drop-shipper, the business does not hold any inventory on-site. Instead, when an order is placed, the business transfers the order details directly to the drop-shipper, who then takes care of storage and shipping directly to the customer. This model eliminates the need for the business to invest in large amounts of inventory and reduces operational costs associated with handling products. Consequently, this can lead to improved cash flow and reduced financial risk, allowing businesses to operate more efficiently and focus resources elsewhere.

Other options, such as managing direct consumer sales or concentrating on retail sales, may be relevant to a drop-shipper’s model but do not highlight the primary reason for choosing this fulfillment method. Similarly, increasing product variety is an advantage of drop-shipping, as it allows businesses to offer a broader range of products without the financial burden of stocking them, but the primary benefit remains the reduction in handling and storage costs.