Drop shipping is a service provided by some wholesalers, where they will package and ship merchandise directly to the buyer on behalf of the retailer. The retailer transfers the customer's order to the wholesaler, who takes all the responsibility for storing, packaging and delivering the item in return for a handling fee.
Because drop shipping involves the retailer purchasing items one at a time from the wholesaler, drop shipped items – although generally discounted from the retail price, will not qualify for bulk wholesale discounts. This can make drop shipping difficult on some marketplaces such as eBay because if other sellers are offering the same item, but have received a bulk buying discount, you will not be able to compete with them on price.
For this reason, drop shipping items from your own website, rather than on eBay, is a much more profitable option for retailers.