Its a company that handles the warehousing and distribution of products you sell for you. For more information, check out the entry on WikiPedia: http://en.wikipedia.org/wiki/Drop-shipper

With a dropshipper, you do all the selling and pass on the order for them to fulfill/deliver. So basically, you don’t need to have any stock.

Most dropshippers sell tat and trinckets, so unlikely to be the foundation of a great ecommerce site. If there did exist a great dropshipper who supplied fantastic products, you can bet his identity would be kept a closely guarded secret - 'where can I find a great dropshipper' is one of the most frequently asked and ignored questions on the ecommerce forum here.

Purchasing stock on demand is okay if you can find a supplier who can deliver next day, but in the end, you'll get much better prices if you buy in bulk and store the stock yourself. Eventually, you will be given net 30 on stock purchases.

Basically, there's no magic solution to running an ecommerce site - yes, it's easy enough to build the thing, but getting stock (and finance) is probably the biggest hurdle - without stock, you're just another chancer with his 'estimated' 10 day delivery times and constant stock issues.

Get networking and negotiating with suppliers is my advise. Also check out,Dropshipping Business