The way drop shipping works is as follows: your customer orders a product from your website and pays you. You in turn order the product from your wholesale drop shipper and pay them. The wholesale drop shipper then ships the product directly to your customer. A complete outline is as follows:

1.) You open an Internet Store, with a shopping cart and the ability to accept credit cards.
2.) You find a wholesale distributor who is willing to drop ship the products you want to sell.
3.) You establish an account as a retailer with the Drop Ship Wholesale Supplier.
4.) You receive images and descriptions of the products you want to sell from the Drop Shipper and post them on your Internet Store.
5.) A customer surfs into your Internet Store, and falls in love with a product that you have priced at, say, $80. They purchase the item with their credit card. Your Store charges their credit card $80 plus your shipping fee.
6.) You turn around and email the order to your Drop Shipper, along with the customer's name and address.
7.) The Drop Shipper sends the product directly to your customer, with your Store's name on the package.
8.) The Drop Shipper charges you the wholesale price of, say, $45.00, plus shipping.
9.) Your customer gets a product from your store shipped to their door, they love it, send referrals and come back for more, thus making you more money.

You just made a $35.00 profit on one item. You didn't have hold any inventory or pay to have it shipped to you and then again to ship it to your customer. All you did was send an email to your Drop Ship Wholesale Supplier.

The key word in here is "wholesale". Many business claim to be drop shippers that are really just retailers who provide the shipping service. You will have a hard time being competitive in most markets if you are buying products at retail and then trying to resell them. The only way you are going to be able to make money as a drop shipper is if you can find a supplier whom you can buy goods from that will sell to you at wholesale pricing and ship directly to your customer.

In order to find wholesale suppliers, you can do internet searches. You can find directories of suppliers that have helped other home based business owners start their businesses. You can also find suppliers on your own. Any real wholesaler can be a drop shipper if they will 1) sell in quantities as low as one and 2) ship directly to your customer. You can ask any wholesale supplier representative and they can tell you. Many wholesalers have a minimum order policy, so you will want to find out if there are any exceptions to the rule.

In summary, there is very low risk involved in starting a small business in drop shipping. You don't need to purchase inventory and you don't need to allocate space for the product. You don't have to worry about products not selling because someone else is doing the inventory stocking and management.